Digital transformation projects will introduce more automation and digitization into compliance tasks when performing Know Your Customer (KYC) on new corporate customers, but are compliance teams ready for the switch? With so much at stake, including competition from hyper-automated FinTechs, enhancing financial crime compliance, including KYC processes, for commercial entities will not be a question of if but when. 

Banking executives, compliance teams, regulators and law enforcement agree that bank compliance programs are a critical function in the fight against financial crime but need to be dealt with in a faster, seamless, and more transparent manner. In the case of KYC, introducing digital transformation will help move these visions along. 

But how will these changes impact these compliance teams? And what do these changes include? Here, we look at a few examples of how digital transformation will impact corporate KYC and bank compliance. 

KYC transformation. A key area that’s ready for transformation is corporate KYC. Today, this heavily relies upon frontline and operational teams to execute highly manual tasks to perform due diligence, which can take days or weeks to complete. Unwrapping complex corporate structures to mitigate AML risk requires significant effort, time and resources. It is here where technologies and automation can significantly improve and transform these efforts.

Digitization and automation. Transforming KYC requires the digitization and automation of compliance tasks, which dramatically improves compliance’s ability to perform due diligence. For example, unwrapping a corporate structure, identifying ultimate beneficial owners (UBOs), associated parties, and their associated risks should take minutes (rather than hours) using live data searches. By digitizing these tasks, compliance teams are able to analyze corporate data automatically, letting technology do the legwork and significantly improving efficiency in the process. 

Speed, accuracy, and control. What digitization and automation provides compliance teams is speed, accuracy and consistency in core processes. Speed is obvious – automation converts manual tasks into tasks performed by computers. Accuracy is also greatly improved in the process because automation reduces opportunities for human error. Finally, compliance teams can expect more consistency across internal organizations – automation allows banks to run core due diligence functions the exact same way, every time, allowing staff to focus on analyzing the data provided. 

Swivel no more. As a part of the automation process, frontline and back-office teams should also be able to move away from their day-to-day ‘swivel chair’ approach – that is, manually entering or copy and pasting data from one platform into another, over, and over again. This is an inefficient use of time and the bane of bankers everywhere. 

Reliable data. Decisions are only as good as the data used to inform them. Financial institutions know this best. Access to trusted, up-to-date data sets in a fast moving, real-time economy is necessary to truly understand the identities and associations tied to an entity. This requires unmitigated access to a range of national and international premium data sources. 

Customer experience. A critical objective of digital transformation is to make KYC less painful by reducing friction and manual processing, minimizing the back-and-forth required in due diligence. In addition to creating a sounder compliance process, the result should be an overall better customer experience. 

By introducing more digitization and automation into the compliance process, banks will be able to free up their compliance teams, opening more bandwidth to focus on the true areas of risk. Digital transformation efforts will also improve scalability, allowing banks to grow their corporate and commercial book of business, without the need to continuously add headcount, which goes directly to the bottom line. This should make corporate customers, bankers, compliance teams and regulators happier in the process.