Financial Services

How Extreme Automation Can Shape the Future of KYC

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Celent estimated that the total IT and operational spend on AML and KYC activities by European financial institutions in 2019 has reached $12.5 billion. Despite of the increasing amount of investment on resources in the KYC process, financial institutions still face a number of major challenges and risks of hundreds of millions of dollars’ fines for failing to be compliant.

Challenges for Financial Institutions

Firstly, during the onboarding stage, the required new client data can be retrieved in varied formats and can require a significant amount of effort from the financial institutions to process and synthesise. Most of the time, the data is also fragmented across multiple repositories, making the process more manual. Secondly, any errors in the customer due diligence and onboarding of noncompliant customers could lead to huge financial fines, therefore financial service providers are under huge pressure to minimise their risk exposure. Thirdly, due to the efforts and amount of time required to onboard a customer, there is high operational cost incurred to complete the complete the process. Fourthly, the pace of change of regulations and compliance requirements such as Dodd Frank and MiFID II are forcing the financial services to adapt to the changes quickly to ensure compliance.

The customers’ experience could be significantly affected as well and it is time that financial services providers differentiate themselves in their services, as any other service providers, to win an edge.

Customers’ Experience

The onboarding process and customer wait time could be long due to the number of process steps that the Financial Services providers have to complete before a decision can be made. Feedback is often not provided to the customer to update them on the status of their onboarding process.In addition, KYC has placed a heavy administrative burden on customers from collating the number of information, data and documents requested by the bank. The customer can often be asked to upload the same documents multiple times throughout the workflow.

Opportunities to Differentiate

There is a huge opportunity to redesign the KYC process to tackle these challenges by leveraging the emerging technologies and Extreme Automation.

  1. Performing screening and investigation

There is huge automation potential in collecting and processing vast amounts of data from various sources and formats through using a combination of RPA, OCR, entity extraction and intelligent workflow. The screening process can also be automated using machine learning models.

2. Creating aggregated and more accurate client risk profiles

The client profiling can be strengthened by automatic detection of inaccurate and missing information which could be achieved on a real time basis and at a large volume.

3. Improving operational efficiency

By applying Extreme Automation and classification solutions, client onboarding cases as well as key activities within the end to end journey could be prioritised to enable the financial services focus the efforts on high priority items when under capacity constraints or facing a large backlog.

4. Managing regulatory change and compliance

To reduce the manual efforts of identify and review changing regulations and assessing the impact, financial services now have the opportunity to use RPA, intelligent workflow and Natural Language Processing to monitor and flag any changes in the requirements and make the changes in the systems.

There are a few examples the areas that we see can benefit hugely from Extremely Automation. There is a lot more potential to reinvent the process to make KYC a lot more efficient than the as-is, to protect the financial services against risks and to improve customer experience.

The Future

There are many financial services companies that have onboarded the automation journey, with KYC one of the first area to be considered. However, the focus has been primarily on the repetitive steps, such as data key-in, and we have seen very few organisations tapping into the end-to-end process reinvention which would drastically reshaped the entire process design and customer touch point. It is time to rethink the process holistically and the future state and truly embrace emerging technologies.

We see Extreme Automation and new technologies change the KYC process in the next 3-5 years and early adaptors will enjoy an early mover advantage and win the customers in the market place.

To learn more about IBM automation, please visit

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