Standardization and Coding of Rules Boosts Quality Assurance Results
A recent study has revealed that standardizing and coding rules can significantly improve quality assurance results in Know Your Customer (KYC) reviews. The study found that by automating the review process, institutions can expect to see a boost in quality of around 15-40%, with manual errors reduced and risk identification and documentation improved.
Benefits of Automation
Automating the review process leads to:
- Improved quality of around 15-40%
- Reduced manual errors
- Improved risk identification and documentation
- Shorter rework loops, as “first-time-right” ratios and regulatory targets are met more quickly
- Faster scaling up of KYC capabilities, leading to improved quality outcomes
Impact on Customer Experience
Automating the review process can have a positive impact on customer experience, with customers enjoying:
- Streamlined digital interactions
- Targeted digital interactions
- High levels of customer satisfaction
Benefits for Employees
Automation frees up employees from tedious tasks, allowing them to focus on:
- Judgment-focused activities
- More efficient workflows
- Enriched jobs, leading to higher employee satisfaction
Core Components of an STP Solution
To build a successful STP solution, financial institutions must define:
Defining Criteria for Automation
Banks should assign cases to STP review, human oversight, or full manual review based on risk appetite.
Determining Requirements for Data Completeness
Institutions must ensure that customer data fields are complete and accurate before automating reviews.
Establishing Rules for Reviews
Banks must define:
- Hard behavioral thresholds
- Anomaly detection
- Peer-group modeling to identify suspicious behavior
Defining Review Completion and Documentation
A concise standard conclusion should be generated once all analyses are completed.
Key Success Factors
To achieve success with STP solutions, banks should:
Close Up-Front Stakeholder Alignment
Align stakeholders on risk requirements across the three lines of defense.
An Agile, Cross-Functional Team
Assemble a team with representatives from business, operations, IT, and data analytics.
Testing and Validation
Undertake thorough testing and validation before going live, with continuous quality control after launch.
Clearly Defined Ownership
Ensure clear ownership of the solution and underlying logic for dropping cases from STP into targeted or full review.
Focus on Data-Quality Management
Implement a robust data-quality management approach to ensure accuracy and completeness.
By following these best practices, financial institutions can successfully implement STP solutions and reap the benefits of improved quality assurance results, customer experience, and employee satisfaction.