Financial Crime World

Banks Must Master Five Key Ingredients to Unlock KYC Program Impact

In today’s digital age, next-generation Know Your Customer (KYC) processes hold significant rewards for banks. However, the question remains: how do financial institutions organize themselves to make advanced KYC programs a reality? A recent benchmarking study identified five essential ingredients that banks must master to unlock the full potential of their KYC programs.

Unlocking the Full Potential of KYC Programs

According to experts, these five ingredients include:

1. Risk-Driven Design and Customer-Risk Management

Focusing on customer-risk assessments for driving policy development and process design is crucial in achieving a more precise, holistic, and near-real-time view of customer risk.

2. Digitization and Optimization of the Customer Experience

Banks must digitize institutional customer journeys via self-service portals that tailor requirements, while employing a customer-service team with global and local KYC knowledge to support these platforms.

3. Data and KYC-Program-Risk Analytics

Implementing a disciplined data-management practice that leverages automatic and dynamic data feeds from external and internal sources is vital in conducting advanced KYC-program-risk analytics for a competitive advantage.

4. Intelligent Process, Case, and Policy Automation

Automating case management, workflows, and policy management can improve capacity, allowing teams to focus on true value-adding activities such as customer-risk assessment.

5. Center of Excellence

Establishing a center of excellence with robust performance management that incorporates customer-experience metrics can help optimize location and resourcing strategies.

Case Study: Global Bank’s KYC Program Improvement

A global bank recently implemented these five ingredients, resulting in significant improvements to its KYC program. The bank was able to:

  • Reduce the number of cases requiring customer outreach by 20%
  • Increase operational capacity by 30-35%

The key lessons learned from this engagement include:

  • Improving a KYC program requires alignment across all stakeholders on the operating model.
  • Process-redesign opportunities abound, particularly in areas such as case management and policy automation.
  • Banks must prioritize technological upgrades, including critical areas like case management, workflows, and policy rules engines.

Benefits of Implementing Next-Generation KYC Programs

By implementing a next-generation KYC program, banks can expect to reap numerous benefits, including:

  • Cost savings
  • Improved risk effectiveness
  • Increased revenue
  • Enhanced customer experience
  • Better employee experience

Knowing the customer can become second nature, a key component of business DNA that drives superior outcomes.