Automation. Efficiency. Effectiveness. Cost-saving. These are what many organizations prioritize when it comes to know your customer (KYC) solutions. They are important considerations, but they aren’t the only ones to factor when approaching KYC. On the other side of the value equation comes competitive advantage, customer experience, brand advocacy, and business growth. All these benefits can come as a result of delivering better KYC experiences when onboarding and monitoring customers.
Organizations globally spend billions of dollars each year on process automation and tools to conduct KYC and achieve compliance. They are acquiring solutions to comply with an ever-growing sea of regulatory demands. This investment in compliance to meet anti-money laundering, counter-terrorist financing, fraud, corruption, and other regulations does save businesses money by avoiding fines and reputational damage. But there is more to the investment.
Despite the stakes being so high, it can be difficult for departments to evidence “return on compliance”. Consequently, compliance spending can sometimes be regarded as a “necessary evil” for teams in regulated markets. This is a reductive view and misses the essential role compliance plays in the wider customer experience. Business value can be unlocked by delivering high-quality compliance experiences when onboarding customers and throughout the customer lifecycle.
Most customers will only occasionally interact with a compliance process. Behind-the-scenes creation of risk profiles by gathering data on identities, UBO discovery, sanctions lists, negative news stories, and so on, happens day-to-day but it’s largely invisible to customers, and this is how most organizations like it.
However, when a system flags suspicious activity and enhanced due diligence is needed, it can leave customers scrabbling around for information they need to provide. Then they enter the compliance leg of the customer experience. Each compliance interaction should be as seamless and positive as any other touchpoint.
Knowing they are being “investigated” by a compliance team can be jarring for customers, who are otherwise disconnected from due diligence and risk monitoring. Experiences gleaned in other areas of life - for example using an identity checking app to unlock a smartphone - bleed over into expectations of compliance interactions. Customers expect a digital, automated experience that asks them for strictly necessary information in a way that’s easy to provide. And these compliance experiences count.
Through research conducted by RegTech Associates for Passfort, a Moody’s Analytics company, we found only 26% of survey respondents had received what they considered to be a “better than expected” compliance experience during onboarding. And, importantly, we found a connection between an institution’s ability to exceed customer expectations around compliance experiences and the resulting positive views and behaviors of those customers concerning the institution.
In fact, instead of being “invisible” to customers, compliance processes are recognized and exert real influence over attitudes towards a brand.
While compliance may lack the “excite and delight” dynamics that drive other areas of customer experience, getting KYC interactions right by exceeding customer expectations, can offer value in terms of loyalty, advocacy, and business growth. For example, compliance journeys can tangibly impact a customer’s propensity to switch, complain, purchase other products, and recommend a brand.
Of the customers who enjoyed a “better than expected” compliance experience, we found the following four tangible benefits.
Besides the broader hygiene imperative of getting compliance right to avoid regulatory action, fines, and bad press, there are tangible profit- and growth-related reasons to invest in an outstanding compliance experience.
KYC compliance can play a key role in driving deeper customer relationships. Beyond ticking all the right boxes at the right price, by delivering a compliance experience that exceeds expectations, regulated firms can achieve higher rates of customer loyalty, advocacy, and business growth.
There is no compromise to be struck along the customer experience value chain, so there should be no compromise between compliance efficiency and compliance experiences.
By challenging the accepted narrative around compliance as a “necessary evil” and by seizing the opportunity to deliver a well-crafted and executed experience, firms can maximize their return on compliance and deliver outstanding experiences to customers.
Moody’s Analytics customers build their own unique KYC eco-system using our workflow orchestration platform, award-winning datasets, analytical insights, and integrations with global providers, creating powerful, digital risk management solutions.
Harnessing our innovative technology and industry expertise, Moody’s Analytics automates accurate screening and swift onboarding of individuals, entities, and third-party suppliers. Then supports perpetual monitoring of counterparty risk across any business network in near real-time.
Our configurable solutions empower risk and compliance professionals to deliver compliance efficiency and excellent customer experiences - no compromise. If you would like to learn more, please get in touch – we would love to hear from you.
*About the report: RegTech Associates conducted the report on behalf of Passfort, a Moody’s Analytics company. It surveyed 500 UK customers who had purchased a new financial product within the preceding 12-month period. A full copy of the report can be obtained from Moody’s Analytics KYC’s marketing team.