Digital transformation of know your customer (KYC) processes has evolved quickly, and there are no signs of the evolution slowing down. Innovation continues apace as always-on forms of risk monitoring become more sophisticated. But how do compliance professionals themselves feel about this?
Moody’s Analytics KYC recently conducted primary research with a group of 60 senior global compliance professionals from a variety of sectors to understand:
What we discovered is that all regulated companies are on a journey to transform risk and compliance – some are further forward than others for a variety of reasons. Some businesses have legacy systems that are hard to integrate and adapt, while others are digital natives. Some businesses operate a culture of compliance, while others consider it a barrier to sales.
What is evident is all compliance professionals operating KYC processes are under a lot of different pressures. Internal demands from commercial teams to reduce friction and improve customer experience. Senior leaders keen to avoid hefty fines and negative press stories related to non-compliance. External requirements from regulators to adapt to new anti-money laundering or supply chain due diligence legislation. Competitive pressures from other companies doing KYC faster, smarter, and more efficiently.
All the while, resources are stretched, and compliance teams are asked to do more with less. There might be fewer people available to do the work as the war for talent rages. There might be a training gap, while new team members get up-to-speed with systems, processes, regulations, and customers. Leveraging regtech will get a compliance team further ahead, but they need buy-in from the top that it’s a “good cost” and worth the investment before vendor selection begins. And choosing the right KYC solution is a whole other ball game...
For companies operating at a “foundational” level, they are fulfilling their regulatory obligations; able to meet stricter regulations in the future; reducing operational costs; and they have peace of mind around the reduced likelihood of fines and reputational damage.
Those companies further up the value chain have all the foundational pieces of their KYC journey in place and can start gaining “motivational” benefits from efficient digital KYC. They can tailor their approach to KYC based on their company’s risk appetite. They are able to improve risk identification and risk mitigation, while also retaining staff who do less manual due diligence and more value-added work. And they have more control over KYC to meet internal and external demands.
At the top of the value stack are the firms operating at an “aspirational” level. These are the companies who have moved beyond satisfying regulators, staff, and internal stakeholders. They have moved towards having a perpetual KYC approach – one that is always-on and provides a 360-degree view of customer data. This single view of customer information encompasses a near real-time picture of risk, but perhaps more exciting is the ability to improve the customer experience. Harnessing their own customer data and insight to cross-sell and up-sell more products; to know the customer so well a product can be offered before the customer even knew they wanted it. And this is where compliance teams converge with commercial teams to add revenue to the business, as well as value and risk avoidance.
Find out more about what these compliance professionals across the US, Europe, and Asia operating in traditional financial, fintech, corporates, and professional services think and feel about how they operate KYC today, and how they believe it could transform in the future.
Download our new report – Perpetual KYC: Transforming risk and compliance.