• Steve Hadaway, Chief Revenue Officer at Encompass Corporation


• 01.12.2023 10:00 am
#RegTech

Financial institutions are juggling increasing customer demands and a regulatory landscape that is going through a period of accelerated change. To manage this hefty combination, banks must digitally transform their processes, with RegTech providers offering the technology-powered solutions needed to forge ahead. 

Today, there is no denying that customers demand a faster, smoother and more value-adding end-to-end journey than ever before. Consequently, the potential rewards for meeting these expectations act as incentives for institutions slow to embrace digital transformation.

With organisations striving to offer a frictionless experience while also prioritising compliance, a key consideration is the Know Your Customer (KYC) process, during onboarding and as part of periodic customer refreshes.

Although mandatory and allowing institutions to verify clients’ identities and flag potential risks, if executed manually this can be time-consuming and aggravating for customers, and expensive for banks.

Because of this, historically KYC due diligence has been seen as a bottleneck, which can impact the bottom line by leading to customer abandonment. This is where trusting in innovative RegTech solutions, and KYC process automation, for example, can have huge benefits – for a bank and its customers.

Leveraging KYC automation can overcome many of the obstacles holding banks back from a best-in-class customer experience, with it being shown to decrease the onboarding period from 12 days to just two days. 

Staying competitive in a crowded market

For banks, the market is more competitive than ever, meaning delivering a first-class service and experience is an imperative. Those who don’t will simply fall behind. 

To keep up – and get ahead – managing customer relationships effectively is critical. Often requiring extensive documentation and verification, a manual onboarding process can result in lengthy, fragmented cycles. Other challenges can arise, such as the cost and complexity of accessing scores of trusted and accurate data sources, managing jurisdictional nuances, and navigating the workload faced by analysts. This means that customers can be left feeling frustrated, and it is not uncommon for them to seek alternative options. For the bank, revenue – and future opportunities – may well be lost.

With automation, digital KYC profiles can be built in minutes. This removes stumbling blocks, takes strain from analysts and reduces time to trade by more than 40 per cent. The result? A smoother journey that increases customer satisfaction, resulting in an enhanced reputation, loyalty and, ultimately business growth.

Now, banks can address these issues before they take hold, reducing their overall KYC spend and optimising activities with the customer in mind. Automation delivers speed, agility and robustness, while having real-time access to the data required for investigations also reduces the need for customer outreach, encouraging better engagement and facilitating retention.

Balancing operational costs and demonstrating ROI

As operational costs continue to rise throughout the industry, it is the job of banks and, typically, Chief Operating Officers to balance these with the need to onboard customers quickly. Here, technology is, without question, the answer. As research predicts that global RegTech spending will hit $207 billion by 2028, the urgency and demand for solutions that can drive success is clear. 

The financial landscape is constantly moving, meaning banks need to be responsive to customer needs, competitive pressures and regulatory developments. Not only does utilising best-in-class RegTech allow institutions to respond to emerging market opportunities, but it also means they can ensure continued efforts by acting upon regulatory change as it happens.

This is because, with digital KYC profiles, they can have access to the critical data required for investigations while being able to monitor change and update customer profiles in real-time. This supports a rigorous, effective approach that fully automates the KYC search in as little as eight minutes.

In the long run, embracing KYC automation and technology-first platforms will provide a demonstrable return on investment as shortened cycles and streamlined processes drastically reduce time to value.

The cost of inefficient KYC, on the other hand, is too high to ignore. To keep customers happy while meeting obligations and setting the path for growth, automation is no longer a nice-to-have, but an absolute must.

Forward-thinking institutions know this and are already unlocking the vast gains it can bring as they work towards their business goals supported by robust, effective processes.

For businesses today, and particularly financial institutions, technology provides some of the most valuable differentiators there can be. This includes an unbeatable customer experience, and it is for that reason – and more besides – that the time to harness the power of RegTech solutions is now.