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How effective KYC management may increase your profit?

Effective KYC management can give you a competitive edge in addition to protection and compliance benefits.Businesses are quickly understanding that enhancing KYC management may benefit the entire company; by converting wasteful, inefficient procedures and enhancing customer experience, it can have a demonstrable influence on the bottom line.

By using new technology to simplify KYC processes for both internal and external stakeholders, operations teams can take the lead on this path.

Let’s examine how effective KYC management can increase your bottom line and how RegTech solutions can help.

Value creation through effective KYC management

KYC is a crucial step in maintaining compliance and lowering the risk exposure of your company. However, the value of effective KYC management goes beyond legal requirements.

From a functional standpoint, KYC presents a significant chance to enhance your company’s performance through effective procedures, a positive client experience, and data visibility. According to research, the average yearly operating expenditures for preventing financial fraud have increased by almost 43%. This is partly because anti-money laundering (AML) laws are becoming more stringent and regulators are placing higher standards on financial institutions (FIs) in terms of the volume, quality, and timeliness of the consumer data they collect.

The growing compliance teams’ workload poses a number of problems for banks:

  • While the overall workload rises with the number of customers, those currently using manual methods will see their costs soar.
  • The customer experience may become more difficult as a result of the additional data gathering and input required from customers for more complicated checks.
  • Pressure to speed up onboarding may put stretched compliance teams under stress, which increases the possibility of mistakes or skipped tasks that might expose banks to regulatory fines.

What RegTech means for banks and other financial organisations?

By using RegTech solutions to streamline antiquated processes, operations leaders have the chance to take the lead in resolving these problems.

With the introduction of RegTech software, there are now more chances than ever for effective KYC management, automation of manual procedures, reduction of human input, enhancement of customer service, and risk reduction. These technologies can handle a sizable portion of the data sourcing, retrieval, and collation required for corporate KYC due diligence, freeing up compliance teams’ time to work on more difficult issues and enhance customer service.

Businesses that deliberately employ these solutions to fill in the gaps in their KYC process have the chance to gain a competitive edge in the market by growing their client base and lowering growth costs and operating costs.

To do this, however, operations leaders must take an active part in arguing for change and digital transformation for KYC .

Three ways that effective KYC management can increase the bottom line of your business

Through the KYC journey and beyond, more effective KYC management strategies can have an impact and lay the groundwork for more beneficial connections and business-wide processes.

1. Enhanced client experience

The onboarding process is your consumers’ initial contact with your business, and it may make or break a relationship. Making the correct impression early on is essential to fostering long-term customer happiness, loyalty, and advocacy in a market where corporate clients are becoming more and more competitive.

As a result, onboarding has emerged as a key area of competition, with banks striving to maximise speed and minimise pointless encounters related to information and document demands.

Driving effective KYC management with the help of a RegTech platform that easily interacts with reliable third-party data sources saves client-side effort and speeds up onboarding by eliminating the need for administrative involvement. Customers claim that effective implementation of RegTech solutions, such as KYC automation software, drastically decreases onboarding time, narrowing the window for delivering value to customers and increasing customer retention.

2. Enhanced operational effectiveness

The cost of KYC and AML compliance is rising for financial institutions. The resources needed to manage the workload in the face of expanding AML rules are a major factor in this.

For KYC due diligence, banks and FIs must now gather and verify a larger variety of data than ever before. Additionally, without access to reliable data sources, costs may rise too quickly. Data quality issues can cost financial organisations up to 26% of their operational expenses, according to McKinsey research. This is brought on by non-standard data formats, redundant information, and information that needs manual examination.

In order to enrol clients more quickly and reduce risk, modern RegTech systems may instantaneously access numerous sources through connections with external data providers. This decreases the need for additional document sourcing and boosts the efficiency and capacity of compliance teams.

3. Less Risk

For FIs, regulatory vigilance is still intense, particularly with regard to AML violations. AML fines totaling hundreds of millions of dollars were imposed on banks and other financial organisations last year, setting a record.

The rise of RegTech solutions that can reduce the potential for human error and enable more effective management of KYC due diligence means that these risks can be significantly reduced, along with costs. Previously, some institutions had viewed fines for AML breaches as simply a cost of doing business.

FIs may improve data quality and depth throughout onboarding, KYC remediation, refresh, and permanent KYC by utilising a KYC process automation platform (pKYC). While reviewing a potential client, automated workflows lessen the likelihood of missing information.

It’s time to establish an integrated KYC procedure

The efficiency of KYC will be a crucial area of competitiveness for FIs as the burden of KYC compliance, and risk management increases. Through the use of contemporary procedures, safe data, and efficient risk mitigation, those who can embrace RegTech and the advantages of digital KYC will be able to provide value for all customers and stakeholders.

Encompass works with top international banks to increase the value of their KYC procedures. We specialise in bringing a new perspective to current manual procedures as a dependable technological partner. This includes smart process automation, access to external primary and premium KYC data sources around the world, digital KYC profiles, and dynamic audit trails.


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