Specialist banks exist because they are special, meaning that they provide their customers – whether individuals or corporates – with a high quality of service or with exotic financial products or services.
They are responsive, reactive and proactive, with a vision of being completely digital – from processing transactions and providing information through to customer support.
The theory is simple: no legacy infrastructure or archive systems that require regulatory-based maintenance, but rather a simple and frictionless process of customer on-boarding and servicing. However, the small detail of legislation may slow things down just a little.
In Europe, this year's update to the European anti-money laundering regulations – AMLD4 – means that more companies need to perform the know your customer (KYC) process on more of their customers as well as to identify additional information, such as beneficial owners. Globally, the political focus on terrorist financing and tax evasion is intensifying. And, as more customers transact online at unprecedented levels, they are no longer effectively serviceable with offline processes that involve paper copies or visits to solicitors as part of the KYC process. So, the challenge for firms worldwide is to look at more efficient ways of dealing with regulatory and market pressure or risk being a brand which customers do not wish to interact with.
The current KYC process is unwieldly and involves endless paper. Copies of company documents are requested directly from new customers, to be manually processed by a compliance officer in order to identify the beneficial owners and controlling individuals of a company. Specific KYC documents are then requested.
This scenario hardly feels special, especially when it can take weeks rather than the hours specialist banks want to offer their clientele. But there is another way: technology solutions from companies such as Know Your Customer (a digital solutions provider that quickly and accurately identifies and verifies companies and individuals prior to client on-boarding) have completely altered the verification and compliance process so that banks can deliver on their promises. This technology digitises and automates more than 90% of that process and cuts down KYC/AML processing times for corporate customers from, typically, three weeks to one day. As well as the obvious benefits of a much faster outcome, the system is more secure than the current manual process as it eliminates errors in manually transferring names and dates from paper documents to AML database solutions. It also uses algorithms for consistent government ID verification, so that information is always up to date and comes directly from official sources – ensuring that the potential for fraudulent documents is eliminated.
Specific features of such technology include:
• only using government data sources in accordance with AML regulations
• delivering documentary proof (filing documents) necessary for full AML regulation compliance
• automatically identifying beneficial owners – and unbundling complex corporate structures to identify the ultimate beneficial owner;
• generating corporate structure charts from the data so compliance gets the full picture
• offering customers a mobile document collection app.
This is not a case of 'using technology to eliminate the need for a compliance manager', but rather of identifying how technology can accelerate the process and break down information stovepipes created by manual processes in any business – old or new. Macro-regulation is likely to become even more complex in the future. Using specialist technology and digitisation to manage disparate data sources quickly and effectively will be key in helping specialist banks to stand apart from their more traditional counterparts.
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