In the parlance of the banking industry, know your customer or KYC processes are meant to safeguard a bank’s coffers from the taint of money laundering or terrorist financing.
5 Benefits of Using a Pattern-Based KYC Software Application
KYC requires that a bank have its own customer identification program and measures for customer due diligence (CDD). These count for a lot, especially when determining whether a banking transaction was made under suspicious circumstances.
Given the current landscape of modern banking, which is now driven by digital processes and services, it will be a challenge for financial institutions to continue overseeing KYC compliance.
Unfortunately, many banks still subscribe to the same slow, disjointed KYC protocols that depend heavily on flagging single transactions. In doing this, banks run the risk of falling behind financial criminals because they aren’t equipped with the tools to remain a step ahead.
Today’s best practices are rooted in using pattern-based know your customer software or a solution that allows a more proactive approach to threats of financial crime. This kind of solution will help your own bank pre-empt the moves of suspicious characters by detecting their risk levels promptly and accurately.
Investing in a pattern-based application will empower your bank to do more than simply meeting its regulatory requirements for KYC. It will save your institution a lot of money in implementing your KYC processes, and it will ultimately improve your relationships with your legitimate customers.
Here’s a detailed analysis of the benefits of using a pattern-based KYC software application. Consider onboarding one from a reputable provider.
Helps Your Bank Upgrade Your KYC Systems with Minimal Friction
Even if the need to upgrade their KYC systems is apparent, some banking executives may still get cold feet about onboarding new software. They may assume that the software is too complicated and troublesome to integrate with, as well as too expensive.
But this isn’t something your bank needs to endure. If you purchase a pattern-based KYC solution from a trustworthy tech partner, both the implementation and acclimatization processes should be easier than you think.
Your tech partner will ensure that this kind of software syncs up with your existing KYC data, and they will utilize data integration interfaces that you may already have on hand.
In the best-case scenario, your bank will be able to do KYC processes from an updated tech environment with tools straight out of the box. You should also be able to do all this with as little disruption to your operations as possible.
Makes Data Collection Easier and Data Analysis More Thorough
When it comes to upholding KYC protocols, oftentimes the biggest pain point is handling large and complex volumes of customer data. This is especially true if inconsistent, incomplete, or low-quality data are regularly part of the equation.
Not only does this slow down the investigation work. It may also allow risky customers to slip through the cracks because compliance staff is preoccupied with an inefficient system full of false negatives and false positives that need to be checked manually.
A pattern-based KYC solution is made to synchronize with third-party applications using application programming interfaces, or APIs, and may be able to address these concerns with superior features like end-to-end integration for data collection and comprehensive data management.
The software may also come with the ability to auto-screen new customers and find out if their names are on sanction lists, politically exposed persons (PEP) lists, and so on. Suffice to say, banks will not need to do KYC data collection and data management from scratch if their system can arrange everything for them.
Your compliance staff can deprioritize piecemeal data collection and instead, focus on the analysis of troublesome customer behavior patterns.
Enhances Due Diligence and Ensures Quality Investigations
Another pain point that this kind of KYC solution can alleviate for your bank is the need to uphold consistent CDD.
It can do this by kickstarting thorough investigations and using up-to-the-minute investigation tools like graph analytics. This will lead to faster discovery of alarming trends, and therefore faster isolation and resolution of problem cases.
This software can lead you to develop a KYC approach that your bank will be rightfully proud of in front of regulatory boards. It will demonstrate rigor, clarity, and cooperativeness in the management of your KYC requirements, and thus open the door for better audit relationships with your regulators.
Allows Your Bank a Holistic View for Its Risk Assessment
The last thing your bank would want is the experience of being repeatedly blindsided by financial criminals, when in fact many of those risks could have been addressed beforehand.
One of the biggest advantages of using a pattern-based KYC application is full KYC visibility, achieved through a 360-degree view of the bank’s customer base.
A pattern-based KYC software application will be specially engineered to oversee continuous monitoring of your customer population. It can also help you predict risk in a logical manner.
For example, your software should be able to assign real-time risk scores to customers that meet a certain condition. This will allow your organization to assess risk in a timely manner and to implement additional safety measures before malicious agents can infiltrate the system.
Helps You Shear Costs for Your KYC System
A new pattern-based solution will also help you enact more efficient KYC processes that will save your organization a lot of money.
On the granular level, this application will come with features like extensible data and risk modules, both of which will make KYC implementation faster. Your staff will also enjoy completing their KYC compliance work with a more configurable workflow.
Soon, you’ll notice that you’re spending less time reconciling KYC data from your old, siloed legacy systems and doing KYC processes in a more straightforward, more productive manner. A better tech environment for KYC also means less downtime and less money spent on overhead, like maintenance and support.
Ultimately, this will reduce the overall costs of KYC compliance and free up some valuable resources for your bank. This benefit alone makes the pattern-based KYC software worth considering.
Final Words: Better KYC Implementation for a Better Customer Experience
The points above have illustrated the benefits of adopting a pattern-based KYC software application in terms of operations, savings, security, and proficiency with data collection and data analytics.
But you shouldn’t forget that proper KYC compliance is also anchored on customer experience. The implementation of your KYC processes should lead your best customers to trust your brand, not feel alienated or hassled by it.
Luckily, one of the best end results that you can expect from this software upgrade is a smooth, secure customer onboarding experience for your legitimate clients.
By calibrating your KYC efforts and working smarter to prevent financial crime, you will also end up bolstering the system that takes care of valuable customers.
