As the requirements for customer due diligence across the world become more complex, Bart Claeys, Head of KYC at SWIFT explains how banks can ease the burden on their customers by adopting the latest Know Your Customer (KYC) technologies, and can reduce costs and free up resource in the process.
In our competitive financial world, customer experience has become a key differentiator for international banks. For corporates, reducing the operational burden of doing business with their banks has become a top priority, allowing them to focus on adding value to their own customers.
A major barrier to this, and a growing source of frustration both for banks and their corporate customers, stems from the amount of time and effort needed to complete the compulsory due diligence when a new customer is on-boarded or an existing one embarks on a new business activity.
In a 2019 study with EuroFinance, more than 90% of treasurers say that responding to KYC requests is more challenging today than it was five years ago. In addition, over 50% have reduced the number of banks they work with to avoid lengthy KYC processes, negatively impacting banking relationships.
A complex regulatory landscape
Regulation about which due diligence checks must be completed and when varies widely from country to country, and market to market. What’s more, new iterations of existing regulations continue to emerge, such as the EU’s 5th AML Directive, introduced at the start of 2020 to further aid transparency around beneficial ownership identification.
Fulfilling these requirements means keeping KYC information up to date and compliant across all of your relationships, which can be a major burden. A bank’s existing customer can receive multiple KYC requests from different parts of their bank, adding to the complexity. And, as international corporates typically hold relationships with several banks at once, it’s easy to see why KYC has become a major headache for corporate treasury and credit management teams.
Effective due diligence is central to security and risk management
Customer due diligence is important. It allows banks to complete the necessary checks on their customers and alerts them to illegal activities. Done right it can help avoid hefty fines from regulators and protect financial institutions from potential risks such as fraud, money laundering, terrorist financing, and more.
However, banks and corporate customers agree, more can be done to streamline the due diligence processes and free up time to focus on business initiatives that add value.
Registries and their role in improving customer experience
Innovation in the financial industry has given rise to the concept of an online registry. Registries can greatly enhance the customer experience by providing a single, secure repository where corporate customers can upload all their KYC information and make changes as and when they need to.
We’ve been actively supporting the financial community with SWIFT’s KYC Registry since its launch in 2015. The efficiency improvements cannot be underestimated: teams within the bank have managed to free up valuable time and resources, strengthening client relationships over time. We have also seen a direct correlation between risk mitigation and customer loyalty, as the Registry is trusted by the global financial community as a secure platform for sharing sensitive data and complying with data privacy rules.
Find out about SWIFT’s KYC Registry and hear from current users about how it has enhanced and modernised their KYC and due diligence processes.
In an increasingly global economy, financial institutions are more vulnerable to illicit criminal activities. Know Your Customer (KYC) standards are designed to protect financial institutions against fraud, corruption, money laundering and terrorist financing.