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Automating and Enhancing the CLM and KYC Journey in the Digital Age

In the rush to fulfil their Know Your Customer (KYC) and Client Lifecycle management (CLM) obligations1, many Financial Institutions (FIs) have established large compliance departments. Often unwieldy and inefficient, these can comprise thousands of full-time employees (FTEs) engaged in repetitive customer due-diligence and onboarding tasks. Faced with continued pressure on their margins, however, and more demands to comply with regulation, FIs are now looking to eradicate some of the meaningless ‘busywork’ involved across the customer lifecycle, to save costs and to reallocate employees to more complex, investigative tasks. Banks also need to eliminate silos, both internally and to improve their clients’ experience.

One key tool in achieving these goals is automation, enabling FIs to assist or even replace FTEs with relatively low-cost technology. Increasingly, FIs are also looking to enhance the effectiveness of their KYC and CLM processes with specific functionality – notably robotics, integrated solutions and Artificial Intelligence (AI) – to combine precise, configurable case management, processes and rules with the adaptability and flexibility these capabilities offer. FIs also need to be able to scale automation across lines of business, geographies, KYC rules, products and channels.

But automation does not work for every process in an FI. Before institutions can determine where to deploy it most effectively, they must assess which aspects of a particular process are best suited to it. KYC and CLM processes, and their components, are particularly well-suited to the techniques automation offers2.

In this report we:

  • Examine these processes.
  • Consider why automation is a useful tool for them.
  • Suggest how FIs can develop a strong automated KYC process, while driving front- to back-office onboarding, transparency and competitive differentiation.

1 - Such as the Foreign Account Tax Compliance Act (FATCA) in the US and the Fourth European Union Anti-Money Laundering (AML) directive.

2 - The customer lifecycle generally encompasses commercial and financial considerations as well as risk concerns; KYC is essentially the ‘risk’ component of CLM.