Relying on manual KYC is an outdated approach that is expensive and inefficient. Modern automation is thankfully replacing manual methods. This begs the question: how can digital automation act as a tool to streamline KYC for the benefit of financial institutions and their clients?
Traditional KYC and its disadvantages
Know Your Client (KYC) is a set of processes by which financial institutions verify a client’s identity and assess the risk of accepting and enrolling that client. These mandatory workflows protect financial institutions and their clients from illegal activities.
Misusing financial services is a real threat, and KYC blocks bad actors from opening accounts. These threats include (but are not limited to) fraud, money laundering, and financing acts of terrorism.
Traditional KYC is manual and consumes a disproportionate amount of staff time. In turn, this means traditional KYC is expensive for institutions to manage. Furthermore, when workflows depend on manual work, carried out methodically by staff, the enrollment process gets delayed. These delays are costly for financial institutions and frustrating to clients.
The major drawbacks of manual KYC include:
- Demand for continual staff training
- Updating workflows is time-consuming
- Greater risk of human error
- Slower approval processes, which means there is a greater risk of clients abandoning enrollment.
How automation streamlines KYC
Advances in technology have made it possible to automate the entire onboarding process. Automated KYC tasks can be seamless and streamlined to companies' enrollment workflows.
For example, mobile onboarding and KYC is popular for clients and profitable to companies.The tasks of establishing and verifying identity can be quickly done with a smartphone. A client can fill out online forms and upload an image of their government ID. If the clients makes a data entry error, they are prompted to make a correction.Then the software conducts identity and security checks, which are a critical part of KYC. Once completed, verified data is stored in secured databases for client service representatives to view.Automation can be tailored to the specific workflows of an institution. If an institution manages documents, then optical character recognition (OCR) features are added to the workflow. Furthermore, development can be future-oriented and automation can evolve as the company grows.
Key benefits of automated KYC are as follows:
- Increased speed of verification and enrollment, as compared to manual methods
- Fewer staff resources involved in repetitive tasks
- Greater client and staff satisfaction due to less friction in the onboarding process
- Changes in KYC processes are faster and less expensive to maintain
- Accurate data capture and fewer costly errors.
In summary, automated KYC workflows have dual benefits to both the client and the company. First, the client can enroll in financial services faster and with fewer barriers to enrollment. So, the client will be less likely to choose a competitor with automation in place. Second, the company benefits by having staff more focused on client services and less on repetitive paperwork.
Moxo’s OneStop Client Interaction Hub modernizes client onboarding and KYC workflows for profitable, long-term engagements. Contact us to learn more.
