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Jul 01, 2022

5 Benefits of Digitising Know Your Business (KYB) Processes

The onboarding journey is one of the first impressions a corporate client has of a financial institution. Digitising the Know Your Business (KYB) process can enhance client satisfaction and strengthen a bank’s competitive advantage.

A vital aspect of risk management, robust KYB compliance involves stringent checks to verify the identity of a business, its company structure, beneficial owners and business activities.

This due diligence process enables banks to determine the authenticity of business entities and investigate whether those entities have been involved in illicit financial activity such as fraud, money laundering or corruption.

Challenges of manual onboarding procedures

Compliance departments have traditionally been late adopters of digitisation due to the intricate nature of KYB procedures. It can take up to a month to complete a manual onboarding journey for corporate clients.

Made up of a sprawling web of controlling entities and individuals, corporate entities can be complex to verify. Compliance teams need to sift through fragmented information from disparate sources to identify beneficial owners, business relationships, key assets and high-risk transactions.

This manual collection and cross-referencing of data can consume a huge amount of time and resources. Littered with various friction points, multiple requests for information and cumbersome paperwork can lead to delays for approval. Besides being prone to human error, manual onboarding also increases the cost of regulatory compliance.

Benefits of digitising KYB processes

The COVID-19 pandemic has accelerated the adoption of digital technologies across the financial services industry. For some banks, digitising the KYB process is long overdue.

From document collection and data assessment to ongoing monitoring and reporting, digitisation is an investment that will pay off in the long haul. It can automate the retrieval of incorporation documents and key personnel details from official online business registries, as well as instantly update changes to company structures, personnel appointments or shareholdings.

While the task of digitising corporate onboarding can initially be arduous, the benefits outweigh the challenges.

1. Seamless customer experience

Digitising corporate onboarding represents a unique opportunity for banks to rethink the customer experience from the first touchpoint. This shapes the corporate client’s view of the financial institution and builds a solid foundation for the business relationship to grow on.

A seamless and painless onboarding process can enhance trust and build client loyalty.

2. Streamlined onboarding process

KYB automation speeds up corporate client onboarding by reducing touchpoints. Digital capture and verification of client identity, as well as the use of artificial intelligence to streamline document processing, removes the need for multiple trips to the bank for document submission and verification. This significantly shortens the time needed to validate the legitimacy of corporate entities.

3. Improved data accuracy with relevant real-time information

Automated data extraction and identity verification from certified and recognised sources such as RegTech’s Know Your Customer reduces the risk of error and protects the integrity of data. Tapping these external databases also facilitates the tracking of material changes to the corporate entity. Whenever changes occur, information can be updated in real time, ensuring high levels of data accuracy.

4. Better risk management

With KYB automation, the entire due diligence process becomes more transparent as there is a documented audit trail and clear step-by-step workflow. The strategic use of technology empowers compliance teams to embed governance and control into business practices, minimising human error. Compliance teams are better-positioned to detect and investigate anomalies or red flag transactions.

5. Increased operational efficiency

Given fewer touchpoints, streamlined processes and increased data accuracy, banks can unlock operational efficiencies through KYB digitisation. This translates to reduced compliance costs in the long run.

Better compliance, greater satisfaction

It is clear that KYB digitisation can transform the corporate client onboarding journey. Financial institutions can fulfil their regulatory obligations while orchestrating a positive experience for both corporate clients. Ultimately, a seamless customer experience from the onset can extend the longevity of the business relationship.

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