Financial institutions, especially those dealing with large deposits, such as capital management firms, face a dilemma when it comes to meeting Know Your Customer (KYC) requirements, collecting anti-money laundering (AML) data, and other regulatory requirements. On the one hand, firms and their consultants must follow these rules – they are by no means mandatory. On the other hand, rules can be cumbersome and create friction at key customer contact points – such as opening a new account and adapting – it takes time and makes customers ’work more unpleasant.
The combination of increased customer expectations due to the digital experience, changing demographics and increased competition from robot advisors means that capital management companies and other financial services are facing increasing pressure to make data collection for KYC as smooth and painless as possible.
Let us consider effective strategies for actively managing the process of gathering information and backup documents for KYC in such a way as to ensure compliance with regulatory requirements while ensuring fast and easy use by customers.
Technology integration overcomes problems with opening a new KYC account
The trend of opening new accounts entirely online has intensified for some time, but has been accelerated by the aftermath of the COVID-19 pandemic.
According to Deloitte, 63% of capital management clients claim that online interfaces are a key component of their consultant firm’s satisfaction.
And while this may be great news for consumers, it’s a severe headache for financial services companies that need to know exactly who these new applicants are. Violation of the rules due to improper verification of applicants means more than just a blow to the wrist: financial firms have been fined $ 26 billion in sanctions for non-compliance with AML and KYC since 2008.
The best way to avoid non-compliance while opening an account, whether online or in person, is to consider collecting data for KYC processes as part of a technology ecosystem designed specifically to minimize compliance risks. Using key integrations, capital management, retirement and other financial institutions can automate the process of assessing the risk of default by potential new customers.
Transformation of data collection for KYC during client adaptation: from static forms to dynamic conversations
Today, the process of collecting KYC data for identity and risk assessment often begins with a static PDF form that cannot be filled out. In addition to being tedious and time consuming, the problem with these forms is that the consultant or firm needs to re-enter the information. This manual effort leads to high failure rates (NIGO) and difficult resources to correct information manually.
In addition, KYC regulations require photographs of a state ID card, such as a passport. But investors don’t have the ability to effectively complete the data collection process simply by using the camera of their mobile device while filling out the adaptation documentation.
Financial services companies need a solution that organizes digital communication with customers by establishing two-way interactive conversations. If customer information already exists in the CRM solution, why does the customer need to enter it again? Instead, they can simply make sure the information is correct and update as needed. Give them the opportunity to start and stop digital interviews on different devices as needed and allow them to collaborate while receiving information from their spouse or other co-investor. The less time clients and financial advisors need to spend collecting data for KYC, the more time advisors need to build meaningful relationships.
More than 40% of capital management firms already offer digital adaptation, and it is expected that almost 70% will offer digital adaptation by 2022. According to Gartner, 82% of capital management companies are investing in technology for customers in the next two years.
SmartIQTM, a managed digital interview solution from Smart Communication, uses open APIs connected via Conversation Cloud ™ to automatically send data to third-party systems to verify customer identity. The solution also integrates easily with other tools specializing in data connectivity and case management for KYC risk assessment, such as OneSpan and Pega.
A managed digital interview solution, such as SmartIQ, is changing the whole dynamic of customer engagement in financial services. Instead of the tedious process of filling out paperwork, counselors can turn adaptation into a pleasurable experience that sets the tone for the relationship at the earliest stage. There is a huge difference between an exciting conversation about how best to secure a client’s financial future, and “Name? Last name? Address? ” Advisors should ask themselves, “What experiences will clients return to and tell their friends?”
Create a powerful personalized experience – one customer at a time
After all, customers want to feel special, whether they’re investing $ 10,000, $ 100,000 or more. They want to feel that they enjoy preferential terms, and can avoid common tasks that are considered costly, such as filling out documents. Unfortunately, static PDF forms send the opposite message. And although certain data points are required to maintain KYC, the data collection approach may affect or disrupt the customer experience.
SmartIQ allows capital and pension management companies to avoid filling in information that already exists, but still obtain the necessary data for KYC, AML and other compliance standards. Being able to do it from anywhere on any device makes discerning customers feel like a name rather than a number. This shows that counselors care enough about clients ’experiences to invest in technologies that make their lives easier. This is the essence of personalization – meeting with customers with experiences that they feel were designed exclusively for them.
As we have seen, financial services firms can be active in eliminating the frictions caused by KYC data collection while maintaining full compliance with the rules both now and in the future – while providing the personalized experience that high value people expect. . With the right technology, managers no longer have to choose between strict KYC compliance and a fantastic customer experience.
https://bankautomationnews.com/allposts/business-banking/how-financial-institutions-can-remove-friction-from-data-collection-for-kyc-and-aml-compliance/ How financial institutions can eliminate data collection issues for KYC and AML compliance