Technology and data are key to helping Financial Institutions (FIs) achieve the goal of creating the frictionless client journey. Good data is crucial for enhanced compliance, enabling a superior customer experience and improving operational efficiencies, especially through automation.

Yet, as we covered on a recent webinar, many FIs struggle to manage data effectively. In this post, we discuss how to unlock the enormous potential of data to digitally transform KYC (Know Your Customer) and regulatory compliance.

Data management remains the Achilles’ heel of client onboarding and KYC

Our research finds that 81% of FIs believe that poor data management lengthens onboarding and negatively impacts the client experience. Robust data management is key when using data to make informed decisions, yet we also observe that three-quarters (74%) of senior decision-makers believe that data management is overlooked strategically, despite its clear value to the business.

The challenge for FIs is to understand how they can digitalize their processes today to make their client journeys more effective.

Some of the biggest data management issues are around client onboarding, Know Your Customer (KYC) compliance and other regulatory requirements. Customers are often contacted multiple times to run through the necessary compliance checks. Many FIs find that this high-level of contact can be a source of friction and negatively impact client relationships.

A good client experience is no longer just ‘nice to have.’. The churn of potential customers due to a poor experience can add up to $10 billion per year in losses, Fenergo finds, when you evaluate the lifetime value of a client.

Digitalization is the backbone of modern financial services

Digitalization plays a key part in solving the problem of poor client experience. Many FIs are already using digitalization and automation to improve the customer journey whilst meeting the rapidly-evolving regulatory requirements.

The increased regulatory burden means a significant increase in the time and effort required to maintain compliance. Removing as much of the manual processing as possible allows FIs to work more efficiently both in the short and long term, saving time, effort and money.

Even just increasing automation by 10% could make a significant difference to the client experience, operational costs and manual input time. FIs can leverage the lake of data they have to enhance surveillance and transaction monitoring, and strengthen Anti-Money Laundering (AML) and KYC controls.

Through digitalization, FIs can reduce paper-based manual processes by leveraging data and document automation, risk assessment, intuitive dashboards and reporting, and use of digital signatures and Identification and Verification (ID&V).

The industry is moving towards digitalization

“As an industry, we’re heading towards data and document aggregation using external partners,” says Nicola Poole, Global Head of Client Lifecycle Management at Banco Santander.
“We need to be able to use Machine Learning for those repeatable processes, so we can automate them and digitalize to use that data in a more effective way. Through the use of automation, we can save time and focus more people hours on value-add services.”

Technology isn’t the only component of successful digital transformation. As well as using trusted tools and technologies, FIs need to put a robust data management process in place in order to fully leverage their data. Successful automation is driven by data, so as you’d expect, data management is a vital part of the picture. FIs must ensure that their datasets are relevant, well-maintained and appropriately labelled with searchable tags.

New technologies can only be as accurate as the data that drives them, so creating strong data management processes should be part of every FI’s digital transformation strategy.

For more tips about how to make digitalized compliance a reality, you can listen to our webinar, Unlocking Real-Time Digital KYC: How to Ignite Review and Minimize Client Disruption, here.

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