Smart Automation for Banking & Financial Services Customer Due Diligence and KYC

The enormity of the effort and spend for compliance is best illustrated by Jamie Dimon’s speech to shareholders last year – JPMC spent over $1.6bn on their Compliance Department, employing 13,000 people to ensure they address regulatory issues and compliance. This after they paid more than $16bn in legal penalties in 2015!

Compliance is an expensive game, but failing is even more expense – by a factor of 10 at least.

So it’s no surprise companies spend so much money on compliance. According to a Thomson Reuters 2016 survey, the average bank is spending an average of $40M+ on Customer Due Diligence (CDD) and Know Your Customer ( KYC) compliance according to the. Some are spending upwards of $300M or more annually on CDD/KYC!!

Where there is pain, there is opportunity!

The traditional CDD/KYC remediation process is slow, manual, and error prone. It’s costly and inefficient. This leads to large CDD/KYC backlogs especially because when remediation event occurs. The backlogs and regulatory pressure leads many banks to hire more temporary or permanent staff – throwing more money and people at the problem. At VirtusaPolaris, we have seen some cases where 85% of steps in a KYC process have an opportunity of improvement.

Artificial Intelligence & KYC

Artificial Intelligence & KYC

But how to get rid of the pain?

Smart Automation –

This is a discipline of methodically improving manual processes.

Start with simple automation using robotics for quick wins in cost savings and efficiency like name screening, client list preparation and PEP search.

Next, look for more advance opportunities to increase efficiency by using document scanning and interpretation technology. This utility captures important metadata like SSN, Name, and Address from scanned images of an existing documents like corporate registration or a passport. This data can be automatically populated and verified by the robots.

The Art of the Possible: The peak of automation of Straight Through Processing (STP) – that magical, and seemingly unattainable utopia – can be had with Machine Learning, and Artificial Intelligence (AI). The use of AI predictive analytics and decisioning can conduct transaction or pattern matching and analysis that automatically seek necessary information to satisfy CDD requirements. Imagine – remediation event, gather data, review, complete – all automatically.

So, where to start?

First, identify the most suitable opportunity for automation. Look for a low value, high volume activity that is manual and repetitive where the data is not easily obtained. In the CDD/KYC process, look for Low Risk clients to start – a simpler process.

Be diligent by performing a cost benefit analysis and mark a Return on Investment (ROI) target to achieve. Don’t forget to collect metrics in order to continuously measure and improve the process!

Using technology that leverages robotics, BPM and case management enables operational transformation, agility, and extensibility to change. These tools enable you to achieve your goals and ROI.

Benefits of robotics and BPM to CDD/KYC are plentiful and powerful.

Operationally, automating the manual steps speeds up the rate and throughput at the same time reduces errors which frees analysts to more complex tasks.

Regulatory compliance is improved as the ability to scale to clear the backlog is much easier with robots. Plus the audit trail and transparency from robotics and BPM are a regulators delight. Doing this helps eliminate financial and reputational risk.

Most importantly, automating this process improves the customer experience because of the reduced unnecessary customer interactions to obtain data and allowing the customer to conduct business faster

Finally, this all promotes quicker time to revenue for the bank.

For more information, come join us on May 24th at 11 AM ET for a webinar “Driving higher automation to address the KYC Remediation Challenges”. Register today and reserve your seat for the webinar

Or come visit us at PegaWORLD 2017 technology pavilion June 4 – 7, Booth#4 in Las Vegas for a Demo of our Robotics solution for Pega KYC.

Robert Wichtendahl

Vice President, BPM Practice - Banking Financial Services, Virtusa Corporation Robert has 25 years of technology and business experience, mostly in the Financial Services industry. For the past 14 years, Robert has led numerous BPM initiatives both from a product development and deployment perspective. In addition, he has designed and deployed BPM centers of excellence. Earlier in his career Rob focused on Data Warehousing, Reporting, Business Intelligence, Database Marketing, Operations Re-engineering, and Primary/Secondary Market Research providing him a diversified background. Robert holds a Bachelor of Business Administration in Management concentration in Finance from Adelphi University

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