The financial industry is one of the most heavily regulated there is. As such, it is imperative for financial institutions to have as much data as possible when making decisions, and to be able to parse it correctly. KYC requirements are nothing new to the sector, but with ever-changing legislation across various jurisdictions, top-notch software is becoming less a luxury and more of a necessity.
Currently, institutions are still struggling with KYC-related issues, according to a survey organized by JWG. Researchers found that AML compliance and financial crimes avoidance posed the biggest challenges to financial organizations last year — nearly 60 percent reported it as their biggest difficulty in 2013. In addition, when questioned on which function was under the most pressure from KYC initiatives, "compliance and regulatory reporting" was the most frequent response.
An article in Banking Tech explored the various benefits that KYC-enabling software can have for a financial institution, even beyond solving these issues.
"It is natural that firms are focused on the near-term operational and compliance challenges arising from KYC regulations. Yet, despite regulatory deadlines and the very serious questions related to compliance, the industry must begin to view KYC not as a burden, but as an opportunity to use customer insights to create competitive advantage and reduce risk," explains author David Bannister.
One of these ancillary benefits of streamlining the KYC process is that it allows institutions to better focus on customer service and retention. When valuable man-hours aren't tied up in slogging through customer data, resources are opened up that can be devoted to more profitable pursuits.
