Introduction

Over the years, our collaboration with various banks and fintech has targeted critical industry challenges including legacy systems, compliance hurdles, and manual onboarding routines. This case study showcases our endeavors to refine Know Your Customer (KYC) processes for both traditional banks and fintech companies.

Our primary objective was to elevate compliance standards and enhance the customer experience by incorporating cutting-edge technologies that streamline operations and minimize reliance on manual procedures. This case study details our systematic approach to improving KYC practices at banks, elaborating on the innovative technologies deployed, the obstacles we overcame, and the significant enhancements in operational efficiency and customer engagement that followed.

Challenge

Banks and fintechs are contending with outdated KYC systems characterized by slow, poorly integrated legacy software, a common issue in the compliance technology industry. The onboarding process involves navigating regulations, extensive manual document collection, and complex workflows tailored to different customer segments. These inefficiencies lead to high error rates and hinder the ability to onboard new clients effectively. Typically, it takes 30 to 45 days to onboard a corporate customer with legacy systems, which exceeds industry benchmarks for efficiency.

Competitive Analysis

The KYC solutions market is diverse, with options tailored to a wide range of institutional needs, from large multinational banks to small financial startups. To effectively address the bank's needs and identify the optimal solution, we categorized the potential KYC solutions into three primary types:

• Enterprise Solutions: These are comprehensive platforms designed for large-scale operations and typically offer a full suite of services, including customer due diligence, ongoing monitoring, and risk management. Companies like NICE Actimize and Oracle Financial Services are notable players in this category.

  
  

• Mid-Market Solutions: These solutions are targeted at medium-sized businesses that need efficient KYC capabilities but with less complexity than those required by large enterprises. These platforms offer a good balance of functionality and ease of use, with less customization than enterprise solutions but more than basic tools. Examples include Clear View KYC and ComplyAdvantage.

  
  

• Basic Tools: Aimed at smaller businesses or startups, these tools provide fundamental KYC checks and are designed for ease of use with minimal setup. They lack the depth and breadth of features found in more comprehensive systems but are also less expensive and easier to implement. Players in this segment include IdentityMind and Trulioo.

  
  

• Bespoke Solutions: Often adopted by organizations with unique requirements, these solutions involve tailored processes that typically require significant internal effort. They are often not as scalable or efficient as automated systems but can be customized to specific operational needs.

Process

The discovery and integration process was planned keeping the end customer journey and stakeholder touch points as the primary basis. 

• Stakeholder Engagement: To effectively address systemic inefficiencies and enhance the KYC process, we initiated comprehensive workshops and interviews involving compliance, operations, IT, and customer-facing teams. This collaborative approach helped identify critical pain points and system requirements, laying the groundwork for targeted improvements.

  
  

• User Journey Mapping: We conducted detailed mapping of the customer onboarding process to better understand the data flow and interaction sequences. This step was crucial for visualizing the entire onboarding journey, from initial contact to full integration, ensuring that all touchpoints were optimized for efficiency and compliance.

  
  

• Data Point Collection: This phase involved identifying critical data points necessary for compliance and risk assessments.

  
  

• System Integration: Essential integration of the selected platform with the bank’s core banking system, Flexcube, as well as with mobile and internet banking platforms, ensured seamless data flow and real-time updates.

  
  

• RFP Process: The process involved drafting clear specifications and criteria, inviting vendors to submit their solutions, assessing these proposals based on functionality, integration capabilities, compliance, and cost, and finally selecting the vendor that best met the organizational needs for effective fraud prevention and detection

Solution

Choosing the right tool to enhance our KYC/CDD processes involved a detailed selection process. After a thorough Request for Proposal (RFP) process that evaluated several leading solutions, we chose NICE Actimize for its robust Customer Due Diligence (CDD) and Suspicious Transaction Monitoring capabilities. The decision was influenced by Actimize’s seamless integration with existing systems and its strong reputation for regulatory compliance.

Key features of the NICE Actimize solution include:

• Comprehensive Risk Assessments: The system employs threshold and machine learning models to provide precise customer risk assessments, adapting to changing risk patterns.

  
  

• Case Management: Utilizing 'four-eyes' and 'six-eyes' principles, our system ensures rigorous scrutiny through structured alert generation assessments and processing.

  
  

• Customer Profiling: The Customer Due Diligence (CDD) module segments customers based on risk factors, enabling targeted risk management.

  
  

• Ongoing Monitoring: AI and machine learning are used for dynamic, event-driven risk management, enhancing responsiveness to potential threats.

  
  

• Automated Dow-Jones Checks: Perform name screenings using Actimize’s watch list filtering functions, checking against sanctions, watchlists, blacklists, PEPs, and internal lists.

  
  

• Custom and Standard Risk Factors: Defined risk parameters using both custom and standard risk factors from the CDD module to meet the needs of the different client segments.

  
  

• Custom APIs:  Secure custom API for Watch list filtering for all client segments and an API for automated customer risk calculation in real time.

Impact

The meticulously executed discovery and integration processes led to significant improvements in the bank’s KYC operations:

• Efficiency Improvements: The redefined KYC process cut onboarding times dramatically. For retail customers, the onboarding time was reduced from 5-7 days to just one day. For corporate customers, the onboarding process was shortened from 18-30 days to just one week. 

  
  

• Enhanced User Experience: The streamlined processes not only benefited the bank's clients by reducing wait times but also improved the working conditions and morale of the bank's staff by eliminating tedious manual tasks.

  
  

• Regulatory Compliance: With improved data handling and systematic processing, the bank enhanced its compliance with stringent AML and KYC regulations, reducing the risk of penalties and fines.

Lessons Learned

• Holistic Product Development: It’s essential to integrate lean practices, user involvement, and market validation with the right expertise to bring a product successfully to market.

  
  

• Strategic Metrics Use: Metrics should inform decisions, not dictate them. Balancing quantitative data with qualitative user feedback ensures products meet real needs.

  
  

• Feature Prioritization: Overloading a product with features can lead to complexity and maintenance challenges. It’s vital to validate the necessity of each feature.

  
  

• Effective Capital Allocation: Distribute investments wisely between feature development and revenue-driving activities to ensure sustainability.

Conclusion

The KYC transformation project at the bank significantly streamlined onboarding processes, cutting down times and bolstering compliance. The integration of NICE Actimize enhanced risk management and customer service, establishing new benchmarks for efficiency and regulatory adherence. These improvements were validated during subsequent audits, demonstrating compliance with industry-specific regulatory standards.

Our proven expertise in implementing complex transformations in regulated environments makes us well-equipped to support your organization's journey toward enhanced operational efficiency and compliance.