KYC Automation: Benefits and Implementation

KYC Automation: Benefits and Implementation

Know Your Customer (KYC) is an essential process for the wealth management industry. Not only does it ensure compliance with various regulations, but it also mitigates risk, establishes trust between your business and your customers, and can refine the first impression you provide.

Despite that, KYC has always been approached reluctantly because of its high cost both in time and labour, as well as numerous inefficiencies and a lengthy verification process. Thankfully, technological advancements in KYC automation have greatly reduced or outright eliminated all these issues. 

This article will go over the KYC steps that can be automated, their benefits and provide useful implementation tips. 

Understanding KYC Process Automation

KYC process automation refers to the use of technology to expedite and streamline the client data-gathering process and regulatory verifications. The automation of this process can apply to several stages like information gathering, distribution, form filling, e-signature and data storage. 

Benefits of KYC Process Automation

Automating your KYC process can provide a wide array of operational improvements and cost savings. As with any software solution, the initial investment and training can seem daunting, but KYC automation always ends up paying for itself.

Here are the main reasons why:

Cost Reduction

Traditional KYC processes involve a lot of manpower to process costly paper forms that must then be replicated over and over. Automating KYC allows you to run an overall leaner operation while reducing potential fine risks by improving data quality and transmission. 

Improved Accuracy

When executed by human workers, KYC is extremely prone to error. When it comes to the data involved in wealth management, those mistakes are particularly damaging. Improper KYC data can not only result in regulatory sanctions, but it can also have deeper consequences by hurting the trust and relationship you’ve nurtured with your clients. 

Enhanced Compliance

KYC regulations are in a state of constant evolution to keep up with ever-changing financial environments and money laundering attempts. Digitization of forms and automation allows you to edit your processes to conform with new regulations in a few clicks instead of having to manually change your entire library of physical forms. An automated KYC process also allows you to have a more auditable process and pull any kind of client information at a moment’s notice.

Faster Onboarding 

When digital onboarding is lengthy, clients get frustrated and often abandon the account opening process altogether. Automating KYC speeds up the onboarding process and makes it convenient for all parties involved. This smoother experience is a clear operational benefit, but it also makes your organization look structured and methodical.

Implementation of KYC Process Automation

As with any technology implementation process, your organization must have a robust plan to guide your employees and clients through every step. A business task like KYC ends up transmitting a lot of sensitive information and should be taken very seriously.

Assess Current Processes

The crucial first step in any automation process is to survey your current way of doing things to identify the steps you’d like to handle using technology. While KYC automation is often used to improve the efficiency of your employees, it also has a notable effect on your customer experience. For this reason, it’s important to map out your customer journey to see which actions would benefit from automation. 

Choose the Right Technology

Selecting the software you will end up using to handle your KYC is a decision that can make or break your implementation. While it can be tempting to select a variety of tools to handle all the issues you might encounter, it’s often best to select a solution like Mako that provides an all-in-one KYC experience while still integrating with all the tools you may currently rely on.

Data Integration and Migration

It’s one thing to automate your data gathering, but it’s even more important to have a good plan to store it and integrate it with your existing client records. For example, Mako integrates with the most popular CRMs in wealth management and offers simple and convenient data export options. 

Employee Training and Change Management

With technology joining wealth management workflows, employee buy-in is almost more pertinent than executive buy-in. Even with a perfect implementation, if your employees can’t integrate the chosen software into their day-to-day lives, it’s destined for failure. Make sure you collaborate with your software service provider to build a strong training plan and ongoing checkups to ensure the KYC automation is having the desired effect on your organization.

Continuous Monitoring and Optimization 

KYC automation should not be seen as a set-it-and-forget-it software. Workflows and the gathered data should be regularly monitored to detect any potential issues. It’s also a good idea to interview your employees and clients every quarter to see their satisfaction level with your KYC automation solution and how it could be improved. 

Transforming KYC Through Automation

Paper forms are hard to refer to once filled and are extremely prone to human error during the transcription process. With ever-changing financial regulations, having an antiquated KYC process will quickly become a liability. 

KYC automation is a versatile and efficient technological innovation that provides incredible efficiency boosts to wealth management offices. Impacting both employee performance and client experience, it accelerates client onboarding and provides you with clean, auditable data you can rely on. 

If you’re ready to take on your KYC automation journey, don’t hesitate to reach out for a demo of Mako’s platform

Photo by Kelly Sikkema on Unsplash

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