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Improving regulatory compliance during customer onboarding


Regulatory compliance is and always will be a major challenge for financial institutions, particularly when it comes to customer onboarding. A recent Pegasystems survey revealed that expanding Know Your Customer (KYC) requirements sits at the root of this problem, as 88% of banks say KYC has a significant impact on onboarding times. Forrester’s report, Client Onboarding In The Age of The Customer, indicated there is no bigger pain point for global corporate banking executives than complying with KYC regulations.

These KYC regulations and due diligence rules such as AML, EMIR, FATCA, CRS, and Dodd-Frank create a massive hindrance to banks’ efforts to streamline onboarding and compliance efforts, while offering transparency and efficient service. The existing siloed and disparate system infrastructure by line of business and jurisdiction is not only leading to more risk and regulatory scrutiny, but also longer onboarding times and transaction times. Since our survey revealed that 62% of banks say poor customer service during onboarding is driving corporate clients to look at competing banks, this is a challenge that must be confronted.

Because of increasing regulations and internal inefficiencies, it can take banks between 60 and 90 days to onboard a new client, and in some cases more. Customers expect faster transaction times, the ability to onboard and transact in multiple jurisdictions and not to repeatedly be asked for the same data. They also want to know their bank has a full, global view of their relationship. However, most banks in our survey admit their current KYC technology isn’t flexible enough to handle rapidly changing regulations, so many of these customer expectations aren’t being met.

The best approach is to invest in fully integrated KYC and client lifecycle management (CLM) technology that automates and orchestrates processes from front to back office. This will further enable banks to update new rules automatically without impacting their customers while also reducing operational and legal costs. Additionally, relationship managers want transparency on where they are in the process, clients want to transact across countries and product sets faster and regulators want global consistency and compliance. These competing demands can only be met through scalable technology.

An investment in unified KYC and CLM is an opportunity to streamline processes and interactions between the front and back office to ensure a seamless experience, while enabling banks to remain competitive. When considering the right technology to invest in, it’s important to be mindful of flexibility. The solution needs to manage and update regulatory rules faster, handle large-scale refreshes and have the ability to scale regardless of channel, country, line-of-business or booking entity. The customer always comes first and the technology investment should enable banks to properly service their customers in today’s digital, global world.

That said, banks need to be mindful that technology alone is not the solution. There is a need for collaboration between technology providers and regulatory experts to ensure solutions keep pace with the changing global regulatory environment. Each bank has its own unique risks, and this type of collaboration allows banks to leverage expertise with ex-regulators and ensure a risk-proof approach.

Scalability, extendibility and agility are critical characteristics of any global enterprise. Siloed applications have proven insufficient in meeting the increasing demands of customers and banks. As global banks continue to streamline processes and expand their reach, more will invest in fully unified technology, improving the customer experience and meeting evolving compliance requirements in the process. Investing early will ensure that banks can stay competitive and best meet their customers’ needs in today’s market.

Ms. Khosla is senior director of Risk, Compliance & Onboarding, with Cambridge, Mass.-based Pegasystems. She can be reached at [email protected]