Onboarding new customers compliantly is a key part of business growth, as the financial and reputational costs of failing Know Your Customer (KYC) checks are high. By replacing expensive and time-consuming manual processes with a secure digital platform, financial and professional services companies can scale their customer onboarding operation both compliantly and efficiently.
KYC and compliantly onboarding new customers
As customer numbers grow, financial and professional and financial services companies must verify the identity of each new customer and understand if there is a risk of illegal activity. These KYC checks help reduce the risk of fraud, bribery, human-rights violations and money-laundering. They are a legal requirement in the UK. The complexity of these checks depends on the potential risk level of the customer. KYC onboarding processes have three main steps:
- Customer identification.
- Verifying the customer is who they say they are, and whether they might be a politically exposed person (PEP).
- Understanding the source of the customer’s income and nature of financial transactions.
After onboarding, scrutiny of the customer’s transactions and relationships needs to be maintained.
In the UK, further information can be found in the FCA Handbook and the UK tax authority HMRC provides plenty of information about how businesses can comply with anti-money-laundering (AML) regulations.
Why manual onboarding cannot be scaled-up efficiently
Compliant customer onboarding remains labour-intensive for many businesses that collate all the KYC checks by phone, letters and emails. Furthermore, in this scenario, where there is miscommunication between front and back office, the risk of mistakes increases.
Most manual KYC resources are consumed in information-gathering and processing, around 80% of the effort according to KPMG. The other 20% percent is verifying and scrutinising the data.
Without significant investment into more trained staff, manual onboarding cannot be scaled, as capacity is determined by the number of employees available to process the work. To truly scale, businesses must grow revenue at a significantly faster rate than costs, which is not the case with manual KYC processes.
Using technology to scale the KYC process
KYC does not have to be a manual process. Technology tools can streamline and automate processes in a secure digital environment that does not require large teams to manage.
For example, the new customer is invited into a financial institution’s secure environment where information can be safely exchanged along with documents for verification and assent. There’s no longer any need to call people, print, fax, post or scan documents. Stakeholders can share and compare a real-time image with an ID document to verify an individual’s identification.
Documents can be digitally signed and their progress, alongside other documentation, can then be tracked, recording and verifying each stage of the KYC onboarding process. Customers, the business and other stakeholders will have access to a dashboard showing where they are in the process.
There is no back and forth between front and back office, compliance is 100% maintained and the risk of errors is significantly reduced.
Finally, with all processes complete and documents securely stored, a financial or professional services business can reduce further low value administrative customer contact, and focus on scaling the business with high value, fee and commission earning sales and advice.
How to scale up efficiently and stay compliant
Secure technology platforms make efficient and compliant scale up of customer onboarding much quicker, affordable and client-friendly.
BONAFiDEE’s digital engagement platform includes a full range of biometric and record checks to verify new customers’ identities in a safe, compliant and fully evidenced way. From the outset, the process is digitally tied to each customer's unique identity, providing evidence that KYC and AML processes have been completed by the same individual.
A full audit trail is available of the customer's journey through the consent, identity verification, data capture and document signing stages, all the way through to completion.
To find out more about our holistic digital signature and customer verification solutions, download our guide, or contact our team.
