Know Your Customer (KYC) is an essential process, allowing banks and financial institutions to verify a client’s identity during onboarding and at regular intervals. Banks must ensure that clients are accurately identified, emphasising the importance of identity verification in the financial services sector.

Revolutionising the KYC process, Corporate Digital Identity (CDI) enables fast, accurate identity validation and verification of corporate customers, and has been set out to bring a gold standard approach to KYC.

CDI combines real-time public and private information to deliver ready-made customer profiles into internal systems. This brings vast benefits to institutions and customers alike, including faster onboarding, improved customer experience, reduced risk and robust regulatory compliance.

CDI is designed to facilitate truly customer-centric banking, addressing critical problems faced by banks and the financial industry to improve efficiency, effectiveness and bring a much smoother process, particularly when it comes to onboarding.

Trust in CDI to navigate tough challenges

Traditional KYC poses several significant challenges, which, ultimately, are centred on time and efficiency – be it of process or time. Not delivering on either of these can drastically impact another vital element – customer experience.

In today’s crowded market, where growth is paramount, every bank wants to do business faster, but with the correct precautions and in a way that ensures compliance.

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Accelerated customer journeys throughout the cycle drive growth and higher returns as satisfied customers become loyal customers. Achieving this requires a holistic customer view, including a verified identity.

Retail banks have made significant progress here, but corporate, investment and commercial banks are faced with unique challenges to overcome before they can transform and meet expectations as a result.

For example, the current lack of unified corporate identity standards poses a core challenge. Establishing technical standards is complex, and limited progress has been made. Without this, banks must create their own view of an entity using client-submitted information and authoritative, up-to-date data. These views are tailored to meet specific regulatory requirements and risk appetite.

Inconsistent global regulations

Banks must navigate a patchwork of evolving regulations that are making cross-border and business transactions complex. Robust anti-money laundering (AML) and KYC compliance requires appropriate, comprehensive, and standardised processes and outcomes supported by clear audit trail evidence.

The traditional reliance on manual processes means that human error is inevitable, which also increases risk, and, in the long run, cost as differing interpretations of information, excessive workload and business pressures result in inconsistent quality and potential bias in decision-making.

Crucially, today, technology exists to generate customer profiles, specific to a bank’s KYC requirements, on demand. Dynamically generated from the most up-to-date authoritative public data sources, CDI profiles contain all the attributes, documents and structures – such as information on beneficial ownership – required to make and evidence sound business decisions. Designed to be leveraged directly within internal systems, such as CLMs and CRMs, they provide a consistent and accurate view of a customer.

These make the mass information that banks and businesses own more digestible as, without, monitoring and maintaining all required data are beyond the resources of most, particularly given that formats vary and data sources have not been structured with integration in mind.

CDI presents a new way for banks to leverage this data and futureproof their processes, with CDI profiles, supported by automation, managing data quicker and more effectively, leading to cross-business gains.

Transform data value

With CDI incorporating real-time data with documents from authoritative public data sources and private information from the customer, it has the potential to truly transform the KYC landscape, addressing banks’ pain points in a way never seen before.

The issue of managing conflicting data, for example, can be resolved by CDI, along with processes like normalisation and entity resolution.

Normalisation regulates data formats, which makes it easier to analyse information and identify and repair discrepancies by ensuring conflicting data points are addressed.

This integrated process is also the creation of a singular unified and reliable source of truth, with the consequent data becoming a valuable business tool, which can be reused across business functions.

Maximise efficiency with technology

Here, automation can reduce the need for manual verification, which also can improve productivity for both internal teams and customers – ultimately, bettering output, reputation and the bottom line.

This streamlined process also eliminates the time spent gathering information and lessens the risk of human error, while allowing banks to allocate manual resources where they are most needed to maintain a focus on growth and revenue.

Not only does this improve efficiency for institutions, but for customers, too. Thanks to CDI enabling a much smoother and faster onboarding and verification processes, customer wait times are dramatically reduced. This also reduces friction and allows the bank to serve its customers better, enhancing relationships.

Manage risk effectively

Effective risk management is essential in the financial services industry, playing a major role in winning – or losing – trust and forging a strong reputation. Achieving success in this area involves the implementation of robust KYC measures, and, particularly, prioritising the continuous use of up-to-date data.

CDI brings enhanced risk management capacity that is crucial for identifying and mitigating financial risks such as money laundering. By addressing these with best-in-class technology, banks can safeguard their assets and maintain the trust of their customers.

As technology becomes ever-present in all facets of the industry, banks must embrace the latest in innovation to not only remain competitive but to get ahead of the rest. Processes that enable fast, seamless onboarding and ongoing compliance, supported by valuable data, are a priority for all parties – and CDI is ready to deliver.

Alex Ford is President, North America, Encompass Corporation