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Simplifying KYC in short order

KYC processes aren’t a competitive differentiator but they are critical processes. However firms are rapidly coming to the conclusion that KYC processes aren’t best done bilaterally. This shift is liberating for organisations seeking a better way.

There are a multitude of challenges to streamlining KYC. Firstly, firms have traditionally allocated more people to the problem but this isn’t sustainable for the industry. KYC is a complex issue and adding headcount doesn’t necessarily improve the quality of the due diligence that regulations such as Dodd-Frank, Fatca or Mifid II require. 

Secondly, asset managers and corporates have relationships with multiple brokers. The onboarding and KYC process involves many different actors and interactions along the way. There is an ongoing struggle with managing data and how to get it right. The swathe of regulatory requirements that firms have to adhere to means clients are continuously asked for similar, but not the same, information. Processes are repeated because often they aren't joined up.

While these challenges can’t be addressed overnight, there is much that could be fixed in short order. Simplify, standardise and industrialise the process. Do it once and repeat the process. Minimise and mutualise the costs. Whether that is for KYC, tax, regulatory reform, margin or being ready to transact, centralising the effort creates efficiency.

Due diligence processes are tricky operationally and there is no business advantage to doing these in isolation. Firms are getting smarter about combining outreach across sales teams and to clients across those processes. A simplified, standardised, industrialised process is how we will really transform the KYC process.

Ultimately, it will give banks an authoritative source of client data. Investment managers and corporates won’t have to replicate processes time and again, and costs will be lowered. Only when firms have centralised the process, coalesced the data and met the necessary requirements can they be ready to transact. Isn’t it time to take action?



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