25 September 2017
Jon May

Connected KYC

Jon May - kyc.com

6Posts 24,376Views 0Comments

KYC utilities: no longer sitting on the sidelines

23 June 2016  |  3817 views  |  0

Roughly two years ago 'KYC utilities' became the big buzzword in financial services. It's not a sexy phrase but it does what is says on the tin – standardises requirements and mutualises costs. Fast forward to today and have these 'RegTech innovators' made their mark? Previously plagued by confusion in the market and slow going momentum, the industry is now at an inflection point for adoption.

I recently had the honour of participating in a breakfast seminar hosted by Citi with BlackRock, PIMCO and Morgan Stanley. There were two topics in particular that dominated the session. The first highlighted the challenges faced by the buyside, corporates and sellside in managing KYC, regulation, tax and credit and legal agreements. The second very much focused on industry adoption and the importance of buyside and corporates driving usage of the service if we want to change the painful way the industry meets these regulatory requirements.

It comes as no surprise that there are a plethora of regulatory and compliance initiatives that buyside, corporates and sellside firms are struggling to deal with. During the session, 97% of participants agreed that since the financial crisis, there has been a significant uptick in the amount of time and effort they spend on KYC and tax initiatives. The countdown to FATCA remediation, new CRS reporting for 2017, margin rules and pending MiFID II requirements are only a few of the upcoming hurdles faced in the pursuit of compliance. The level of administration around these tasks alone is a heavy lift. Perhaps that is why 35% of the audience believed that account opening takes too long and delays business. Furthermore, 31% said that there is a complete lack of standardisation in requests for information and documentation.

Wouldn't the shift to a utility just make sense then? The large G14 banks have been the early movers on this front. Buyside and corporate institutions on the other hand have taken a wait and see approach, yet they are increasingly feeling the regulatory squeeze when it comes to onboarding because of the number of counterparties they deal with.

We are now at an inflection point as the sellside, corporates and buyside realise that the current processes aren't sustainable. As one firm put it, the question isn't whether or not to join a utility. It's at what point should you join? At what point does a utility exceed the threshold of manual processes and a lack of standardisation? The inevitability is a bit like the initial adoption of mobile phones when they first emerged. Once you had one, you never looked back. Now we have smartphones and an interconnected ecosystem of devices and apps much like the ecosystem of data in regulatory and compliance – the more there is, the more interdependent it becomes. 

Citi breakfast seminar TagsRisk & regulation

Comments: (0)

Comment on this story (membership required)

Latest posts from Jon

KYC utilities: no longer sitting on the sidelines

23 June 2016  |  3817 views  |  0 comments | recomends Recommends 0 TagsRisk & regulation

KYC utilities offer a refreshing approach for APAC

02 May 2016  |  5567 views  |  0 comments | recomends Recommends 0 TagsRisk & regulation

Delivering a return on KYC: more than meets the bottom line

08 December 2015  |  3458 views  |  0 comments | recomends Recommends 3 TagsRisk & regulation

KYC: Getting the green light to transact

30 September 2015  |  3500 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationSibos

Simplifying KYC in short order

14 September 2015  |  2866 views  |  0 comments | recomends Recommends 0 TagsRisk & regulationSibos

Jon's profile

job title CEO
location London
member since 2015
Summary profile See full profile »
Jon joined IHS Markit in January 2015 to head up kyc.com and IHS Markit's regulatory and compliance managed services.

Jon's expertise

Member since 2015
6 posts0 comments
What Jon reads
Jon writes about
Risk & regulationSibos
Jon's blog archive
2016 (2)2015 (4)

Who's commenting on Jon's posts