Pegasystems has been collaborating with the global banking community at Sibos for over 35 years (since 1983). The banking industry’s premier corporate banking event goes ‘down under’ this year. But, I wonder how much Sibos in Australia could be an opportunity to turn the debate upside down and take a radically different perspective on how financial institutions implement client onboarding and know your customer processes?

AI and robotics are alluring but it’s the zero-code/low-code movement that’s shaking up how banks ensure customer onboarding and Know Your Customer (KYC), as well as develop RegTech. It is revolutionising how banks future-proof KYC globally, while driving customer centricity. New technology to automate and undertake more predictive analytics are crucial, of course. But, they’re only ever going to be useful when controlled and managed within a true end-to-end process that’s easily adaptable to change.

The largest global banks have spent the last 20 years implementing siloed solutions and rapidly responding to new regulatory mandates across the globe. The fines are unprecedented. Complex KYC rules are driving increased onboarding time. The front office and corporates lack visibility into the process. Technology doesn’t scale. Then there is the emergence of RegTech solutions, including start-ups trying to solve these problems for the largest global banks, who are under the most regulatory pressure. What’s more, this process isn’t pausing for banks especially as they drive differentiation and digitisation to drive multi-jurisdictional, multi-product onboarding of complex customers – large corporates through to correspondent banks.

The goal remains the same: be totally compliant with the regulations while simplifying the customer experience and stay competitive.

To reach this goal, banks have accumulated hundreds of bespoke technologies to meet thousands of KYC rules within country, line of business and customer type. However, this is simply not enough. There is no let up on regulatory changes that must be absorbed into a bank’s operations. Even with today’s technology and years of adapting to new rules and laws, it takes most institutions today more than 12 months to make regulatory changes.  So, how can they do this more rapidly within the technology, while minimizing the impact on costs and the customer?

Indeed, it is the technology banks possess today that is the biggest challenge when implementing new client onboarding processes. Best practice is to drive a ‘wrap and renew’ approach with modern technologies. This means the solutions of today need to be able to rapidly integrate with hundreds of legacy systems, while making sense of the data. The pressure for adopting new industry best practices cannot lead to creating a new layer of hard coded bespoke applications that become themselves difficult to adapt and amend and are no longer future-proof. The lack of future-proofed solutions increases costs and risks for the banks. This is driving the largest financial institutions to look at robust solutions that are designed for the digital transformation of the client lifecycle and KYC. The key criteria are they must be: global, out of the box and with zero-code/low-code from front to back office.

What’s the industry’s desired scenario?

In a nutshell, it’s driving rapid delivery of regulatory compliance and improved customer experience using business tools and technology that allow the business and compliance to drive outcomes and change faster. The days of IT staying ahead of business requirements through hard coded applications to solve complex problems that span channels, countries and lines of business are over. Speed of change is key.

Proven client lifecycle management, KYC and RegTech and the emergence of new solutions-need to be designed to scale, future-proof and rapidly adapt-with zero-code/low-code. The largest banks are moving towards IT simplification, cost reduction and focussing on rapid change. The days of millions of dollars to change rules and process as business continue to digitize are over. 

Zero-code/low-code out-of-the-box client onboarding and KYC solutions are part of rapid digital transformation. The banks can now own rapid business outcomes in minutes vs. years. They can stay ahead of change faster than ever and adapt to the fast pace of regulatory change.

AI and Robotics

AI and robotics are the latest buzzword in RegTech and client onboarding technology. However, it is important to put these technologies into perspective when applied to onboarding and KYC. Whilst there are massive rewards to AI and robotics, there are risks without control and transparency. These risks increase for large global banks, with millions and billions of data points, hundreds of legacy systems and operating in 40-100+ countries.  

AI allows banks to learn and adapt to risks but this requires controls when unleashed across hundreds of legacy systems, millions and billions of data points, and silos. Process and control within the technology need to be inherent, to ensure systems and data are not adapting and learning risky behaviour.

Robotics is about automating rudimentary tasks like copying and pasting addresses, pulling data from third party data providers. Massively time saving but it comes with no intelligence. Robotics can help with rapid remediation, KYC data gathering and input, and client data input but only within a fully controlled, transparent case structure.

Hot technologies like AI and Robotics are helping drive transformation, learnings and efficiencies but their value to KYC and onboarding process improvements comes with caveats and limitations. Control and transparency are critical to driving benefits. Robotics and AI must be inherent in the control structure within client lifecycle management and KYC technology to mitigate and manage risk, with full transparency.

Is there a silver bullet?

This is where zero-code/low-code can come forward as the tool banks need to drive faster innovation without increased costs. This is software that builds itself, giving managers of customer onboarding and KYC functions the visual tools to configure unique nuances using business metaphors (i.e. rule forms in plain English) vs. ‘custom code’, that automatically generate the code and the user experience. The same zero-code/low-code tools support IT too. Visual models can design and architect applications as well as manage integrations.  Zero-code/low-code RegTech allows the different business, IT and compliance teams to collaborate and test new and innovative ideas, the bank can rapidly assess what smart outcomes could and will be. This collaboration is what unlocks how the bank can go from months to minutes to adapt to new regulatory requirements or emerging risks.

If we can use fully unified and easily accessible technology to help banks meet complex KYC regulatory requirements, this provides a global client experience and drives digital transformation of client onboarding for the world’s most complex banks. The combination of industrial strength client onboarding, KYC, RegTech solutions, AI and robotics can help drive rapid business results. Zero-code/low-code technology for this type of end-to-end transformation has started to revolutionise the way global banks are driving rapid results out of the box.

We are already seeing clients who are adopting low-code/zero-code solutions to support front to back office client onboarding, KYC transformation through to offboarding. The idea that you can deliver results through configuration only in a zero-code/low-code environment in a few months and modify KYC rules in minutes due to the banks unique risks and re-rendering the UI/UX is revolutionising. These banks can roll out new functionality and digitize their end-to-end client lifecycle management and KYC globally in three months and then roll out – in production – in two week increments across customer segments.