Many organisations continue to wrestle with the challenge of delivering a fast and efficient client onboarding (& review) approach while ensuring compliance with the various KYC/AML rules. Ultimately, the goal for every Financial Institution is to optimise this balance and gain the associated competitive advantage, with the added benefit of a more satisfied client base.

So how should you approach this challenge to achieve this outcome? How can you combine well-articulated risk arguments with the right technical solutions to create an efficient onboarding process within a robust and transparent compliance framework? Here are some of our observations:

1.       Consider where the financial crime risks lie for each product and service being offered

It is not uncommon for services offered (even within the same service line) to have material variability in financial crime risk. Institutions must consider these risks carefully and in conjunction with the regulatory rules to determine a suitable approach to cover each of these. Clear articulation of reasons for factors that reduce the risk, as well as those requiring greater attention, will help form a strong argument for the makeup of the client information that must be obtained and the associated operational checks upon it.

 2.       Work in close collaboration with financial crime compliance colleagues

Armed with a solid understanding of the financial crime risks associated with the business to be conducted, work closely with the compliance function to develop risk profiles for each offering. Both parties must work together to jointly develop an approach that addresses the risk posed by the business alongside an approach that is operationally viable.

 3.       Consider which parts of the process require a human skillset versus those better served by a machine

We have long advised that onboarding resources be augmented by technology, rather than replaced through full automation. Humans and machines have quite different skillsets; people are able to extract nuance from unstructured data, while automated processes excel at working with structured data to complete processes repeatably and reliably. By analysing the end-to-end process, many of the individual tasks can be placed easily into one category or the other.

 4.       Establish a plan to deliver the desired lean operating approach

Based upon the framework developed as part of step 3, first design an overall process architecture incorporating the automation elements identified. Consider the foundations that need to be built, particularly around the data structures and the agreements needed on how trusted information sources can be established.

With a plan to build these foundations, attention can move to the industry technology solutions available to augment the onboarding teams leveraging this data. Document ingestion, externally available data aggregation and logic tools, workflow management and screening solutions are tools commonly employed by organisations to automate processes. These form common pillars of the operating models, creating scalable solutions which are able to complete tasks reliably and at a greater pace than a human operator.

 With core technological pillars in place, processes can be established for human operators to bring the end-to-end approach together. Precise procedural documentation is essential, constantly iterated to continually improve the approaches being taken. Where procedures cannot be clearly documented, additional focus must be placed on agreeing how these areas are to be handled. Areas lacking detail can quickly lead to variance in application of the intended approach.

 5.       Use analytics to continually improve

With robust data in place, analytics provides a huge advantage. Data can be used to assess a whole range of factors both operational and risk focused. Process pinch points can be considered, but equally so should the risk distribution of the client population. Does the distribution fit with expectations? Is it explainable? Does random sampling and client deep dives indicate risk ratings are being applied appropriately? The potential is huge if time is invested to map the systematic data to business consequences.

Historically there has been an expectation that there must always be a trade-off between operating efficiency and robust compliance within client onboarding.  However, advances in both data management and technologies have helped increase transparency within the process and demonstrated, when implemented well, that the two can work to support each other. The functional and technological capabilities, now widely available to all institutions within the industry, continue to amplify the benefit of a well-engineered approach – what were considered opposing forces can now work to support each other, building a robust and effective client onboarding experience for all parties.