Renewed sanction lists add complexities into the banks’ KYC process – can technology support?

The invasion of Ukraine passed its second anniversary recently and with that, sanctions have been revised and updated against groups or individuals linked to Russia and its allies. For example, the UK government added 50 new sanctions while the US continuously reviews and expands its own lists. Now the Biden administration is suggesting that financial sanctions should be extended to third parties who fund and supply the Russian war machine. What this all confirms is that sanction regimes are getting more complex and larger, driven by geopolitical instabilities and events that mean the situation can change at short notice. This is challenging how banks avoid inadvertent non-compliance with new sanction measures and is putting serious strain on their know-your-customer (KYC) processes. A fine, but tough balance, must be maintained between how the KYC process should remain accurate, up-to-date and compliant while also offering efficiency to their customers. Failing to do so could result in breach of law, heavy fines and reputational damage.

The good news is that technology has lifted some of that pressure by equipping financial services and banks with effective KYC-focused tools. Such offerings significantly streamline the process providing a smooth onboarding while complying with the latest regulations.

Keeping up with evolving regulations

With sanctions lists and laws changing frequently, banks should not rely on manual KYC processes to ensure their customers are compliant. The nature of sanctions is so multifaceted and risky which makes it easy to have a slip up when onboarding new customers or simply reviewing and evaluating your current contacts. Therefore technology, such as agile low code software, offers a secure and efficient way to deal with sanctions.

Not only that but some of these tools offer application development that is eight times faster than Java coding. This means that banks can manage regulatory and operational changes in days and any regulatory rule maintenance is completed in just a few minutes.

In addition to this, client lifecycle management (CLM) software is able to be constantly updated with the latest sanction details from each country across the world while also keeping in mind any product-specific rules that come with it. The software enables teams to swiftly locate any infringements in KYC checks and by that prevent illicit activity. 

Along with providing the latest regulations on sanctions, some software can be used as a single hub for data. This means that employees are able to easily access a customer’s profile containing all the information needed during the onboarding. As everything is under one roof, any information that is updated is immediately accessible to all regardless of region or business line. This also helps streamline service and creates a better customer experience, as a variety of employees can refer to the same profile and its latest updates. 

Leveraging such technology ensures end-to-end compliance and significantly reduces time and costs. This also gives employees precious time back to concentrate on more pressing activities such as optimising the customer experience, product set and advisory services to drive growth. 

Seeking customer-centric solutions

While remaining compliant is a necessity, banks cannot afford to lose sight of improving the customer experience. The onboarding phase is essential to the first impressions and how ‘sticky’ a customer becomes but during this period challenges may surface delaying time to revenue and resulting in customer dissatisfaction. The total onboarding time some banks take can still be four to five weeks to finalise and set up products.

Customers are obviously at the heart of every business, therefore banks should invest in reliable and robust technology to improve experience. Beyond product features and cost, service is the key area where banks can differentiate. For example, financial services that offer omni-channel access and quick turnaround of new onboarding and product requests globally, significantly improve customers’ journey and are hence favoured over competitors. CLM applications can play a critical role in keeping customers happy as they give managers and customers the opportunity to engage seamlessly across any channel and device whether that is over email or a chat box.

Financial services are facing increasing pressures to ensure they efficiently and accurately onboard their customers and this is made more complex through geopolitical tensions and the sanctions that come out of this. As we see complex KYC regulations continue to grow, banks need to re-evaluate their technology and make sure it is strong and reliable enough to keep up with these changes. Therefore, adopting software that further enhances efficiency, productivity and compliance will be key to customer satisfaction, revenue growth but also the survival of the business.