How has COVID accelerated the need for digitisation in the financial industry? How are organisations large and small reacting to attract and retain customers in the wake of a global pandemic? And what role do KYB solutions play in the future of the sector?
These were just a handful of the questions posed to Justin Fitzpatrick, our CEO and Russell Perry, CEO of kompany, a global business verification provider on the recent One World Identity (OWI) Podcast.
In an examination of the surging interest in KYB solutions, Justin and Russell laid out the complexity of the challenge that lies ahead for large and small financial organisations looking to bring on customers, tackle regulatory compliance across borders, and streamline digital onboarding.
It all points to organisations struggling to understand their customers and facilitate the consumer-like experiences they now come to expect from businesses.
These new digital-first behaviours are driving a major reaction in the market and making KYB solutions a hot topic.
But it isn’t just about bringing customers onboard, it’s also about how you make sure you do the necessary compliance, complete the checks, and have access to all the validated data you need at the right time.
Here’s a few highlights from the conversation and how the industry is responding to escalating consumer expectations and ever-more rigorous compliance requirements.
KYB is all about access to accurate data
The fundamental point of any streamlined and successful KYB process is the ease of access to aggregated, contextual and accurate data. Something that both Justin and Russell understand all too well.
“Our business model is all about collecting data from multiple sources, analysing it and processing it with our Machine Learning layer in the DueDil Business Information Graph, and then making it readily available via API,” says Justin.
“This is essential for our clients to understand who their customers are quickly, trust the information they receive, and build workflows from it that deliver the experiences their customers crave.”
Russell echoed these sentiments and added:
“Aggregated access to data is not only critical for KYB, it's a fundamental competitive advantage as it fuels faster decision making while simplifying the burden of managing AML regulations and compliance at the same time.”
KYB is lagging behind KYC
According to Russell Perry, the financial world is a couple of years behind the level of sophistication we see in KYC:
“KYC is all about volumes whereas KYB is about understanding the entity and the people behind it. There is a trend now towards automation but there are only about 5% of financial institutions around the world that have a fully digital solution in place today.”
But not for long as the market is moving quickly
Justin highlighted the rapid consolidation in the market and how providers are coming together to fulfil customer needs and look to become a single source of truth for engagement for all things KYB:
“We see the growing importance of the ecosystem within financial services. New players are looking to build platforms and leverage best-in-class technologies from different sources to supplement their core offerings.
“This will continue to happen and it will be interesting to see how the larger organisations respond to these propositions.”
Russell believes that the future of the industry is focused around interoperability as solutions providers look to find ways to keep customers’ attention:
“It will be all about the network. There’s still a high level of fragmentation for different use cases in different parts of the customer lifecycle management. We now need to think about how different platforms work together and how we can leverage APIs to provider better, broader services.”
KYB needs to become a continuous process and not an event
Organisations are constantly changing too, adding a layer of complexity that KYC processes aren’t designed to handle:
“Entities can move, shift and change shape rapidly. From new officers, directorships and UBOs to address changes, keeping on top of these changes needs to be moved from periodic updates of data to perpetual monitoring.”
New digital behaviours and regulations are squeezing the market from both sides
The industry appears to be caught in a pincer movement as customers demand slick digital experiences at precisely the same time regulators are cracking down and demanding more compliance checks are conducted.
Justin believes this represents a major opportunity for organisations that can act as orchestrators of data and workflows:
“There are largely 3 types of organisation in this space - the workflow or software providers, the data providers, and then the AI and ML suppliers. The organisations that are doing well are those that can orchestrate a collection of these tools and provide a single source of truth for customers to tackle compliance and onboarding challenges in one place.”