For banks, the ability to conduct due diligence quickly and effectively can be the difference between winning and losing valuable customers.
With customer experience an increasingly important differentiator competition increases, a seamless digital process is now a must. Lengthy and difficult Know Your Customer (KYC) will no longer be tolerated, as highlighted by Encompass research, which found that 38% of UK businesses have deliberately abandoned an application for banking services in the last year due to slow due diligence processes.
With companies often completing applications with a number of providers when looking for new financial services or products, the bank that can offer the quickest and most efficient onboarding has a better chance of success when it comes to securing business.
The importance of due diligence
We know that due diligence is complex, particularly as the scope of a bank’s customer base widens.
To be effective, due diligence processes must be robust yet flexible enough to quickly adapt in line with regulation and any changes to risk profile or geographical footprint.
In global financial institutions, making these changes can be a long and challenging task, largely due to the reliance on manual systems. Performed manually, the process is prone to error and slow. It can also take analysts away from business critical tasks that require their attention, proving inefficient business-wide.
Banks must also set aside budgets to acquire information necessary for due diligence. At many institutions, the productive life of these assets ends with the completion of KYC checks. This practice is wasteful.
When there is pressure to get results quickly but regulations and best practices are constantly evolving, due diligence can be relegated to a tick-box exercise. However, it is imperative that business people within financial services appreciate the importance of proper KYC, which is something often still not realised, as the implications of not doing so – both operational and reputational – can be costly.
Benefits of Encompass
With the level of urgency heightened by the implications of the COVID-19 pandemic, digital transformation initiatives have risen to the top of the agenda for financial institutions worldwide, and the value of automation as part of robust due diligence has become increasingly evident.
By bringing transparency to complex corporate structures and identifying ultimate beneficial ownership, Encompass delivers accurate and comprehensive KYC due diligence on demand.
With Encompass, information uncovered at this stage is given the opportunity to find new, highly valuable life as an asset used in multiple areas of the business, for overall benefit.
When digital data flows from Encompass into CLM and CRM systems, banks automate their account opening processes. When digital data flows from the middle office into the front office, business development teams quickly gain the full picture of a client’s corporate structure. This allows them to offer geographically-relevant products and services to other entities related to their new customer, providing the opportunity to expand business reach and, crucially, influence.
When digital data flows from Encompass into data lakes and data warehouses, banks use business intelligence and machine learning to create new understanding that drives informed business decisions.
Automating and transforming the process of due diligence on corporate customers delivers immediate improvements in customer service while guarding institutions against risks of reputational damage.
By rendering information on customers as digital assets, institutions choosing to automate bring additional benefits to systems and operations downstream from their compliance teams in the middle office.
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