NEWS IBS Journal December 2017
Businesses losing out to bad know-your-customer processes
O
ver two-thirds of financial institutions are losing out on business due to inefficient ‘Know Your Customer’ processes, research by LexisNexis Risk Solutions shows
Financial institutions need to improve the efficiency of their KYC and sanctions remediation processes or risk losing business, the latest report published today by LexisNexis Risk Solutions says. Almost 70% of professionals in financial institutions are worried that customer friction caused by inefficiencies in these practices are resulting in lost business. KYC and remediation procedures are in place to investigate whether a new or existing customer flagged as a potential financial crime or sanctions threat, poses a genuine risk. Industry feedback indicates that common reasons which result in institutions losing business due to inefficiencies include
•Customers frustrated with delays or repeated requests for information opt to take their business elsewhere;
•Institutions rejecting potential customers who have been erroneously flagged as a financial crime risk
The report, KYC & Sanctions Remediation: The Impact of Inefficiency, interviewed 151 decision-makers responsible for KYC and sanctions alert remediation in UK financial institutions (including banks and investment firms), to identify both the root causes and business impact of inefficient financial crime compliance processes.
Financial institutions are challenged with balancing the needs of the business and customers with financial crime compliance obligations, which can often cause friction. Over half (59%) of the decision makers surveyed stated that their current KYC and sanctions remediation processes are less than very efficient (63% of small-mid sized firms and 54% of large firms*), which has a subsequent negative impact on their organisation.
The biggest factor impacting process efficiency was found to be disparate and siloed data systems, with 60% of those with less efficient processes citing this as a key concern. The next two most common factors were the lack of a single risk view for customers and prospects, and the time required to maintain an audit trail, both cited by 59% of respondents.
The consequential business impacts varied from internal friction between departments and decreased productivity, to loss of business. Notably, over two-thirds of professionals from banks (67%) with processes which needed improvement, pointed to losing business due to inefficiencies in remediation practices, with 50% of investment firms flagging the same issue.
Michael Harris, Director, Financial Crime Compliance, at LexisNexis® Risk Solutions said: “Inefficiencies in Know Your Customer and sanctions remediation processes can result in a huge cost for financial institutions, due to the negative effect they can have on business operations. This cost can be both reputational and financial.
“Significantly, disparate data and a lack of a single risk view were flagged as two of the major causes of inefficiencies, highlighting how important having access to the right combination of information and technology is when conducting remediation activities.
“Fully efficient remediation requires a holistic view of the customer or prospect. Only when financial crime compliance teams have access to the full picture are they able to make the robust and timely decisions required to expedite remediation activities, meet compliance obligations, maintain the customer experience, and of course, combat financial crime effectively.”
13
www.ibsintelligence.com
iStock-612239276
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
