Know Your Customer (KYC) is a process for businesses to verify the identity of clients. This is typically done at two stages while onboarding of a new customer and on a recurring basis for existing customers. The objective is have a robust KYC process in place to mitigate risks pertaining to money laundering activities.
Typical KYC controls include:
- Customer identification programme: Identity documents
- Identification against any known parties: Politically Exposed Person (PEP)
- Transactions monitoring.
Some of the key challenges include
- There is a need for businesses to perform KYC validation checks on a periodic basis to upgrade or downgrade the risk profiles of customers. Often, this is done manually, which is not only time consuming, but it may also result in operational and regulatory risks.
- As a part of reaching out to customers, the process of making KYC changes, submitting documents and making partial withdrawals are made simple. In some cases, the process of changing contact details like email address, telephone number and correspondence address is made online, without proof. This arises an inherent risk of disbursing without proper authentication of the transacting parties. Hence, there is a need for KYC verification before any disbursement.
- Often, organisations handling various lines of business (bank accounts, life and general insurance and credit card) may demand KYC documents from the same customer multiple times, leading to duplication in KYC processing. There is a need to reconcile data across businesses to centralise the KYC process.
The below section depicts the transition from current state to future state of Intelligent Automation driven Smart E-KYC solution
Current State – KYC
- Branch-level physical mandates are received/Mandates are manually verified
- KYC checklist is validated for completeness as per customer type
- Data is manually entered into the core banking application
- Missing fields are tracked and reported manually.
Interim State: Moving towards the Smart E-KYC solution
- Adopt branch level scanning solutions to digitise mandates
- Process re-engineering to reduce customer onboarding time and reduce time taken to receive mandatory documents for KYC processing
- Implement machine learning solutions to perform smart Optical Character Recognition (OCR)
- Automate reconciliation between digitised copies and banking system and provide variance reports
- Automate remediation activities.
Future/Target State: Intelligent Automation driven Smart e-KYC
- Deploy Artificial Intelligence (AI)-powered smart kiosk for interacting with customers
- Perform real time scanning of proof documents powered by intelligent image processing
- Facilitate real time data processing with cognitive engine for providing near-instantaneous output
- Use cognitive engine for auto population of forms and perform real time discrepancy check for uploaded documents
- Use intelligent data extraction engine and perform auto filling of KYC documents through pattern recognition.
- Cost efficient delivery
- Advancement towards a digital organisation
- Secure and scalable systems
- Enhanced customer onboarding
- Lesser human exposure to sensitive data
- Enhanced customer satisfaction.