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Date: 06/05/2019

Title: Enabling the Knowledge Worker: Role of Technology in KYC

Teaser: Intelligent Process Automation in KYC assists front office workers allowing them to focus on revenue-generating tasks.

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Enabling the Knowledge Worker: Role of Technology in KYC

Intelligent Process Automation in KYC assists front office workers allowing them to focus on revenue-generating tasks.

Authors: Richard DiSante | Damon Gatison

With Robotic Process Automation (RPA), banks may prefer to eliminate human involvement in Know Your Customer (KYC) processes. However, successful completion of complex cases requires cognitive decisions that may oppose traditional logic.

After careful analysis, KYC cases with a highly complex risk profile may still be accepted by the business when the benefits justify this decision. Although RPA technology cannot replace cognitive decisions, it can help expedite KYC processes. A widely accepted tool, namely the Business Process Management (BPM) platform, provides solutions that use structured data to navigate rule-based decisions and triggers. Although RPA and BPM only deliver rigid process flows and simple field validations, they lay the foundation for future KYC process improvements.

While neither RPA nor BPM alone poses an adequate solution for complex KYC processes, their combination can provide an optimal and efficient technology mixture. Intelligent Process Automation (IPA) provides a platform to reduce or remove routine tasks from traditional assignments while still providing structured workflows. IPA can reduce expensive follow-up costs deriving from manual labor respectively rework, while providing a means to increase quality and speed. Unlike traditional BPM platforms, IPA emphasizes employee focus on skill-based assignments and not on routine manual tasks that are replaced with elements of RPA.

IPA can be applied to the three KYC phases, Customer Identification Program (CIP), Customer Due Diligence (CDD) and ongoing monitoring. Aside from complex cases that require human involvement, IPA consolidates publicly available and unstructured client data and promotes straight through processing (STP). IPA combines traditional BPM processes with elements of RPA to improve information routing, data quality and necessary escalations. Ultimately, IPA in KYC will enable employees to focus more on complex decision-making tasks and revenue-generating activities by removing information hurdles and reducing rework from incorrect KYC process routing.

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Fig. 1: Three phases of KYC

Customer Identification Program (CIP)

Identification Program (CIP) in US-regulation as referred to in our example, or the Anti Money Laundering Directive in the European Union). It for example requires the acquisition of data from individuals or entities wishing to conduct financial transactions. IPA automates this manual collection task traditionally done by employees. When supplemented by knowledgeable reviewers, the CIP process time can be greatly reduced and made less prone to error. The means to scan public sources for adverse media and government name lists are available in the market. With them, staff can perform thorough background and information checks. By comparing the publicly available information with the responses provided by the client, the probability of uncovering fraud is increased.

Front-office users spend a great deal of time on the non-revenue-generating CIP process steps. During the KYC process, there are frequent exchanges to review, sign and provide supporting documents. As the technology within CIP becomes more important, expectations from clients will increase. Document collection and scanning are large pain points for financial institutions and prospective clients, but IPA can assist users by searching public sources for relevant information on publicly traded companies or individuals. By collecting such information, IPA can reduce both the workload and the potential touch points with the prospect or client by having the information seamlessly collected, scrubbed and added to their profile. Introducing IPA to reduce workload may also lead to fewer required headcount on CIP tasks. The remaining resources can be deployed to support more revenue generating tasks within the bank, such as greater sales conversations during successful customer service interactions.

Customer due diligence (CDD)

KYC quality has increased with traditional BPM workflow rules and logic. However, due to the large number of functional groups involved, traditional BPM workflows alone do not provide great efficiency. Although banks need strong KYC vetting for clients, IPA can consolidate CIP information, perform due diligence and either route to one functional group for final KYC sign-off or directly open an account. As STP can only be used for simple and low risk clients, introducing IPA into CDD can enable automatic routing to various departments. This will, in turn, increase efficiency and prompt appropriate reviews. IPA provides a mechanism to enable the responsible departments to give their approval through an efficient workflow process decreasing delays.

As enhanced due diligence is often reserved for high-risk clients, IPA can introduce an important safeguard to protect the corporation. During final approval for high-risk clients, advanced analytics provide scenarios through calculated assumptions on how a prospect or client may perform. Through machine-learning algorithms and forecasted market conditions, senior managers are given a clear view of the risk before approving the KYC.

Ongoing monitoring

IPA can trigger event-driven reviews and then quickly and effectively identify risk associated with specific clients. Through the benefit of artificial intelligence, staff can pinpoint clients who may be impacted by new country regulation or sanctions.

A daily review of discrepancies from previous results, delta checks, performed with high-speed processing across a client database allows banks to continuously monitor any new risk hits from customers and provides real-time management reporting. Continuous review, rather than timed reviews, ensures that reputational and financial risks can be identified, closely monitored, and mitigated.

Applying IPA to periodic monitoring practices can increase KYC review speed and reduce costs by ensuring t ensuring the right owner signs off on financial risks for the bank during the initial KYC review allowing the entire process to become more efficient. In addition, front-office staff periodically require updated documentation from the clients during KYC reviews. IPA will automatically trigger client requests for information and support/house/consolidate the retrieval process for the case under review. With a more efficient KYC process through the IPA capability, clients will only be contacted as necessary and abstained from routine tasks and questioning.


In the heated global regulatory environment, fines for KYC failure are increasing and more frequent. IPA provides an updated and more automated solution to collect and screen relevant information for the KYC process leading to a more seamless organization. Powered by AI and machine learning technologies, IPA promises to revolutionize how financial organizations operate, maximize efficiency, cut costs and ensure optimal service levels. There have been Return on Investment (ROI) in similar industries from IPA of nearly triple digit percentages making it an attractive option for institutions operating in risky markets. This, in turn, enables the financial institution to discover illegal activities and get in front of them before any reputational or financial damage occurs. Instituting IPA throughout the KYC lifecycle provides employees the automated tools to support their labor-intensive and decision-making duties. This allows financial institutions to redirect support and front-office staff to revenue-activities that provide the client with an overall positive experience and service.



Richard DiSante

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