6 RPA Secrets Leading the Next Generation KYC

Banking CIO Outlook | Wednesday, May 25, 2022

Financial institutions are stepping up their spending on headcount to assist KYC activities. To reduce costs and increase the effectiveness of these KYC processes, the implementation of RPA has a vital role to play. 

FREMONT, CA: Banks are in high pressure to meet compliance requirements without slowing down their transactions or hurting customer relationships. A digital approach to Know Your Customer (KYC) is going to be essential for financial institutions to suffice higher demands of compliance. This changing landscape will require compliance processes that are scalable, dynamic, latest, and comprehensive— the features only automation can provide and manual systems will find difficult to match.

Many banks have realized the signposts and are transitioning to the next level by adopting new technologies that will facilitate them to meet new requirements. Robotic Process Automation (RPA) has emerged as a way to help eliminate the manual processes associated with KYC in recent years. It is helping to reduce costly human errors and compliance failures. With increased pressure from regulators, financial institutions are turning to RPA as a way to not only reduce the expensive burden of compliance but also to automate and boost the anti-money laundering project's overall effectiveness. Here is how RPA helps banking firms to realize their dream of automating KYC processes.

· Cost Reduction

RPA can be useful in lowering costs involved with high volume, repetitive manual processes that are often prone to human error. The KYC and its onboarding process are greatly improved by RPA. KYC and client onboarding process is fraught with potential opportunities for money launderers to manipulate the system, particularly in areas where human error is prevalent. RPA also saves time, effort, and expertise, all while producing a more effective KYC onboarding process.

· Optimizing Customer Onboarding  

Banking bots powered by RPA is assisting customers with account opening by analyzing credit limits, evaluating risks associated with the customer, and implementing new regulations effectively and quickly. Hence, bank personnel receives a complete picture of the client's financial history. When relationship managers have hundreds of accounts assigned to them, it is challenging to monitor all of them simultaneously. RPA reduces this burden of the onboarding process and identifies financial risks and reposts abnormal behavior securing the institution from potential compliance failures.

· Customer Data Screening

RPA gathers customer data from multiple sources systems and departments for proper screening. It helps by processing forms and adding client data to the system, thus reducing the chances for errors. Customer account data and financial transaction history from multiple sources can be accessed quickly, offering the banking personnel with a complete view of the customers' accounts and financial history. That is, RPA allows the financial institution to monitor the risks associated with opening an account for a potential client more effectively.

· Monitoring Regulatory Laws

RPA can help by continually monitoring regulatory laws and incorporate the findings into the financial institutions, anti-money laundering policy. The process of collecting and processing data from both external and internal sources helps firms to stay on top of their client portfolio and remain compliant with regulatory requirements. Since done automatically, the monitoring process of client behavior becomes more efficient with RPA. If a customer has a credit card with a particular financial institution and the spending behavior deviates, an RPA can quickly identify this from historical patterns, and notifying the client, and close the credit card before a fraudulent transaction becomes costly to the institution.

· Bank Secrecy Act (BSA)

RPA assists BSA officers to stay up to date on the continually changing regulatory landscape. Spotting a new abnormal scheme or a new regulatory change can be challenging and time-consuming, and any delay in the training of BSA officers can translate to noncompliance. RPA helps to prevent delays and human errors involved with this when identifying not normal financial behavior. That is, it helps to ensure that financial institutions are compliant and up to date on any recently passed regulations and respond quickly and efficiently to any anti-money laundering violations.

· Communication Automation

RPA automates communication throughout the financial institution on account closures and alerts to customers. Bank relationship managers and branch managers can be quickly informed of ongoing investigations and account status updates. Automating the communication process makes sure that time-sensitive deadlines are met and best practices are intact.

Financial institutions have already started implementing RPA in their banking operations, and many others are considering and exploring it. The value RPA can provide for all financial institutions as they serve more futuristic and point-based solutions that are easier to deploy than any other large scale technology transformations. In the future, as challenges for financial institutions in managing KYC will continue to grow, RPA can bring considerable initiatives in managing them. This all points to the truth that with RPA, full automation of KYC is possible, but it will require financial institutions and regulatory technology community to work together closely. Indeed it is the quality of this integration that will dictate the future path of KYC automation.

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