In the realm of digital technology, no industry has experienced such a rapid and effective transformation as financial services. The pandemic has expedited the adoption of digital banking and payments by individuals and businesses worldwide. According to statistics, the number of active online banking users had already surpassed two billion by the end of 2021, with a predicted increase to over 2.5 billion by 2024.
With the increase in the number of progressive Fintech companies joining the industry to keep up with the growing demand, competition has become fierce. This applies to established companies transitioning into digital services and new technology-based entrants as well. Their primary goal is to attract customers by providing beneficial digital services and ensuring a smooth and quick customer experience. The average customer has a short attention span, and even the slightest issue or delay during their initial interactions with a digital service can result in them abandoning it and moving on.
The challenge faced by heavily regulated businesses in the payment and banking sector is significant. As the financial services industry has advanced, so have the tactics used by fraudsters, money launderers, and criminals. In this landscape, comprehensive screening checks are not only mandatory for regulatory compliance, but also essential for operational success – a struggle for many firms. According to a recent APAC True Cost of Financial Crime Compliance study conducted by LexisNexis Risk Solutions, the projected cost of financial crime compliance for all financial institutions in APAC has reached $50.1 billion. The report states that a combination of increased geopolitical risk, stricter regulations for anti-money laundering (AML) and counter terrorist financing (CFT), and evolving criminal tactics are all contributing to the rising cost of compliance.
Dealing with Onboarding Frustration
According to a survey by one of the leading AML providers, customer onboarding is the most significant challenge for companies. This is especially true for KYC checks and accurately identifying PEPs and ultimate beneficial owners. Many companies face difficulties with language barriers and accessing the necessary documentation, leading to a frustrating and inefficient process. As a result, customers often drop off and compliance teams waste time and resources. On average, it takes seven hours to resolve a KYC alert, and a majority of firms expect the number of alerts to increase in the near future. The survey also revealed that 64% of firms in APAC experienced delays in customer onboarding during the Covid-19 pandemic, and 67% reported that compliance negatively affected customer acquisition. To remain competitive in a crowded market, it is crucial to reverse this trend.
What actions can financial institutions take to enhance the effectiveness of customer onboarding while maintaining the thoroughness of verification processes?
The solution can be found in technology. To achieve digital transformation, a more advanced and comprehensive approach is required for financial crime compliance. This approach should prioritize risk assessment and mitigation. However, many companies continue to depend on manual methods and restricted data sources.
Efficient yet Effective Compliance
The process of onboarding and conducting KYC checks can be greatly improved by implementing automation and digitization, which can create a quick and reliable compliance system without causing any inconvenience to legitimate customers.
The modular solution offered by Cellbunq can be accessed through an intuitive SaaS platform or a Restful API. This enables companies to create a personalized corporate onboarding process that caters to their specific requirements and effectively addresses the top three compliance hurdles.
The compliance function’s workflow is managed by the Compliance Dashboard through the digitalization and automation of tasks for compliance teams across various offices, business functions, and locations. Real-time access to over 190+ countries worldwide is provided by our business data with automated extraction of data and identification of shareholders from official sources. Review offers continuous monitoring and updating of KYC, ensuring constant compliance for firms. The system automatically verifies the accuracy of client information held by compliance teams.
When using Cellbunq’s workflow features and high-quality data and screening solutions, clients can establish a comprehensive understanding of their customers by accessing a centralized location where all risk factors are collected and analyzed.
Additionally, the company’s industry-leading registry coverage further enhances this transparent and comprehensive view.
The incorporation of Cellbunq solution with our connected AML Screening provides assurance to users that their screening procedures will utilize the most extensive, strong, and current datasets accessible. The integrated screening providers offers data such as:
- Individuals in positions of political power (PEPs) – a database of almost two million structured profiles of PEPs, categorized by administrative divisions to determine their levels of influence, prominence, and potential risk, as well as those of their family members and close associates.
- Government-owned Enterprises – a comprehensive compilation of government-owned and government-linked companies and businesses, with the capability to identify entities with at least 1% investment or ownership by a government entity or state.
- Sanctioned Entities – a consolidation of information from major sanctions lists globally, including OFAC, the EU, UN, and UK. WorldCompliance Data also offers profiles of companies, vessels, and aircrafts owned or controlled by individuals on any of these sanctions lists, as well as entities that are not explicitly named but may pose a risk due to their association with a sanctioned individual.
- Enforcement Actions – collected from over 1,600 enforcement sources worldwide, such as the SEC and FBI.
- Negative Publicity – profiles of individuals that have been linked to illegal activities through over 30,000 news sources worldwide.
At the point of onboarding and continuously thereafter, all corporations, shareholders, beneficial owners, and individuals undergo automatic screening against extensive watchlists. This process is managed through a single integrated control tower. By consolidating all KYC, KYB and AML tasks, onboarding times can be significantly decreased, from a rough index of 30 days to less than a couple of hours.