Dublin, London – 15 November 2023 – Carrying out Know Your Customer (KYC) tasks is becoming increasingly costly and time consuming for banks in Britain and across the world, according to new research from Fenergo, the leading provider of KYC and Client Lifecycle Management (CLM) software solutions for financial institutions.
A global study of over 1,100 C-level executives across corporate and institutional banks found it cost on average $2,598 to complete a KYC review for a corporate client in 2023 – up a considerable 17% from 2022. Rising costs are a significant concern in the UK market, with British banks incurring an average cost of $2,613 to complete a KYC review for a corporate client, up 19% year on year.
Beyond growing increasingly costly, KYC checks are also taking banks much longer to complete. Globally, banks took on average 95 days to complete a KYC review in 2023, up meaningfully from 84 days in 2022. This trend is particularly stark in the UK, where firms take on average 17 more days to complete a KYC review this year than in 2022. Adding to the mounting strain on banks is a worsening talent shortage, with the global average number of people involved in KYC tasks having fallen by 14% in the last year. In the UK staff numbers have increased marginally (1%).
Nearly half (48%) of banks globally said they have lost clients due to slow or inefficient onboarding processes, a figure that falls slightly to 39% for banks operating in the UK. This may explain why UK firms are prioritizing financial crime risk in terms of their technology investment over the coming year, with 40% of respondents looking to bolster this area of risk. It may also be reflective of the UK’s growing reputation as a hub for money laundering.
The findings come amid a renewed push by the Financial Conduct Authority (FCA) to crack down on money laundering in the UK. Between January and October 2023, the FCA fined financial institutions in the UK a combined $410m for anti-money laundering (AML) compliance failures. The regulator is now also targeting cryptocurrency businesses conducting international transfers through its new ‘Travel Rule', which came into effect on 1 September.
“Financial institutions across the globe have yet to make meaningful progress on streamlining KYC and anti-money laundering processes,” said Stella Clarke, Chief Strategy Officer, Fenergo. “Most banks, not least those operating in the UK, still rely heavily on manual processes when it comes to KYC, contributing to lofty onboarding costs, and a greater risk of human error and regulatory breaches. This approach will no longer be fit for purpose over the coming months as financial regulators look to clamp down hard on money laundering.”
Fenergo’s report, KYC in 2023 – Tackling KYC at a Time of Heightened Global Challenges, provides in-depth analysis into the time and cost implications for regional and global banks conducting KYC and AML tasks. The full study is available here, alongside the full methodology here.
Fenergo is the leading provider of Client Lifecycle Management (CLM) solutions that digitally transform how financial institutions, asset management and fintech firms onboard and manage clients throughout their client lifecycle. Its software digitally orchestrates every client journey from initial Know your Customer (KYC) and client onboarding, automating regulatory compliance and enabling continuous monitoring throughout the client lifecycle (transaction monitoring, perpetual KYC), all the way to client offboarding.
Fenergo is recognized for its in-depth financial services and regulatory expertise and out-of-the-box rules engine which ensures financial institutions are future-proofed against evolving Environmental, Social and Governance (ESG), KYC, Anti-Money-Laundering (AML), tax and prudential regulations across 120+ jurisdictions. Headquartered in Dublin, Ireland, Fenergo has offices in North America, the UK, Poland, Spain, South Africa, Asia Pacific, and the United Arab Emirates.