Arduous client onboarding and KYC costing banks millions
Impacts ability to make better risk decisions
Dublin, London, New York – Tuesday 11th October 2022 – Financial institutions are spending millions of dollars every year inefficiently onboarding and maintaining clients, according to new research from Fenergo, the leading provider of Know Your Customer (KYC) and Client Lifecycle Management (CLM) software solutions for financial institutions.
A global study of over 1,000 C-level executives across corporate and institutional banks found that on average, over half are spending between $1,500 and $3,000 to complete just one client KYC review. Large financial institutions onboarding thousands of new clients per year are spending up to $30 million per annum on KYC.
The findings also showed that over half of financial institutions are spending between 61- and 150-days on KYC reviews for clients, much of which is spent gathering and inputting data across multiple systems. This is a waste of operations and compliance resources that could otherwise be focused on higher-risk cases.
Overall, more than 80% of respondents have between 1,000 and 2,500 employees working on KYC tasks. The majority of firms (90%) stated that labour-intensive KYC effort impacts their ability to make better risk decisions.
Between 31%-60% of KYC review tasks are still being completed manually by over half of financial institutions. However the data shows that financial institutions are now focusing investment on automation with 62% prioritising spend for technology.
The research also uncovered continued friction between compliance and operations with approach to risk management, rate of regulatory change and communication and collaboration in the top three areas of concern for respondents.
“With so much focus on digital transformation towards revenue generating parts of the bank, KYC has been left somewhat as a technological afterthought – still relying on manual and legacy systems,”
said Stella Clarke, Chief Strategy and Marketing Officer, Fenergo.
“But KYC compliance has long been a critical part of the client lifecycle and has important implications on how fast a bank can generate revenue. With the economic climate putting an even greater emphasis on cost control, more financial institutions are looking for ways to streamline the client lifecycle process in order to drive much needed efficiencies.”
Dive into the data in our new infographic here.