Know your customer (KYC)/customer due diligence (CDD): A costly and labor intensive challenge for financial institutions
Financial institutions spend an average of USD 150 million a year on KYC/CDD operations, yet many struggle with inefficient and ineffective delivery centers, while non-compliance fines are on the rise1 . Leaders at major financial institutions have increased their focus on reducing the cost of compliance by designing customer centric changes and focus on simplifying and standardizing customer due diligence processes.
Financial institutions continue to face a number of regulatory and operational challenges with its due diligence framework. These include:
Process inefficiencies
Globally inconsistent, fragmented and non-standardized KYC/CDD processes with limited end-to-end automation resulting in lower staff productivity and rework.
Fragmented data
Siloed, duplicative and inconsistent data (structured and un-structured) offers limited ability to search and access internal and/or public sources to meet compliance needs.
Minimal technology investments
Increased case volumes call for continuous investments in technical capabilities (e.g. case management, AI) to adequately scale operations and minimize investment in human capital.
Negative customer experience
Cumbersome and disjointed on-boarding and periodic customer refresh processes and systems resulting in redundant and inconsistent customer outreach to collect and verify KYC/CDD data.
Labor-intensive operations
Significant manual processing creates an unattractive workplace, with redundant activities and poor controls resulting in sub-optimal quality and rework.
Limited controls
Increased AML/KYC requirements have raised the cost of doing business through additional controls (e.g., manual, systematic) required to meet compliance needs.
KPMG’s KYC/CDD Managed Service provides a leading approach to address these challenges combining our subject matter expertise, tools, proprietary technology and operational experience to help deliver scalable and cost-effective services to our clients. This reduces the need to incur one-time costs, make temporary investments, and spend time managing noncore processes.
