REGULATORY TECHNOLOGY (KYC)

Regulatory technology being a subsector of the financial technology is used to facilitate the delivery of regulatory requirements, to address regulatory challenges, help companies understand regulatory requirements and stay compliant. Financial institutions who consider revenue generation side look at compliance as a hindrance that limits their revenue potential. Activities within the compliance side may perceive some business practices inviting undue risk. But what if increasing compliance can not only decrease risk but also increase revenue, efficiency and give a competitive advantage.

This brings us to the "buzzword" that is taking over the financial industries REGULATORY TECHNOLOGY (REGTECH). REGTECH was created to address a growing need in the market because of the financial crises in 2008, regulations have been put in place, more so because we are in the era of digitization, financial institutions are emerging with more digital product frequently so regulations keep mounting, in a bid to optimize internal governance procedures which include compliance and abiding to regulations within the financial industry specialized companies and solutions have emerged to address.

 

 

Regulatory Technology In Know Your Customer (KYC)

Know-Your-Customer (KYC) guidelines form a fundamental part of banks' risk management practices and customer risk monitoring, and are legal requirement to comply with anti-money laundering (AML) laws.

Overtime, many financial services firms have struggled to meet demands to fully know their customer, and some can neither meet their obligations to the regulator, nor can they control spiraling operating costs. According to estimates published by the Financial Times in 2015, some of the world's largest banks have each spent an additional $4 billion on compliance in every year following the 2008 financial crisis. If experiences from financial services provide any guide, the problem facing firms as they adapt to new regulations will not necessarily be the availability of information on which they can assess risk. Quite the opposite, information required for KYC is available as digitized streams from a broad range of primary and secondary sources. For many companies the stumbling block is creating a continuous KYC process at an economically feasible cost that effectively harnesses the best information to create risk assessments that are fully documented and up to date, available to regulators and to the firm's authorized risk professionals

In its simplest form, KYC refer to the steps taken by a financial institution or business to establish customer identity by collecting and documenting a customer's name, date of birth, and address. Financial institutions then verify that information, build a customer's risk profile, and then monitor the customer's transaction behavior on an ongoing basis. Unfortunately banks do not validate customer's information

However, as the demands for information required to comply with KYC and the complexity of the rules increase, financial institutions and businesses find themselves having to manage, monitor and analyze an excessive amount of information on each customer to be compliant. The result is that the implementation and enhancement of KYC and ongoing compliance is a costly and time-consuming enterprise - and achieving the holistic, firm-wide level of KYC detail continues to be a challenge customer might not inform you if he has changed his address or name as long as he doesn't have challenges with the bank.

In recent years, banks have shifted again to adopting tools in the third phase of regtech - continuous monitoring. Traditional monitoring and revalidation of kyc documents such as address for most firms are executed on cyclical or ad hoc basis. This method surfaces existing inconsistencies and gaps that, depending on the cycle time of the review, could have been lingering for years.

 

 

3consulting Approach

At 3consulting we propose this service of taking helping banks in validation and continuous monitoring of customer's information by bringing a more comprehensive and continuous approach to kyc, we will have a centralized data-driven analytics platform that can help banks to turn the management of customer knowledge into a process, starting from when customers are on boarded to a periodic kyc check that will be carried out to update customer's data and make sure information customer provided during on boarding is still inline, this helps to readily assess customer risk.

Establishing digital infrastructure to provide end-to-end KYC and customer due diligence - one consolidated view of all activity - is where financial institutions need to start if they have not already. This approach will enable them to integrate and leverage data they have on their customers to drive a more effective KYC approach and continuously monitor the customer relationship.

Assess the risk of a customer relationship, conduct comprehensive screening, periodically review risk entities, establish an expectation of customer behaviour based on collected data and risk rating assessment, and automate the review of risks through workflows and reporting at an enterprise-wide level.

Our service provides incomparable techniques to access and aggregate data enterprise-wide to provide you with the most accurate, up-to-date and valuable information, allowing you to increase transparency and reduce risk. Information compiled is then analyzed and each customer is provided with a risk score. The information can then be reviewed by your department on a regular basis and if there is any deviation from a customer's predicted transactional behaviour, your investigators or analysts can be alerted immediately.Learn more here...

 

 

At 3Consulting, we believe in innovative disruption to bring you the best of financial technology through our certified financial and technology experts to provide you with the next innovative solution to that problem in the financial space.

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