The importance of KYC technology for financial institutions amidst COVID-19

Why now is the time for companies to bring their onboarding processes into the digital age

By Vanessa Malone

While many companies have been making steps to create flexible options for their clients to interact with their business online for quite some time, those in heavily regulated environments like financial institutions, have been slower to adopt these changes.

The unprecedented measures put in place to combat COVID-19 are forcing banks, broker-dealers, and other financial institutions to expedite the transition of many of their business processes into their digital equivalents.

Customer onboarding, including identity verification and money laundering checks are among these. For financial institutions that still rely on mostly manual or legacy KYC and AML programs, these shortcomings have become glaring.

It’s no surprise that firms are turning to modern technology, or fintech, to address these gaps using high-tech, high-touch onboarding solutions.

When it comes to implementing the right onboarding technology, we believe financial institutions that focus on compliance-first solutions that don’t sacrifice user-friendliness are going to come out on top.

Compliance-first

Recent comments from regulators appear to echo the same message: they acknowledge that COVID-19 has created challenges but state that financial institutions are still responsible for carrying out their compliance plans to combat money laundering and other financial crimes.

For example, last month FinCEN issued an advisory to assist financial institutions in complying with their BSA obligations during the pandemic. They state that financial institutions must “diligently” adhere to the BSA and AML regulations.

To accomplish this, “FinCEN encourages financial institutions to consider, evaluate, and, where appropriate, responsibly implement innovative approaches to meet their BSA/anti-money laundering compliance obligations.”

User-friendliness

In today’s digital world, users expect the same frictionless, high-touch experiences they go through when they shop on Amazon to be replicated when opening a bank account or brokerage account.

This means firms have to consider user experience, brand alignment, and integration, all while ensuring the onboarding process meets compliance demands.

Pandemic Stress

On top of demands for a compliant and frictionless onboarding experience, people are more fearful of fraud during an economic crisis and are going to be more interested in how a firm is collecting and protecting sensitive information.

In fact, according to a survey conducted by Deloitte & Touche in late 2008, 63% of its firm’s clients expected an increase in fraud related to the economic downturn.

Whether this is true or not is irrelevant, the key word here is “expect,” and its this perception that puts even more weight on how important it is to create a positive and secure onboarding experience.

A streamlined KYC/AML onboarding solution

Finding an onboarding solution that meets compliance requirements without sacrificing user experience, while assuring customers that their data is secure is no small feat.

Horizon built KYCware, a white-label KYC/ AML onboarding solution to onboard investors, verify their identity, continually screen details against Horizon’s proprietary AML database and meet ongoing regulatory compliance.

How it works for financial institutions using KYCware:

1. Customize: We customize a KYCware app branded to your company’s likeness to meet your needs and participating client’s jurisdictions. Keeping the onboarding process under an issuer’s brand maintains trust, reliability, and keeps an on-brand experience for clients.
2. Integrate: The KYC onboarding app becomes available to clients on the Apple App Store or Google Play Store, with a turnkey KYCware hosted web portal for your firm’s designated compliance/onboarding team to efficiently review, and compliantly manage client’s Personally Identifiable Information (PII).
3. Onboard Customers: Clients download the onboarding app and are taken through advanced ID, document, and identity verification technology including anti-gaming features, a Machine Readable Zone ‘MRZ’ scanner and liveness detection. The app auto-adjusts depending on a firm’s jurisdiction regulatory requirements to maintain a comprehensive, yet user-friendly onboarding process.
4. Secure Upload: Once a client completes the KYC onboarding process, data is securely uploaded into a compliant in-memory datastore where the firm can securely download data for KYC+AML review. Clients are automatically screened against Horizon’s proprietary database of global sanctions, politically exposed persons (PEPs), and watchlists.
5. Streamlined Review: It typically takes 1.5 minutes to verify a client’s KYC submission and AML screening.

Horizon’s KYC/AML onboarding solution offers financial institutions an innovative and integrated solution to meet today’s modern compliance and onboarding demands. To schedule a demo to see how KYCware can meet your unique needs, please visit www.kycware.com or email us at horizon@kycware.com.

About Horizon

Horizon offers a suite of integrated securities software applications for compliant issuance through secondary trading of electronic securities. Truly a compliance-first business, our solutions combine Wall Street and Silicon Valley to power the next generation of exchanges and securities offerings in the U.S. and globally. Visit us at https://www.horizonfintex.com/.