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How KYC Automation Is Transforming Client Onboarding in Finance?

Know Your Customer, or KYC technology has long been one of the main means of business development and profit growth. With such financial software development services, the registration of new customers of the company becomes more efficient, since manual sorting and processing of payment or other information is no longer required. The following is a detailed description of how this optimization tool solves the problems of today’s business.


KYC Automation

What is KYC and how does this system work?

The KYC system greatly facilitates the work of checking new or regular customers through the security services of banking and other financial institutions. Technology to cope with problems such as money laundering, verification of the solvency of an individual or legal entity, and obtaining other important information. The system operates on the basis of the following principles and algorithms:

  • Information about the client is entered into the database for analysis and comparison on external sources.
  • The source of his income is checked, according to the documents provided.
  • Credit history and doubtful facts are provided.

Based on the results of interaction with KYC, the client will have access to complete information about an individual or legal entity, which allows for making an error-free decision.

What are the challenges and challenges of a manual KYC system?

With the rapid development of the financial sector, the control of clients and their biography is becoming an increasingly difficult task. Thus, in order to create a reliable database, an automated check of each applicant is required. The manual KYC system has the following disadvantages:

  • Entering the information provided into the electronic media is carried out manually, from paper documents, which often leads to corrections and the human factor.
  • Increased costs for business owners due to the need to attract additional staff to collect, enter and analyze data, as well as to ensure control over information previously entered into the database.
  • Increased labor and time costs, as employees of financial institutions, spend a lot of effort on the analysis and double control of all incoming information.
  • Considering that detailed verification of information about users is carried out for a long time, a banking or other credit institution loses its credibility in front of customers, as customers remain dissatisfied with the failure to meet deadlines and violation of plans for issuing credit funds.
  • Manual labor in the control of clients of financial organizations does not always meet the requirements of constantly changing standards and legal frameworks.
  • In the case of manual analysis using the KYC system, there is no clear action plan for the specialist of the credit institution, which leads to failures, violations, and inconsistencies.
  • Manual analysis using KYC technology always violates the confidentiality and security of the client’s personal data.
  • Unfortunately, when manually analyzing incoming data, employees do too much unnecessary work, which leads to inefficient use of human resources and, as a result, problems in paying salaries or calculating the potential profit of a financial institution.

The main disadvantage of KYC is that many financial institutions, in pursuit of profit and recognition from customers, neglect many of the mandatory control steps, which ultimately leads to violations and loss of potential profit due to the attraction of dubious depositors, the formation of debtors.

How does automated KYC technology work?

Automated KYC technology, one of the most advanced systems, which is responsible for full compliance with modern market requirements when checking clients of a banking institution, is being implemented to achieve the following goals, according to a number of algorithms:

  • Nonlinear analysis of customer data by artificial intelligence technology.
  • Full automation of data analysis processes for each client of the banking sector.
  • Elimination of any errors when performing routine work, since there is no human factor in data analysis.
  • Most of the processes that were previously performed manually are now automated.
  • For the normal stable operation of the system, unique IP technology is used, that is, intelligent process automation.
  • Artificial intelligence simulates the real behavior of a living person, which allows you to process a huge amount of information without the risk of running linear programs that do not work for real KYC analysis.
  • KYC technology involves the use of IDP algorithms, that is, an individual approach of a robotic program when analyzing incoming documents.
  • One of the most important advantages of this program is the recognition of handwritten text and its transfer to an electronic document, which completely eliminates the need for wall and manual printing in text editors.

Artificial intelligence has a unique ability – software codes have the ability to analyze past errors and not repeat them in the future, that is, the technology is self-improving, which indicates its development over time and improvement of work, without human intervention.

Key Benefits of Automated KYC

Automated KYC technology is increasingly being implemented in most business process management and customer service systems in many financial institutions, as it gives business owners a lot of undeniable advantages, such as:

  • Due to savings on human and hardware resources, up to a 70% reduction in direct costs for organizing the entire process of analyzing customer data is achieved. The business owner saves at all stages of the process – he needs a much smaller staff, for which it is necessary to purchase hardware and organize jobs, which, in turn, greatly affects the number of leased areas and other factors.
  • AI in the KYC system will allow you to create a personal electronic card for each client, which indicates all his personal data, as well as banking history. This allows the manager to quickly study the information and make a decision on issuing a loan or making financial transactions in relation to this person.
  • When using automated KYC technology, up to 75% – 80%-time savings are achieved, and the bank’s client receives an answer on any application in a matter of hours, without the need for a long wait, which significantly raises the company’s credibility.
  • When working with this technology, the human factor is completely eliminated, which significantly reduces the risk of making any mistakes, which always leads to negative consequences and additional costs for a banking institution, as well as to the loss of its competitive advantage. The system always works according to a previously developed algorithm, which completely reduces the risk of missing important information, and the information is always processed completely.
  • The system is completely decentralized, the information is stored on encrypted cloud servers, which allows it to be scaled in direct proportion to business development and database expansion, without the need to stop work or purchase new hardware.
  • All AI work in the automated KYC process is based on the functioning of high-tech bots that do not get tired and do not need sleep or days off. These intelligent programs can work equally efficiently 24/7, without the risk of losing vigilance.
  • This software provides a simplified direct contact between the bank and the customer, which significantly increases his interest in this organization. This leads to an expansion of the customer base, since a satisfied consumer always attracts his friends and partners, explaining all the benefits, provided that he receives the information he is interested in without downtime and expectations.
  • Each staff that was previously involved in the manual processing of information or documents received from a potential customer can now do other things, as the company frees up its production capacity. At the same time, a banking institution has the ability to quickly optimize staff, get rid of ballast, and increase or optimize its profits, and this is also reflected in customers, for example, in commission payments or interest rates on both deposits and loans.
  • Modern IT companies that have previously used these digital technologies to automate KYC for competitive financial institutions can now offer ready-made solutions that have already worked out all the mistakes of previous versions, which makes smart products even more valuable and effective for solving the most complex tasks, beyond depending on the number of registered users of the system.

According to the results of surveys of executives and other business participants, the implementation of the KYP system based on artificial intelligence allowed them to repeatedly increase efficiency, reduce the company’s staff, reduce the number of departments, provide new opportunities for scaling, and also eliminate any errors. Many users still believe that the use of this technology requires too much investment, but reputable IT companies that have been operating in this market for more than a year are ready to debunk these myths and prove in practice that one-time investments pay off in the shortest possible time period.


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