This article was written by Lisa Roitman, regulatory compliance workflow specialist and business strategist in Bloomberg’s Enterprise Data department.
Evolving regulation and geopolitical conditions have changed operational dynamics and dramatically increased Know Your Customer (KYC) burdens on market players. Financial Services firms face increased pressure to conduct ongoing KYC, draining treasury operations resources.
It’s estimated that treasury teams at multi-national corporations spend upwards of 25-hours-a-week tackling KYC requests, often on repetitive and administrative tasks, according to a NeuGroup study.
Increasingly, corporate treasurers highlight KYC as one of their most significant pain points, frustrated by the consumption of time, human capital and money spent, instead of focusing efforts on value-adding activities. Corporations (in particular multi-national corporations) are far more likely to maintain multiple banking relationships, making the management of KYC documentation and data more time consuming and complicated. Even maintaining simple bank by bank portal access and password information can drain resources.
Dan Matthies, Head of KYC at Bloomberg says: “The industry needs to shift from emails to automation. In the future, corporate treasurers should only need to grant access to specific data stored in a secure place, switching from documents to data.”
This allows multiple, static requests to become continuous flows. Machines can automatically distribute information to authorized parties depending on the set rules. Updates can be made in real time everywhere and corporate treasurers will have total control over their data.
“Our experience shows that asset managers, for example, are willing to simplify their KYC experience,” Matthies adds. They also insist on remaining in control which is critical in the context of regulations like GDPR.
While some market participants suggest that the solution may lie in the creation of a central KYC register, standardization may prove impossible. There are many obstacles to regulators, countries and banks agreeing on standard processes. Some may even view world standardization as anti-competitive. Absent the creation by regulators of a central KYC register, corporate treasurers are increasingly looking to technology driven solutions to help solve an industry wide problem.
KYC solutions take a variety of approaches to address differing user needs but the main differentiators revolve around automation, data quality, ease of use, security and auditability.
Imperatives for a successful KYC solution
Corporate treasurers play an increasingly critical role as advisors to their organizations but their value creation agendas are often sidelined by the demands of KYC. As opening new bank accounts and maintaining trading relationships consumes more and more time, costs rise and new business can stagnate. While there may be no single path to solving the conundrum, adopting a solution focused on automation, security and data quality can streamline operations and help corporate treasurers reshape the KYC landscape.
This article is reproduced from the Bloomberg’s Professional Services blog, and is licensed by The Association of Corporate Treasurers.