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Why Fintechs Need to Prioritise KYC Remediation in 2021

By NorthRow

 

FinTechs are entering into a new age of uncertainty, as they navigate the fallout from coronavirus with higher SME lending and increased levels of fraud. Leading firms have responded by delivering agile solutions that support their customers through these challenging times to maintain customer service and experience.

However, due to the volatile market, the customers Fintechs originally signed up to serve may not be the same customers they have today. A sign of the changing economic landscape is the increasing number of businesses that have entered into administration or become insolvent during 2020. The Government’s bankruptcy and insolvency register has recorded over 13,000 since the pandemic emerged, and as we look ahead to 2021 this number is expected to increase further.

KYC remediation has often been regarded as an activity undertaken by traditional Financial Services firms, who have huge databases of client information, held within multiple legacy platforms that no longer meet the latest regulatory compliance obligations. 

As we head into an uncertain future, KYC remediation, and periodic client reviews, will be critical to ensure FinTechs truly understand the organisations they are doing business with and the risks associated with doing so. 

Mature FinTechs will now have a wealth of client data that has been built up over the last 5 years and the newer FinTechs will need to implement systems now to understand their client’s changing risk status as their data matures. 

As budgets tighten, delivering efficient KYC remediation projects will be critical in 2021. In this blog, we explore how best to equip your FinTech to deliver efficient KYC remediation projects that support compliance, sales and the business as a whole.

Automate low-risk client data

By using technology solutions FinTechs can automate re-verification on low-risk clients, improve operational efficiencies and reduce the risk of human error, whilst ensuring that their compliance team focuses on enhanced due diligence on high-risk clients.

Use digital client self-service verification solutions

For collecting hard to reach client data, Fintechs should use digital self-service solutions to allow clients to update their own information and upload ID documents at their own convenience. It’s important that there is little effort required by the client in order to keep attrition rates to a minimum.

Add clients to a monitoring list

Due to the current economic instability, your client’s risk status will constantly be changing, and you need to ensure you are aware of any change.

FinTechs should be investing in ongoing client monitoring tools to enable real-time alerts on relevant changes to clients’ risk status. Digital tools are extremely agile and can be matched to a companies appetite to risk to enable a ‘Red, Amber, Green’ approach to alerts. Red alerts are a clear sign that there is suspicious activity and should be avoided. Amber alerts require further investigation and green are good to go.

Receiving alerts of changes in company structure, beneficial ownership, directorships, customers and their financial stability through agile cloud solutions can significantly reduce your business risk and operational overheads. Directing resources and focus is a real positive for your compliance team.

Rather than seeing remediation, monitoring and onboarding as siloed projects, businesses will see far greater benefit if they combine all three areas to deliver an entire customer lifecycle. There will be benefits for all parties – from user experience through to effective delivery of compliance.

In taking this approach a financial organisation can build an accurate real-time picture of risk throughout the customer’s life cycle.

Register for Webinar: Digitally Transform KYC Remediation in 2021

For compliance officers and business leaders, it has never been more important to understand who your customers are, their circumstance, and to ensure that the data you hold on them is sufficient, accurate and up-to-date. 

Delivering efficient KYC Remediation projects will be a key priority if you want to ensure compliance and reduce costs in 2021 and beyond. NorthRow and WNS are hosting a webinar on Tuesday 3rd of November at 2 pm on how to implement digital-first, efficient remediation projects that save you money, time and resource. We will be bringing together industry leaders from Finance, Legal and Technology to discuss. 

Register Your Seat