Connect with us
Finance Digest is a leading online platform for finance and business news, providing insights on banking, finance, technology, investing,trading, insurance, fintech, and more. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

NEWS

Over two-thirds of financial institutions are losing out on business due to inefficient Know Your Customer processes, research by LexisNexis® Risk Solutions shows

Published On :

  • 54% of professionals in large financial institutions state that there are inefficiencies in their current Know Your Customer (KYC) and Sanctions alert remediation processes
  • Over two-thirds (70%) of those with less efficient processes cited missing out on business due to customers being flagged erroneously as a financial crime risk 

Financial institutions need to improve the efficiency of their KYC and sanctions remediation processes or risk losing business, the latest report published today by LexisNexis® Risk Solutions reveals.  70% of professionals in financial institutions are worried that customer friction caused by inefficiencies in these practices are resulting in lost business. KYC and remediation procedures are in place to investigate whether a new or existing customer flagged as a potential financial crime or sanctions threat, poses a genuine risk. Industry feedback indicates that common reasons which result in institutions losing business due to inefficiencies include:

  • Customers frustrated with delays or repeated requests for information opt to take their business elsewhere;
  • Institutions rejecting potential customers who have been erroneously flagged as a financial crime risk.

The report, KYC & Sanctions Remediation: The Impact of Inefficiency, interviewed 151 decision-makers responsible for KYC and sanctions alert remediation in UK financial institutions (including banks and investment firms), to identify both the root causes and business impact of inefficient financial crime compliance processes.

Financial institutions are challenged with balancing the needs of the business and customers with financial crime compliance obligations, which can often cause friction. Over half (59%) of the decision makers surveyed stated that their current KYC and sanctions remediation processes are less than very efficient (63% of small-mid sized firms and 54% of large firms*), which has a subsequent negative impact on their organisation.

The biggest factor impacting process efficiency was found to be disparate and siloed data systems, with 60% of those with less efficient processes citing this as a key concern. The next two most common factors were the lack of a single risk view for customers and prospects, and the time required to maintain an audit trail, both cited by 59% of respondents.

The consequential business impacts varied from internal friction between departments and decreased productivity, to loss of business. Notably, over two-thirds of professionals from banks (67%) with processes which needed improvement, pointed to losing business due to inefficiencies in remediation practices, with 50% of investment firms flagging the same issue. 

Michael Harris, Director, Financial Crime Compliance, at LexisNexis® Risk Solutions says:

“Inefficiencies in Know Your Customer and sanctions remediation processes can result in a huge cost for financial institutions, due to the negative effect they can have on business operations. This cost can be both reputational and financial.

“Significantly, disparate data and a lack of a single risk view were flagged as two of the major causes of inefficiencies, highlighting how important having access to the right combination of information and technology is when conducting remediation activities.

“Fully efficient remediation requires a holistic view of the customer or prospect. Only when financial crime compliance teams have access to the full picture are they able to make the robust and timely decisions required to expedite remediation activities, meet compliance obligations, maintain the customer experience, and of course, combat financial crime effectively.”

Continue Reading

Recent Posts