Know Your Customer (KYC) can be a significant challenge for financial institutions when they sign on new customers and so is attracting the attention of fintech companies to provide more automated solutions.
KYC is the process by which a bank verifies the identity of its clients. It is generally required by regulators as part of efforts to combat money laundering and illegal money transfers and affects almost every part of their major operations including payments, retail transactions and funds management.
Helping banks with KYC solutions is part of the growing Regulatory Technology (RegTech) sector, where new technology is used to help companies meet and monitor regulatory requirements.
“The global RegTech market continues to grow at a rapid pace,” says Lory Kehoe, Senior Manager Financial Services Strategy & Operations Consulting at Deloitte in Ireland.
Firstly, organisations are struggling to understand the ongoing and changing reporting requirements. Secondly, regulators around the globe are looking for ways to invest and use 21st century browser-based technology solutions to help them gather, organise and analyse data to identify trends, anomalies and areas for further investigation ensuring actions are taken much earlier in the cycle.
Kehoe says that along with compliance reporting, KYC is another opportunity for RegTech companies, because it is often a challenge for financial institutions.
“KYC is one area where we are seeing a lot of activity in the RegTech space as it continues to be a challenge, non-revenue generating and most definitely not a differentiator,” says Lory Kehoe.
Kehoe points to Fenergo as an example of a RegTech company with a strong KYC offering comprised of a sophisticated and agile regulatory rules engine. “Fenergo is punching above its weight in this sector as it competes with global established entities likes of fiserv, Oracle and Nice Actimise,” he says.
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