The use of robotics in KYC verification process brings considerable improvements of the due diligence activities. That, and big savings too.

Looking into RPA solutions in KYC authentication

Robotic Process Automation (RPA) is the technology that allows a person to build a computer software (a “machine” or “robot) to imitate the actions of a human while carrying out a business process. KYC stands for Know Your Customer; it’s a verification that banks are required to perform to make sure that their customers are actually who they claim to be.

Financial institutions are looking into RPA solutions in KYC authentication for several reasons.

Firstly, RPA improves operational efficiency by automating manual, repetitive tasks like opening cases, recording updates or collecting data for KYC authentication – those who carry out the tasks can move on to more interesting ones, and become more efficient at that.

No errors in sight - KYC verification process

Secondly, the accuracy of RPA solutions for KYC verification process is perfect, with almost 0% error rate. Therefore, time consuming documentation edits done by employees are very rare. What is more, there is much less likelihood of customer complaints and regulation violations resulting in fines.

It is known that finance is one of the most regulated sector, therefore RPA is highly desirable in compliance. The KYC authentication tool works 24/7 – when employees rest after work, sleep at night, are on vacation or on a sick leave, RPA is functioning at peek proficiency, constantly collecting transaction information and analyzing transactions against different validation rules. The compliance department is immediately notified when a robot finds something suspicious.

12 important minutes

On average, an AML analyst spends one hour on analyzing a suspicious case.  With the use of RPA, that hour can be shortened by up to 12 minutes thanks to automating the KYC verification process.

Moving forward, the average AML team consists of 50 analysts and works for a financial institution located in US, UK or a Western European country. The average earnings of an analyst vary between $40,000 and $50,00 per year. Including other costs, such as employer’s costs, team management costs, IT support, rent, etc., the amount rises rapidly to $100,000 a year.

Saving 12 minutes on every hour is enough for an RPA tool to save up to $1 million in a department of 50 analysts. What is more, the analysts do not have to perform repetitive tasks and their work becomes more enjoyable.

The courage to innovate

Financial institutions have a risk-averse culture when it comes to compliance. They are all about risk minimization which directly conflicts with change. Certainly, there are tasks which computers cannot perform as accurately as humans at the moment, like the analysis of collected data. However, machines should be used as a support that handle repetitive activities.

Searching for a customer in the database of suspects, verifying if the customer is not on a warning lists, checking what is known about the customer online – all these activities can and should be automated with the use of RPA. Repetitive tasks handled by machines help humans with analyzing things more effectively. An RPA tool can suggest what further steps to take, however the final decision is up to a human.

Today, financial institutions have to face an excess of work resulting both from ever-changing regulations and subpar IT solutions. Therefore, it is worthwhile to automate the KYC verification process and others, because soon it will be a market standard.

Painful fines

Findings from January 2020 show that global fines on financial institutions total $36 billion for not being compliant with AML, KYC authentication and sanction regulations – a 160% increase since the last 15 months. Furthermore, since September 2018, European financial institutions account for two-third of all penalties issued by US regulators. Banks with headquartered in the EMEA region were fined 10 times higher ($216m USD) than US institutions ($20m USD) in the same period. Big banks were one of the groups with the harshest punishment given – 12 from world’s top 50 banks were fined for non-compliance with AML and KYC regulation in 2019. Penalties will not disappear – the number of institutions fined will increase together with the amount to pay.

The data above shows that implementing an RPA for KYC authentication should be a priority – not only will it protect the institution against unwanted penalties, but it will also reduce costs and make AML analysts’ work more satisfying.

Comarch RPA for KYC is a good example of an IT solution that solves all of the above mentioned problems. It optimizes the KYC verification process for AML by enhancing data collection and input.

Daniel Madajewski, Business Development Manager at Comarch Finance

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