Any business owner, CFO, or internal legal team personnel will be aware of the many components that must be addressed when it comes to workflow, business processes, and daily human activities. Part of operating a successful business that survives the test of time is being aware of potential risks, researching how to combat those risks and liabilities, and implementing solutions that ensure.
However, age-old and inefficient processes can ultimately slow down risk management, thus causing a greater liability and financial cost to a company. Here’s what you need to know about how hygienic entity management can speed up processes known as KYC and aid your company in maintaining financial compliance.
Defining KYC in Business
KYC, also known as “Know Your Customer,” is essentially a set of guidelines in financial services or within a business’s financial department that help with the identification and verification of a client or customer. As part of due diligence, a company is required to take certain steps to ensure that their customer is who they say they are. The aim of a KYC process is to help a business prevent liabilities related to potential illegal activity such as money laundering, fraud, or other financial crimes.
KYC regulations are mandatory and relevant for essentially all businesses that deal with money, such as banks, credit unions, private lenders, and more. Since criminal activity in the private sector can affect many other customers and sectors, these regulations are also applicable to organizations in other industries, too.
How Traditional KYC Processes Hinder Growth
An effective KYC process is the backbone to any successful compliance program and risk management department. With the increased amount of online crimes happening and increasingly more stringent compliance regulations, companies are being forced to dedicate valuable time, resources, and money into KYC processes. Yet, when these companies rely upon outdated, time-consuming, and inefficient processes for due diligence, business growth is hindered.
KYC is typically a lot of information gathering, processing, and communication. Delays often result in companies losing many potential clients during the onboarding and registration process alone. This is not even to mention the revenue lost during the exhaustive and labor-intensive processes that are often full of errors and duplicate efforts across multiple platforms. A 2016 survey from Thomas Reuters on the escalating cost and complexity of KYC processes revealed that:
- It takes an average of 32 days for corporations to onboard new clients.
- 89 percent of clients report bad KYC experiences.
- Financial institutions lose an average $60 million a year on KYC costs.
Essentially, businesses that rely on archaic KYC processes lose out on a future with potential clients and also waste invaluable time with manual user efforts getting their remaining clients onboard.
Automated KYC Requests and Processes
The good news is that, in today’s day and age, there is technology available that has established a new way of processing KYC requests. An automated entity management software is the type of solution that can benefit your company and your future clients. Some of the specific ways that this type of software can help you change your procedures for the better include:
- Streamlined Process. Poor customer experience is something all businesses want to avoid, and you especially do not want a poor experience to be in their first process with your business during KYC. Removing time-consuming administrative checks can create a more simple, easy, and smooth process for your future clients so they don’t abandon the process and find another service provider.
- Time and Cost Saving. With an automated system, you can literally take tasks for the KYC process from days to minutes. This benefits your business because your personnel do not have to perform time-consuming tasks and potentially make errors, while it also benefits clients because they can get their service sooner rather than later.
- Quality KYC. Manual checks may be necessary for certain parts of the LYC process, but a majority of the steps that are taken become prone to human error. With automated entity management software, your company reduced the chance of a mistake occurring during the KYC process that could result in either a potential customer getting wrongfully rejected or a potential customer who is committed a crime to get through successfully.
- Reduce Fraud. With the growth of e-commerce, the number of cyber crimes, such as identity theft, is a major issue. Having an automated and secure entity management software in your repertoire can ensure that your customers feel safe sharing their personal information and data during the KYC process.
Helping You Become Deal Ready
Athennian’s entity management software comes equipped with the tools you need to remain compliant, perform KYC requests as efficiently as possible, and be deal ready at all times. Take our quiz to learn whether it’s time to upgrade how your entities are managed. You can also request a custom demo with an entity management expert today!