This article is part of Kyckr’s Future of KYC Compliance series, which interviews leading industry professionals and thought leaders to learn more about the trends that will shape the future of KYC compliance.
The following is an interview we recently had with Nishank Khanna, CFO of Clarify Capital.
What's the current state of KYC compliance?
KYC Compliance is undergoing a transformation. Online security measures are smarter than they were a year ago, but still relatively rudimentary, compared to where most companies would like to be. There’s a huge industry push for better protection and risk management for online transactions. Since COVID and the digital boom, the industry has shifted to prioritise KYC compliance more than ever before. Many companies are in the process of integrating new tech and software to improve outcomes.
How has KYC compliance evolved over the past 5 years?
More rules and regulations have led to a need for advanced technology and software. In order to remain compliant, companies have had to find and invest in workable solutions that aren’t especially labor intensive. This has meant turning to automation over manual processes. Automation has benefited companies by increasing accuracy and saving time. Over the last five years, we’ve seen companies revamp entire processes in order to increase customer protection. Risk is increasingly being managed by the implementation of new and innovative digital products.
How has KYC compliance changed in the midst of COVID?
During COVID19, we’ve seen a surge in online and remote customer transactions. To reflect the change in consumer behavior, companies are faced with the challenge of implementing digital KYC checks to remain compliant. There’s a heightened level of importance surrounding secure payment and consumer protection. Companies not only need to have measures in place that increase customer security, but they need to be able to do so efficiently. Prior to COVID, a reliance on manual, or partially-manual KYC checks was fairly commonplace. Even now, many companies still process red flags manually.
COVID has made adopting tech, including cloud-based solutions, much more imminent, given the need for more up-to-date and efficient KYC compliance. The demand for improving online security and revamping how security checks are done to account for the digital disruption has been especially crucial for banks and financial institutions.
What are the top trends shaping the future of KYC compliance?
As tech and automation increases the accuracy of compliance measures, regulation will transform in tandem. Rather than over-see adoption alone, regulation will shift to measuring how efficient company compliance is. A new trend should evolve towards decreasing inaccuracies and setting benchmarks and metrics that more easily define what successful KYC compliance looks like.
What's the future of KYC compliance?
We can expect companies to increasingly adopt AI and other advanced technology that allows these processes to be fully automated. The benefit to automation is better accuracy and a reduction in organisational waste.
As the demand for automated solutions grows and more products enter the market, tech companies will begin to undercut one another to remain competitive. This will allow for mainstream access and adoption of these security products, as retail price becomes more and more affordable.