This article is part of Kyckr’s new 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 have recently had with Hansi Latifi
What’s the current state of KYC compliance?
HL: The KYC process has reached its most evolving state with the present market conditions. The combined regulatory guidance and supervision with service quality and suitability have pushed the process towards its present state, directing all the accumulated progress towards future continuation. Taking hold of system capabilities, KYC is currently aiming towards complete automation.
As a process focused on establishing customer identity, technology is further enhancing its balance and improving its efficiency through supporting structures and operational capabilities. The current state of KYC compliance has further upgraded and improved the general compliance framework through the presence of advanced technology in the process.
Entities applying up to date KYC solutions are upgrading the compliance management framework by incorporating these features. The evolving KYC features, being reflected on each component of the process in the current state of the market and the current conditions of the industries’ demands, are assisting the build up of solid compliance management programs.
How has KYC compliance evolved over the past 5 years?
HL: Built around compliance regulations and guidance, over the past five years, the KYC established structure has reflected the principal requirements, while its operating logic has followed the technological developments. The trend over the course of this period has consisted in aligning KYC compliance with effective operating models and innovative technologies. Advances in AI technology, big Data and analytics have led to a rapid development of KYC solutions.
Fine-tuning technology with compliance frameworks has resulted in the creation of advanced solutions in tailored ways. Solutions have united artificial intelligence and machine learning with process resources and system capabilities, significantly evolving KYC compliance over the past five years. In addition, over the last five years there has been a significant transition from minimal KYC solutions towards complete solutions. This has been achieved mostly through technology capabilities integrated into each phase of the process. The attached technological component has evolved each process through increased capacities.
How has KYC compliance changed in the midst of COVID?
HL: COVID has identified resistance continuation among different areas. KYC compliance’s solid continuation has been demonstrated because of the existence of already established structures. The changing patterns in which customers have approached activities have been supported by the existing compliance framework. In that regard, the increasing trend of transactions performed through electronic channels has been sustained by the automated KYC solutions. The need for remote activity throughout different sectors of the economy has pushed forward an increasing amount of new customer registrations and an increasing amount of performed transactions across digital channels. The operational stability of each entity processing KYC requirements will depend on how compact each implemented solutions is.
What are the top trends shaping the future of KYC compliance?
HL: KYC compliance solutions are built around a compliance management structure and are supplied with data. The increasing amount of generated data is the primary trend that is shaping the future of KYC compliance. This boost is guided by the huge quantities of produced data– big data (BD) and by the improved opportunities for screening this data. Furthermore, technology is the other trend shaping the future of KYC compliance.
Artificial intelligence and machine learning are the main ways working the volume of produced data according to compliance requirements. Increased necessity for increased data analytics being carried all the way towards the entire process length, will be adjusted to the increasing volume of data being generated. In addition, emerging transaction activities occurring with a similar pace across the world is the other trend pushing forward compliance regulations towards uniform best practices and international standards for uniform KYC compliance in different sectors of the economy.
What’s the future of KYC compliance?
HL: The future of KYC compliance will be characterized mostly by the new technologies shaping the markets and the future itself. Emerging technologies, already present at an initial state, will further mature into complete forms. Identity recognition methods are coming into surface through different available solutions. Technology extending towards innovative solutions, including face recognition, fingerprint recognition, and eye scanning that is supporting KYC solutions to react by stretching towards the same direction.
KYC compliance will evolve with the pace of the applied technology by balancing solutions with resources. The expected mutual trend to occur is the joined development of technology and KYC compliance. The combination of innovative technology and applied compliance will make each process better. In this regard, the future of KYC compliance looks more advanced in technology, more efficient in resource utilization, and more effective in application.