Know your customer (KYC) compliance challenges have intensified for corporates around the world, the latest Thomson Reuters KYC compliance survey finds.
Despite the banks ploughing significant resources into KYC compliance in an effort to streamline the KYC process for themselves and their clients, the latest Thomson Reuters survey into this area finds that compliance challenges are increasing for corporates.
The survey, which quizzed over 1,000 decision makers at non-financial corporations around the world, found that the increasing compliance challenge for corporates is having a significant impact on their customer experience when working with banks. As a result, 12% say that they had changed banks in the past year because of KYC issues.
For corporates around the world, a lack of consistency is one of the biggest issues they face when dealing with bank KYC demands. To highlight this, Thomson Reuters’ survey finds that 37% of corporates say that different banks ask for different documents.
Perhaps even more frustrating is the lack of internal communication/alignment within banks themselves. For instance, 26% say they were asked for different documentation by different departments within the same bank. A further 37% said they had to deal with many different people within the same bank during the process.
Unsurprisingly, because of these inconsistencies, corporates are spending increasing amounts of time dealing with KYC requests with 58% reporting such an increase. Eighty-five percent report a poor experience of the KYC process and 12% changed banks as a result.
From a regional perspective, it is surprising to see Singapore posing the most KYC issues, with 20% of corporates changing banks due to KYC-related issues.
Time not well spent
Unfortunately, the increased time and effort that corporates are spending on KYC is not resulting in faster onboarding times. Indeed, in 2017 average onboarding times increased from 28 days to 32 days.
When quizzed on the longest time they had to wait to be onboarded, the average time was 45 days. Just over a quarter said that they have had to wait two months or more.
Looking ahead to 2018, corporates are not positive that they will be onboarded more quickly. Indeed, 24% say they expect to see a rise in onboarding times in the next 12 months.
Corporates can do better too
Once a corporate is onboarded, the KYC work does not stop there for the banks who must ensure they hold adequate and up to date information on their customers. The onus is very much on the corporate to provide this information and Thomson Reuters’ survey finds that many are not living up to their side of the bargain, with 30% having not updated their banks with vital information around organisational reviews.
Again, the amount of time it takes corporates to update this information with their banks is holding them back. The survey finds that corporates on average spend 30 days bringing their banks up to date with such material changes and 28% expect the time they spend doing this will increase in 2018.
Whilst KYC continues to be a burden for everyone involved in financial services, when the results of this years’ survey are compared to those of 2016 there are signs of incremental improvement.
The hope is that through greater dialogue, driving of standards and the use of technology, this improvement will continue and corporates and banks will spend less time on KYC. However, with regulators becoming increasingly focused on this area and the fines for KYC lapses growing, we stand at a crossroads. Only time will tell what direction the industry will move in.
Learn more about how to improve KYC processes
Treasury Today and Thomson Reuters recently held a webinar looking at the challenges corporates face around KYC and what can be done to alleviate some of the burdens.
Watch the webinar today