Verifying the identity of customers and assessing the risks associated with them has long been a disheartening exercise for corporate treasurers. However, this does not mean that they have become resigned to the issues created by inefficient KYC processes. In fact, a recent survey of US and UK treasurers published by Encompass suggests we might have reached a tipping point in terms of acceptance of the onboarding experience.
The vast majority (86%) of survey respondents reported losses as a direct result of lengthy or complex onboarding journeys and a similar percentage had abandoned applications due to the time taken to process them.
Julianna Achmatow, Vice President, Global Treasurer at developer, manufacturer and distributor of consumable products in the life sciences and diagnostics sectors, Calibre Scientific, explains that the main pain points in KYC compliance include ad hoc requests with no specific schedule.
“You get these requests for KYC or KYC refresh at random times, usually when least expected,” she says. “Failing to complete the process carries the risk of having your bank accounts frozen, which has happened to us a few times.”
When working with a relationship bank, Achmatow says she often sends them back to their files. “It happens numerous times that you may get a KYC request form from the same bank but from a different analyst,” she adds. “I never send the same information twice. I don’t think I had the opportunity to be proactive but establishing a cadence and knowing when KYC refresh happens would be helpful.”
One of the biggest issues for Cranfield Group, which specialises in engineering, architecture and project management/advisory and renewable energy recruitment, was just how manual the whole process felt says company Founder and Director, Marc Owen.
“We were stuck chasing documents over email and checking IDs manually,” he adds. “It turned every candidate into a separate task, which slowed things down. We ran everything through [recruitment software] JobAdder and most of the KYC tools we looked at didn’t connect with it. That meant more time copying data between platforms and more chances for errors. Instead of making things easier, those tools just added another layer of work.”
Eventually, the company built an API connection into the software and switched to a simple SMS link for document and biometric checks. “Candidates click the link, complete their checks on their phones and the results feed straight back into our workflow,” says Owen. “What used to take days now takes minutes and almost all of the manual hand-offs have disappeared.”
Submitting the same KYC information to multiple banks is a common bugbear. Fortunately, there are solutions. “Client lifecycle management platforms offer firms a single, standardised repository of verified KYC data that can be shared securely and seamlessly across a network of participating financial institutions,” says Ruth Ormsby, MD EMEA at Fenergo. “Although the initial cost of integrating such a solution may seem steep, firms can expect to save a great deal of capital over the long term.”
Treasury4 Co-Founder & Chief Product Officer, Ed Barrie recommends centrally organising and managing all legal entity and financial account data and related legal documents while acknowledging that the challenge with legal entity data is that there is no single owner within an organisation.
“Some firms are building centralised repositories maintained by dedicated teams, while others have appointed KYC leads to coordinate responses and stay on top of requests across their banking relationships,” observes Craig McLeod, Head of Financial Crime Compliance at FTI Consulting.
According to Sumsub Chief Product Officer, Andrew Novoselsky, the most effective way to reduce repetitive submissions is by adopting a reusable KYC framework, while ScreenlyyID Director, Brett Wise, advocates creating a golden record of legal entity data structured with standard fields that can be exposed via an API or portal.
Many companies are prioritising the maintenance of standardised data repositories with clearly defined update protocols. One of the most promising developments in this space is the emergence of corporate digital identity solutions through industry initiatives.
“Our participation in the CFIT [Centre for Finance, Innovation and Technology] coalition demonstrates how corporate digital ID frameworks can fundamentally transform KYC processes by enabling controlled access to verified digital identities rather than perpetuating endless document resubmission cycles,” says Katarina Pranjic, Head of Regulation and Policy at LexisNexis Risk Solutions.
Vendors can support corporates through education and integration reckons Brittany Garland, Head of Regulatory & Compliance Solutions at S&P Global Market Intelligence, who agrees that it is not clear that KYC utilities have reduced the burden for corporates given the difficulty of reaching consensus on policy and data standards.
McLeod recommends making it easier for firms to see who accessed their data, what is outstanding and what has been accepted as well as expand coverage beyond large multinationals into SMEs and mid-tier firms “who often bear the greatest KYC pain.”
To make KYC utilities more useful, Wise believes vendors need to evolve beyond the basics and implement features such as live data feeds and open APIs. “Businesses should be able to push the same data to multiple banks or platforms without starting from scratch every time,” he says. “Having a trusted third party – like an auditor or legal representative – certify documents can give banks more confidence to rely on shared files. Utilities have already helped cut the paperwork, now it’s about making the whole process faster, smarter and more connected.”
Implementation of more secure technologies to improve data protection and transparency remains crucial, alongside creating more intelligent document parsing systems that can automatically extract relevant information.
“The development of robust monitoring tools to track expiring documents and regulatory changes would further alleviate the compliance burden for corporate clients managing multiple banking relationships,” says Pranjic.
Vendors should consider an open architecture that brings in other stakeholders beyond treasury for data management and workflow that allows the corporate to choose what data they want to share and with whom with a full audit trail, says Barrie. “Vendors should parameterise as much of the data as possible to drive standardisation around data definitions and types,” he adds. “Banks need to integrate more effectively with technology vendors through APIs and standards like ISO 20022 XML and push clients away from data sharing via email and proprietary banking portals, which are not used by corporate stakeholders outside of treasury.”
Utilities have made progress, especially when it comes to data reuse and shared frameworks across institutions. But uptake is still slow and many banks still operate in silos. In practice, there are still too many points of friction including inconsistent data formats, compliance standards that don’t match and concerns around liability and trust.
“What vendors can do better is twofold,” says Novoselsky. “First, build trust and transparency into the data sharing process with clear consent mechanisms, audit trails and granular control. Second, shift from monolithic KYC solutions to modular ones. Corporates don’t need a one-size-fits-all system – they need tools that fit their risk models and geographies.”
The vast majority (85%) of the organisations surveyed by Encompass were actively considering a move to digital-first banks in search of a more seamless onboarding experience. According to Ormsby, this is a reality many banks are already confronting. A recent Fenergo study of more than 450 C-level executives across corporate, institutional and commercial banks found that two-thirds had lost clients due to slow and inefficient client onboarding and KYC, up 19% from 2023.
“This high abandonment rate is due to a combination of internal and external factors, including poor data management and siloed processes, poor customer experience and delays in processes,” he adds.
When a neobank can open an account in a day with APIs, real-time dashboards and instant virtual accounts, it’s no surprise companies are shifting part of their business there, says Wise. “Compliance isn’t the issue, it’s the friction,” he adds. “Streamline data sharing and automate the basics and KYC becomes a strategic advantage, not a roadblock.”
Novoselsky observes that digital-first banks can design KYC flows that actually serve the user and suggests that if traditional banks don’t catch up – particularly by embracing reusable verification, smart orchestration and adaptive compliance – they risk losing business to more agile challengers.
For multinationals, even a modest reduction in onboarding lead time across jurisdictions can free up liquidity and operational capacity. McLeod states that traditional banks need to evolve (not by relaxing standards, but by redesigning processes to be smarter and more client-centric) and adds that reducing friction shouldn’t come at the cost of control.
However, faster is not always better and creating a true picture of risk and building trust in a relationship are just as important. That is the view of Marisol Lopez Mellado, Industry Practice Lead at Moody’s focused on financial crime and third party risk compliance, who reckons scale is also a significant consideration.
“While faster onboarding could make digital-first banks attractive to corporate clients, there are many other factors that influence the choice of bank,” she says. “Every bank has gone through digital transformation of operations to ensure better, smoother experiences and these transformations are an ongoing process of continual improvement.”
Pranjic agrees, noting that while digital-first banks excel at onboarding efficiency, they sometimes lack the global reach, comprehensive product suites and established risk management frameworks that multinational corporations require.
Barrie is also sceptical, suggesting the banking sector should seek to get the basics right for operations such as account opening, account reconciliation, streamlining of KYC refreshes and client onboarding.
Then there is the question of how, as these challenger banks offer more products and grow through acquisition, they prevent themselves from entering the same trap as more established institutions. “Both traditional and challenger banks need a detailed, well thought out technology strategy and must select the right partners to stay relevant,” suggests Garland. “It is incredibly challenging for a financial institution to spend what they need to build and maintain proprietary bespoke technology.”
Looking ahead, Owen refers to a number of developments that would make it easier for companies like his to onboard customers. These include tools that plug straight into the systems companies already use (such as CRM platforms) without any extra coding and moving the whole ID check experience onto mobile with no-code widgets or simple SMS links that reduce the number of steps in the process.
“While most identity verification tools already use AI and device checks, there is still room to improve how those systems flag edge cases and reduce the need for manual review,” he says.
In addition to operational issues, Achmatow refers to concerns around the sensitivity of the data that has to be provided. “A secure vault is the future of KYC and I can’t wait to have a system where the confidential information is kept and that would allow the bank to tap into our database,” she concludes.
