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Thomson Reuters KYC surveys of FIs & corporates reveal escalating costs/complexity

Managing and complying with Know Your Customer regulations around the world is one of the biggest bugbears and drags on efficient and hassle free operations in both financial institutions and corporate treasury departments. This shown, yet again, by two Thomson Reuters surveys*, 1) on the impact of global changes in Know Your Customer (KYC) regulation in FIs and , 2) a parallel survey of their corporate customers which showed that:

  • the lack of sufficient people resources and the volume of regulatory change are top concerns among nearly 800 financial institutions who responded to a Thomson Reuters survey on the impact of global changes in Know Your Customer (KYC) regulation
  • 89% of corporates had not had a good KYC experience, and 13% had changed their financial institution relationship as a result
  • the costs and complexity of KYC are rising, and are having a negative impact on their businesses
  • financial firms’ average costs to meet their obligations are $60 million, some are spending up to $500 million on compliance with KYC and Customer Due Diligence (CDD).

Time to bring a new client on board – up 22 %

Both financial firms and their corporate customers agreed that lengthening KYC procedures are putting more strain on on-boarding processes and client relationships. The time to bring a new client on board:

  • was up 22% from last year -- and anticipated to increase a further 18% over the next year
  • 30 percent of corporate respondents reported that times to on-board are more than two months
  • 10 percent claim an on-boarding time in excess of four months

And not only this, corporates report that they have, on average, eight different bank interactions with the bank during the process.

FIs KYC costs and reporting dynamics

KYC continues to weigh heavily on financial institutions, with the report citing that a lack of appropriately skilled people is their biggest concern and half of all respondents stated that the number of employees working on KYC had increased over the past year. 

Ever-changing regulations pose KYC challenges not only for financial institutions but also for their customers in keeping up-to-date, viz:

  • nearly 70 percent of financial institutions shared that they believe that all or most of their clients are proactive in reporting material changes in KYC status such as beneficial ownership change
  • but only approx. 30 % of the corporate respondents reported that they keep their financial institutions up to date proactively

Not surprisingly the majority of banks reported an increased level of engagement - at all levels - with the regulators.


* The surveys -- administered at the outset of 2016 to an evenly proportioned set of respondents in leading regional markets in Europe, the U.S., South Africa and Asia-Pacific -- involved 772 respondents at financial institutions as well as 822 respondents at corporations, all engaged within their organizations in KYC-related compliance activities, encompassing processing of and adherence to client on-boarding and CDD.

CTMfile take: Steve Pulley at Thomson Reuters believes that, “A positive and efficient client on-boarding experience is a differentiator for those financial institutions able to deliver it to their clients,.” Too right. Elongated and farcical KYC on-boarding processes are all too common. However, FIs and corporates are both going to have to accept that third parties, like Thomson Reuters, will have to have a major role in KYC on-boarding and management. It really will be a matter of who do you trust to do your KYC??

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This item appears in the following sections:
Fraud Prevention
Anti-Money Laundering
ID Systems & Services in Fraud Prevention
Minimizing Fraud Procedures

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