KYC is at the forefront of multiple industries and is a key regulatory requirement across the globe. The inability to prove the relevant checks have been performed is not only a mandatory requirement but the punitive financial implications are extraordinary from not only a financial crime, fraud but increasingly from a regulatory punishment perspective.
Could using artificial intelligence (AI) within this process improve accuracy and efficiency for organisations? The simple answer is yes.
What is KYC? How does AI assist KYC?
KYC is validation across multiple documents and data sets to validate the individual is who they claim to be to enable financial transactions to be performed legally.
KYC powered with AI can:
- Reduce the cost involved in screening and checking background details on a customer
- Save time on ‘standard’ automation tasks, freeing time for staff to carry out other customer analysis
- Reduce the risk of fraud by spotting the tell-tale signs of a fraudulent customer application
- Deliver better, stronger compliance that can ensure the bank is less likely to fall foul of regulation
How artificial intelligence KYC is used in the finance sector
The finance sector has increased transactional volumes, increased geographies, a changing technology landscape and increased channels for interaction. Previously, tasks such as data collation and analysis would take hours. It would require trained staff to look over everything with a fine tooth comb. Now, AI can help to go through the ‘basics’ of a KYC check while ensuring the sections requiring human input are streamlined.
It also helps with intelligent document processing, ensuring everything is looked over, reviewed, secured, and stored where it should be. AI platforms are able to retrieve all the data needed, such as signatures and photographs, and can turn this into a fully readable document. Then, the user needs only review the information and validate what is on-screen. This saves everyone time and allows for easier more compliant onboarding.
Real-time monitoring, too, is important for using AI in KYC queries. This helps to look for potential flaws in the answers or the data held elsewhere. Alerts can be created to have a human investigate the problem.
This means the right information is provided to the correct person at the ideal time. The result? A much-improved experience for both customer and organisation.
The challenges of applying AI to this sector
Of course, the application and use of AI in any sector are quite challenging. There is no ‘easy’ way to speed up the process. Many firms also run into problems with two key areas: data preparation and employee training.
Data currently held might be scrambled and thus have to be better organized before it can be properly analysed. The staff must be trained to use AI in their KYC inquiries. While intelligent process automation (IPA) can save teams many hours, they must understand how to use the information on-screen.
Is AI the next KYC frontier?
It most certainly could be. AI is becoming a solution used in industries that, even a decade ago, would have balked at the idea. Now, the cost of compliance and the time-consuming nature of any KYC process means automation has become almost essential.
When KYC is paired-up with AI, though, the results could be pretty incredible. This could help to minimize fraud potential, make it easier for banks to make informed decisions, and ensure human staff can focus their attention on the areas which need a human hand.
Knowing your customer is a major part of modern business, but so is AI. Why, then, should they not be able to work together in harmony?