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The purpose of threat intelligence is to manage the risk of impersonation and ID fraud by undertaking relevant checks as part of the onboarding process. Vendors take different approaches including tracking of device IDs and geolocations often combined with other onboarding checks such as ID security features and external database checks.
Customers have come to expect a fully digital, paperless front-end experience, including onboarding. CLM vendor solutions enable the digitisation of onboarding and account/opening processes. Efficiency savings come from capabilities such as auto-populating forms with data collected across different workflows.
Verifying the identity of clients remains a key tenet of the know-your-customer (KYC) process. Vendors are able to eliminate the need for face-to-face interactions by relying on biometrics, digital IDs or video based identity verification.
Establishing the ownership structure of the client can be a complex exercise with many firms organised in complex offshore and multinational structures. Mature solutions can go beyond shareholding calculation and visualisation to independently extracting data from relevant data sources and guiding analysts on which parties to select for further investigation.
Screening is an established process with a large number of solutions that aggregate watchlists and provide automated results against input names. Mature vendor solutions minimise the likelihood of false positives and are integrated with the broader client due diligence (CDD) workflow.
Adverse media and profiling is one of the most time consuming and labour intensive processes within KYC/client due diligence (CDD). Vendor solutions are able to use artificial intelligence and machine learning to automatically dispose of a significant number of articles. The effectiveness depends largely on how these solutions are set up and trained. There is also a trade-off between the most effective disposition of articles and accuracy.
Optical character recognition (OCR) combined with machine learning tools can extract relevant information from documents to establish the source(s) of wealth and funds. However, the process of identifying acceptable documents varies significantly by source of wealth category and jurisdiction which poses a challenge in setting up and maintaining these capabilities.
Enhanced due diligence is necessitated by the presence of client risk factors. The major technological challenge with EDD is granular risk scoring of models to enable fine-tuned measures based on the level and nature of the risk and for automated workflows that accurately reflect the additional measures required.
third party party data collection and aggregation is a repetitive process with high potential for automation. Manual access, application programming interfaces (API), robotic process automation (RPA) and point-to-point integrations may be leveraged. Some challenges persist as many third party party databases do not have existing APIs. RPA may need additional entity resolution capabilities to identify likely matches when multiple results are yielded.
Technology can enable granular risk scoring across multiple dimensions. This allows for sub-categories with dedicated policies and workflows without applying a single onerous standard to all high risk customers.
Perpetual KYC is enabled by solutions that regularly monitor any updates to client information i.e. expired documents, third party databases etc. Changes to fields are extracted and fed into an automated workflow which recalculates risk levels on a regular basis and triggers and completes a file refresh when needed.
Operationalising client offboarding requires solutions that can build a complete profile of the client across the organisation as well as workflows integrated to the various banking system that can automate product closure and client exits.
Rules management is key to embedding the logic of the bank’s policies into the system. Rules updates driven by regulatory updates as well as changes in policy are fairly frequent. A robust solution has rules libraries that can be easily updated and reflected in the broader workflow including risk scoring and dynamic smart forms.
Successful data models enable data to be used across multiple use cases, entities and product lines. The CLM data can serve as the master data source for client data. In mature platforms, this data model can be easily integrated into other banking systems through pre-built connectors.
CLM platforms that tie together a number of point solutions come with advanced capabilities including infrastructure management, usage monitoring and associated hardware requirement as well as application management.
Customer outreach can be a very time consuming task, in particular for periodic refreshes that are required. Technical solutions allow for client portals, self serve document uploads, guided on screen instructions to increase take up and dedicated optical character recognition (OCR) + machine learning (ML) solutions to automate the entry of information from client documents.
The vendors profiled reflect a sample of vendors that provide CLM capabilities, chosen from the PwC FinCrime library of vendors with more than 100+ vendors reviewed, assessed and profiled
As financial institutions have come increasingly to see KYC/AML, account opening as well as tax declarations as part of an interconnected set of processes, industry technology providers have followed suit. Modern CLM platforms are important in providing financial institutions with the necessary technical capabilities for the maintenance of client relationships from on-boarding all the way up till the client is off-boarded.
We have mapped all key technical capabilities that make up an end to end CLM model and indicated some example solutions to show what is available in the market. The mapping is indicative only and further details and insights are available.
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Perpetual know-your-customer (P-KYC) is an approach, powered by technology, that enables automation across all end-to-end periodic KYC review process steps, leaving only a small subset of the more complex cases that require some degree of human intervention.
P-KYC enables the industry to address some of its long-standing KYC challenges, especially with the cost savings and quality improvements that can be potentially realised. In some cases, through the adoption of P-KYC, banks have achieved savings of up to 60%-80% of the total effort across the entire customer book.
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Partner, Risk Consulting Leader, PwC South East Asia Consulting
Partner, Financial Crime Unit, PwC South East Asia Consulting
Director, Financial Crime Unit, PwC South East Asia Consulting
