KYC Still Time-Consuming and Not Standardized in Fintech, SWIFT Says


EXCLUSIVE— A time-consuming and costly area of banking, Know Your Customer (KYC) and due diligence maintenance could use an upgrade, global payments provider SWIFT told Bank Innovation.

“KYC is a key tenant of our product set, part of a unit of SWIFT we launched in 2012. It’s part of a bigger play for us,” Paul Taylor, global head, financial crime compliance product marketing for SWIFT, told Bank Innovation.

“Basically, the [collection] of due diligence data was very laborious, so we established this central platform so banks could use the data more efficiently,” he said. “4,500 banking institutions worldwide are using that solution.”

SWIFT, whose KYC registry is a central platform for banks to manage their KYC data, is using the service to help standardize KYC requirements in banking, something that would go a long way towards minimizing the cost and effort involved.

As many in the industry have noted — such as the European Supervisory Authorities, who put out a letter on the topic recently — implementing technology such as artificial intelligence or machine learning would also simplify the process immensely.

This is especially the case as multiple data sources are “still a key pain point in the industry,” Taylor said, especially as much of the data verification is still conducted manually while experiments with artificial intelligence and other new technologies continue.

“[SWIFT] has not yet implemented new technologies like AI and robotics on the platform,” Taylor said, though other SWIFT processes are making use of learning algorithms and machine learning, he added.

This remains a manual process, with a team of about 35 to 40 people looking over the due diligence data for 4,500 financial institutions, Taylor said.

“With AI, you want to make sure you understand what it’s doing,” he said, noting that this was an area SWIFT needed “to explore” but had not “specifically deployed” as yet.

As for other technologies, while blockchain remains an area of interest for the financial world, it may not have yet found its place in KYC, according to Taylor.

“I’ve not come across many banks that are deploying blockchain for KYC, real-time,” Taylor said. “Certainly banks seem a lot keener on the technology we’re providing to them.”

To learn more about KYC and artificial intelligence, join us on March 5-6, 2018 at the Parc 55 in San Francisco for Bank Innovation 2018. Click here to register.

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