How can traditional banks meet the alternative bank challenge?

Jane Jee, CEO of Kompli-Global, explains how frictionless customer onboarding without compromising on compliance with anti-money laundering (AML) legislation is crucial if banks are to meet the challenge presented by the rise of agile fintechs.

Success in the field of banking is increasingly about offering the customer the best possible experience and putting them at the heart of the business. Delivering a smooth, frictionless customer onboarding experience will be particularly important.

However, to comply with AML regulations, all financial institutions, as well as other regulated entities, must carry out stringent know-your-customer (KYC) checks on all new customers before handling their money – and, in addition, they must monitor existing customers on a regular basis according to the level of risk they pose.

The regulations require comprehensive checks of all available data for “adverse information” on new and existing customers. This means searching not just media news sources but databases and watchlists, as well as the so-called “deep web” for the 90 per cent of internet data not indexed by commercial search engines.

Meeting the challenge

The initial KYC-checking process has traditionally proven difficult for banks trying to onboard customers quickly while meeting compliance obligations, for a number of reasons.

The legacy infrastructure of financial institutions means that too many are using obsolete technology and manual processes to carry out the required KYC searches. Many are using Google and similar search engines, despite their unsuitability for AML – they can’t explore the “deep web” for non-indexed data, for example, while SEO and other techniques can skew results.

Further complicating matters, many financial institutions are making use of static databases in their adverse information searches. As noted in a recent FATF report[1], “the information provided by third-party service providers can be out-of-date or incomplete,” with implications for KYC searches.

It’s time for them to step up their game

These factors can all lead to unnecessary delays in approving new account holders. This potentially sours the company’s relationship with customers from the very beginning, leaving the big banks vulnerable to competition from the growing number of fintech start-ups offering potentially better tailored banking services to customers.

With their cutting-edge, purpose-built technology created from scratch, this new generation of start-up banking service providers are flexible and agile enough to offer a speedy, seamless experience to customers, while at the same time meeting AML obligations.

Banks, therefore, need to step up to the plate when it comes to customer experience, without compromising on AML legislative compliance, in order to compete with the new players in the industry.

Benefiting from innovative technology

This is where the new generation of regulatory technology (regtech) experts can help banks beat the new banking services providers at their own game. Forming partnerships with innovative suppliers with dedicated cutting-edge solutions may prove a lifeline for traditional banks and save them significant costs and effort.

Advanced regtech incorporating innovative machine learning (ML) and natural language processing (NLP) technology – examples of the generic term “artificial intelligence” – have been designed specifically to help banks fully automate KYC searches to minimise onboarding times while optimising due diligence.

Kompli-Global’s search platform kompli-IQ, for example, replicates the techniques of the very best human-compliance analysts by deploying such technology. Using more than 500 search terms in multiple languages, the platform can perform real-time searches of the surface and deep web, as well as other key global databases for information on any new or existing customers.

Such technology can perform multiple KYC checks simultaneously, and unlike its human counterparts can search 24 hours a day, seven days a week, enabling it to flag any adverse media to human compliance managers the instant it appears, without delay.

In doing so, this kind of regtech can do more than help banks identify potential money launderers before they become customers. It can help streamline the onboarding process for new account holders so that applying for an account at a bank can truly be as smooth and seamless as setting one up with a start-up banking services provider.

Time to take action

The new breed of agile banking service providers pose a real challenge to the financial dominance of traditional banks. To compete, banks need to do all they can to optimise the customer experience, by streamlining the customer onboarding process.

By incorporating advanced regtech into their due diligence processes, banks can address account application delays caused by inefficient KYC protocols, while ensuring optimum regulatory compliance. In doing so they can ensure their businesses continue to thrive, all while helping to protect the wider economy from the threat of money laundering.


To find out more about how Kompli-Global’s advanced search platform kompli-IQ can help your bank optimise customer experience, visit www.kompli-global.com.

[1] www.fatf-gafi.org/media/fatf/documents/reports/FATF-Egmont-Concealment-beneficial-ownership.pdf

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