17 Mar 2014

How well do you know your customers?

KYCThe FCA identified one in ten banks still have a risky sales strategy, offering staff pay incentives that could trigger miss-selling. This is a definite call to action for CIOs and CTOs to review the Know Your Customer procedures that their companies have in place.

As many of you will know, the ‘Know Your Customer’ (KYC) regulation that was brought in by the FCA, demands companies better understand their customers. This regulation has been brought in to help prevent money-laundering as well as leaving banks better able to advise their customers.

The information required includes the customer’s financial aims, aspirations and attitude to risk. The FCA demands that companies need to be actively collecting this information and ensuring it is up-to-date at all times. Should customers’ situation change, there needs to be a process in place that keeps this information accurate.

To help you evaluate your KYC process, we have had a look at the best-practice techniques in use throughout the financial services industry today.

There are a multitude of ‘made-for-purpose’ systems available on the market. Software packages provide you with dynamic, rules-based functionality, allowing your sales team and relationship managers to access the necessary information about your customers.

When asked what is needed to comply with KYC, a spokesperson from American Financial Crimes Enforcement Network (FinCEN) suggested the best procedure for this process is “Sharing information across business lines and separate legal entities within an enterprise”. Data needs to be collated from across the enterprise and fed into your KYC system to ensure the information provided is easily accessible and up to date.

To allow your ‘Know Your Customer’ software package to become a plethora of useful information, you need to employ a structure that will effectively and immediately feed information into the ‘Know Your Customer’ platform. The best way to do this is to implement an ‘Enterprise Service Bus’. This helps stop silos of information, so if customer information is changed in one system, it is automatically changed across your whole enterprise.

The best practice way to achieve this, is to implement an Integration hub that provides this structure. There are a number of ESB platforms on the market. If you want to know more about what is available, take a look at the technologies section on our website.

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