Faced with an alarming rise in inefficiencies in KYC (Know Your Customer) integration processes, global banks are witnessing a worrying phenomenon: the massive flight of their customers. Recent investigations conducted by Fenergo reveal that more than two-thirds of financial institutions have recently lost clients due to these delays. Singapore is particularly affected, with a staggering 87% of banks encountering this challenge. Undoubtedly, the cost of conducting KYC assessments, reaching hundreds of millions of dollars annually, coupled with fragmented processes and an unsatisfactory customer experience, results in a staggering abandonment rate. In such a context, the use of artificial intelligence emerges as a promising solution to enhance operational efficiency and data accuracy. Fenergo urges banks to evolve quickly, otherwise they risk not only regulatory fines but also a decline in customer satisfaction due to prolonged and complex interfaces.
The Challenges of KYC Processes in Global Banks
According to a recent study by Fenergo, the slowness and inefficiency of KYC (Know Your Customer) processes have driven a record number of clients to leave their bank this year. More than two-thirds of enterprise, institutional, and commercial bank executives reported losing clients due to these inefficiencies. Particularly affected, 87% of banks in Singapore have reported this trend.
The annual costs associated with conducting KYC examinations are estimated at $60 million for enterprise and institutional banks, and $175 million for commercial banks. The main factors contributing to this situation include poor data management, inadequate customer service, and complex integration processes.
This comes as regulators intensify their efforts to combat money laundering, thereby reinforcing the importance of compliance procedures. At the same time, automation and artificial intelligence are being explored to address inefficiencies and enhance the customer experience by optimizing KYC processes.
Fenergo reveals a “leak” of customers due to inadequate KYC processes
A recent study conducted by Fenergo highlights a problem that is currently upsetting the global banking sector: the inefficiencies of Know Your Customer (KYC) and onboarding processes. More than two-thirds of banks admitted to losing customers due to slow and inefficient procedures. This figure, an increase of 19% compared to the previous year, underscores a troubling trend. In a world where speed and efficiency are synonymous with customer satisfaction, any delay can tip the scales against an institution.
Singaporean banks appear to be particularly suffering from this hemorrhage, with 87% reporting customer losses. This phenomenon is not geographically limited, with every region reporting an annual increase in customer losses. Additionally, the high costs of KYC weigh heavily on financial institutions, pushing them to reevaluate their strategies. Combining these costs with high abandonment rates, this scenario drives many players to seek innovative solutions to turn the tide.
The Internal and External Challenges of Banks
The factors responsible for inefficiencies in KYC processes are numerous, ranging from internal issues to external pressures. A major obstacle remains poor data management and siloed processes. This problem, cited by 86% of banks, significantly hinders the improvement of practices. These internal silos make it difficult to share essential information between departments, preventing a comprehensive view of clients and their needs.
The Future: Towards KYC Process Optimization with AI
In light of these challenges, a majority of financial institutions are turning to technological innovation, particularly artificial intelligence (AI), to address these issues. A clear trend highlighted by the study shows that 42% of banks plan to enhance operational efficiency through AI, while 40% apply it to data accuracy. With AI, the landscape of KYC could undergo a radical transformation, turning a major obstacle into a competitive advantage. To dive even deeper into these transformative dynamics, you can visit Fenergo
