Digital Transformation in Banking

Know Your Customer (KYC) procedures are due diligence requirements that help banks verify the identity of customers, assess risk, and comply with Anti-Money Laundering (AML) regulations. KYC activities may include tasks such as gathering information from internal and external sources, verifying information, and applying decisioning models to help determine risk. Banks are digitally transforming these tasks to automate these interconnected tasks and processes, such as:

• Verifying identity
• Collecting data
• Assessing risk
• Monitoring transactions
• Auditing and reporting compliance processes

Additional resource: KYC Automation for Banks: 5 Biggest Benefits

Onboarding is the process of setting up a new account and guiding customers through the initial steps of using a product or service. It’s also the bank’s opportunity to make a great first impression with their customer.

Omnichannel customer onboarding is the ability to perform these tasks on and across multiple business channels, such as mobile apps, websites, call centers, or in person – making it possible, for example, for a customer to start a form on a bank’s website and to complete it with a customer service representative over the phone. Traditionally, onboarding activities involved a high amount of manual data entry and work across several departments.

Digital transformation and banking automation are helping banks improve customers’ onboarding experiences by coordinating tasks, including:

• Triggering KYC/AML processes
• Automatically assessing risk and decisions
• Synchronizing backend data systems and sources
• Providing real-time updates and notifications
• Personalizing products, services, and recommendations

In a competitive lending marketplace, speed can be a bank’s differentiator. The faster and more accurately banks can complete loan origination activities, such as data collection and verification, credit scoring and risk assessment, decisioning, approvals and compliance, the quicker they can close the contract with a customer.

Digital transformation helps banks speed their process from end to end and reduce risk by automating tasks, including:

• Digital platforms for online applications
• KYC/AML procedures
• Underwriting decisions
• Document management
• Auditing and regulatory compliance

Similar to loan origination activities, banks that make the lending process fast, easy, and transparent can gain an advantage over their competition. That’s why banks are using digital transformation to improve mortgage application, decision, and servicing processes, including:

• KYC/AML
• Digital platforms for online applications
• Document verification
• Property appraisal and assessment

In the trading lifecycle, it’s essential for banks and financial institutions to transmit data accurately and swiftly across channels and platforms. In reality, it’s not that easy. Organizations are optimizing their operations by using investment banking automations to integrate with trade partners through APIs, digitize trade documentation, automate risk assessments, incorporate blockchain technology, monitor trade activity and enable mobile application solutions.

With digital transformation, organizations are improving:

• Electronic trade capture
• Straight-through-processing
• Post-trade workflow automation
• Integrations with clearinghouses and other third-parties
• Monitoring and reporting
• Document and account management
• Advanced analytics for actionable insights

Trade financing is a complex activity involving multiple stakeholders, regulations, and documentation. To mitigate risk and deliver the most value to their customers, financial firms are taking advantage of banking automations to help evaluate credit risk, reduce fraud, and manage a long paper trail of documents.

Using process orchestration, banks are coordinating systems to optimize:

• Digital trade and financing platforms
• Cash and treasury management
• Risk analysis and due diligence
• Electronic documentation and account management
• Real-time payments and next-gen technology, such as distributed ledger

Globally, banks face a long list of national and international regulations they must comply with, such as Know Your Customer (KYC), Anti-Money Laundering (AML), Foreign Account Tax Compliance Act (FATCA), Payment Services Directive (PSD2) and Securities and Exchange Commission (SEC) rules – and supervisory activities are expected to increase. Compliance with industry regulations is important for banks, not only to avoid potential fines but also to instill trust and confidence with consumers.

To be more compliant, banks are applying advanced analytics and process automation capabilities to digitally transform daily operational tasks, such as:

• Transaction monitoring and analysis
• Security monitoring
• Audit trail management
• Automated regulatory technology

As consumers are using credit cards to purchase and pay for goods and services, banks are seeking to create a competitive advantage by streamlining payment processing and ensuring credit card transactions are secure.

To enhance customer experience and improve services, banks are implementing retail banking automations to optimize:

• Fraud detection and prevention
• Contactless payments
• Mobile wallets

Banks are driving better, more individualized customer experiences through digital transformation. From 24/7 account access to virtual assistants, AI-enabled call centers, and personalized recommendations, customers are benefitting from banks with IT infrastructures that connect diverse data sources, orchestrate processes across various endpoints, and integrate with customer relationship management (CRM) systems.

By implementing a digital-first approach to customer support, banks are improving:

• Customer service availability and response times
• Self-service capabilities
• Personalized service and support
• Service consistency and quality