Case Study Analysis

• ABC Bank is an Indian Retail Bank. It wants to digitally transform its KYC & Onboarding Processes, with a view to attract millennial

customers.

• The traditional paper based approach follows multiple procedures such as data collecting, identification checks, document

collection, and, on occasion, face-to-face interviews with prospective clients. The onboarding process must be completed before a

new client may open an account or conduct business with the bank. Adherence to onboarding regulations while making the process

as pleasant as possible for users becomes a pain. Several forms are to be completed, documents submitted, manual compliance

checks completed by hand, and face-to-face identification checks conducted at branch offices. Even though advances in

technology, such as online form completion, have simplified this process in recent years, it remains a lengthy process.

• Thus the bank draws a conclusion to shift the processes both onboarding as well as KYC Completion to a more stacked approach

digitally automating the process.

• The upcoming slides talk about the prerequisites for implementation, and how technology can be leveraged for KYC Processes and

Onboarding.

• The bank also compares the ROI benefits wrt to process time, resource utilization, risks and their mitigation strategies.
 Overview

• Physical filling up the forms

• The process a bank
undertakes when bringing a • Document verification
new business customer
What is Customer • Customer image identification
onboard, Customer
• Involves Onboarding? Onboarding Process
gathering vital • Individual threat identification
information on the customer
and conducting identity
checks to comply with know-
your-customer (KYC)
regulations

What is KYC? Our Strategy

KYC Process

• Document acceptable as proof • Document Collection

of identity
Reduce Manual Automation • Document Validation
Touch Points Transformation
• Individual image
• Start Remediation
• Physical signature Building digital and cloud ready applications • Approval Process
to enhance capabilities, reduce manual
• Self declaration
touch points and efforts
Traditional Paper Based Approach vs Digitized Approach

Document Customer
Customer Data KYC verification with onboarding
Customer Capture using Documentation originals
forms process begun
Request Capture Individual
Verification

Onboarding
Image and other Detail Completed
Verification along with
documents

Unique token
Mannual verification with generation
Government databases

Relationship Mgmt KYC Legal Operations Relationship Mgmt.

Onboarding Legal Customer Communication/

Data Capture Due-Diligence
Request Documentation Account Set up Interaction
Prerequisites for Implementation of digital transformed operations
Sr. No. Pre-Requisites (Configuration) Manual Digital

1 Web application licencing × ✔

2 Multi - platform support for documentation purpose × ✔

3 Human Intervention at branch ✔ ×

4 AI, NLP, MI, QR support for CKYC verification, OTP verification × ✔

5 Extensive Chatbot support for users × ✔

6 OCR system to identify the individuals’ image to the live picture × ✔

7 Access to be provided for connecting to Customer network ✔ ✔

8 API driven rule engine Integrated with third party data providers for profile verification ✔ ✔

Sr. No. Pre-Requisites (Documentation & Verification) Manual Digital

1 PAN, Mobile Number and email id registered under UIDAI, cancelled check leaf ✔ ✔

2 Identity Proof, Address Proof ✔ ✔

Trends in KYC Automation & Transformation
Creating individualised and meaningful
experiences for customers & employees

01
Need for continuous user interaction,
continuous monitoring and improved
06 Replacing global complexity with guided

02
experience and ease of use
simplicity

Global Trends

05
03
Steep regulatory hurdles & outdated data
Escalating frequency of data breaches
centric iden

04
Trends in KYC Automation & Transformation
CURRENT WORLD SCENARIOS HAVE CREATED A
HUGE DEMAND TO AUTOMATE AND SPEED UP THE
ONBOARDING PROCESS

2010 marked the implementation of According to IBM-operational spend on

automation on governance with Freddie AML and KYC activities by European
Mac for mortgage governance in US financial institutions in 2019 has reached
$12.5 billion

2015 several automation solution All major national and private bank are
introduced in marked now automating the AML and KYC
process with 65% growth between 2019-
2021
Reimagining Repeat KYC Processes with AI –
Leveraging Technology for digital transformation

Limitations of existing Norms:

● Onboarding & KYC for all the individuals and non individuals to be reviewed by
Customer Transactions
the bank officials on interval of 24 months
Data indicating
Mismatches money ● Any updates made in the existing KYC docs to be re-submitted to the bank.
signaling laundering &
● Banks require the individuals to provide a physical signature or thumb
unauthorize Illegal
d usage funding impression in front of the bank officials whenever the customer is onboarded
Customer Profile AML Screening
Screening & & to the bank, or on reactivation of an old customer.
Outreach Disambiguation
How technology Can be leveraged
• Continuous digitization leading to Automation at its best
• Culture of transparency with users
• Flexibility in Governance & Monitoring
Transaction Adverse Media
Screening Screening • No fear of Cannibalization
• Focussed growth -
Negative • Reduction in Manual and individual touchpoints while shortening
Anomalies in references
Transaction involving process time
Patterns PEP & HNI • Avoiding human errors

Touchless KYC Processing &

Onboarding for the New World Order
 ROI Dashboard: Benefits
The following is a comparison between Traditional & Digitized Operations of Banking - Onboarding & KYC
Traditional Digital

Low Process
Long Time due to
Improved Process digitization &
Availability Time Manual Time Automation
Saved

● 3 X Faster
Paperwork Digitally Automated ● Multiple parallel runs possible since
there is no paperwork of resources
Effort Reduction Inefficient Spend Reduction in manual efforts
along with resources ● Improved self Service
● Cost efficient
● Engaging multiple Users at the same
Manual Automated
Business time
Improvement in Digitization follows a defined Benefits ● Straight through Processing with
Process Prone to Human Errors more business outcomes due to
Quality workflow for the Process
transparency
Manual Automated ● Higher compliance adherence
● Lower risk of human errors
Hours of Effort: 8
Hours of Effort: 24 ● Robust audit trails
hours/day
hours

Improved User Usual process takes 1-2

Quick turnaround time
Experience weeks for completion
 Risks & Mitigation

  Risks Mitigation

International money laundering transactions are

AML AML regulators are to be imposed
estimated at 5% of the global GDP per year

Considerations when determining the Customer Risk Level:

Accuracy of the documents submitted by the customer to the company.
If identified as a high risk customer, due diligence is very Business industry in which the customer works.
Enhanced Due Diligence
important Sanction and Politically Exposed Person screening
Past financial transactions history

Muliple customers who fall under the risk zone, may end
Fraudaulent transactions or risky up damaging the bank reputation when compliance are Scheduled KYC using NLP, ML & AI can help improve risk profiling
customers
not followed in an orderly manner
Cloud versus on-premise Given digital KYC is a highly regulated process, a hybrid strategy where the
Retaining sensitive customer data application functions are hosted on the cloud and more sensitive customer data is
application and data hosting retained on-premise is the way forward
the need for extensive customization of the specialized unless the bank has a capable IT department, partnering with a service provider or
Build versus buy strategies investing in a specialized product may deliver a better return on investment (RoI) and
and complex KYC processes.
cut maintenance costs in the long run
User adoption to technology and stakeholder experience
Digital appetite and user can be harmed if there is resistance to change from A digital strategy with the capability to overcome resistance to change, enable faster
experience either ends onboarding, and deliver superior experience is critical to drive adoption
Risk Mitigation strategies and Ecosystem in detail

● AI based solutions that leverage

machine vision, intelligent forms,
and optical character recognition
(OCR)
● Diving the customers into different
risk levels to identify money
laundering
● Monitoring the nature and
frequency of abnormal
transactions algorithm to identify
AML & anti-Terrorism frauds
● Screening documents provided by
the customer to reduce fraudulent
risk
 Implementation Roadmap

Design Environment Setup Development Testing Implementation

Governance Sanction order analysis AML sanctions Transaction and kyc monitoring Risk monitoring

Scope Reducing human intervention

Integrating Finacle Analyzing reducing Demo 2

Onboarding
Demo 1
UADAI, data Testing errors, and the new
Integration Testing Integrati
NSDL securitizati Use Case data Users/Prom
case on management on otion

cloud Enabling
Depl.
Flow evaluation integra Deployment Plan Third party Integration OTP and CKYC response time Identity accuracy and response testing subject
Deployment Design
tion group

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12