Published by Jessica Weisman-Pitts
Posted on September 1, 2023
5 min readLast updated: February 1, 2026
By Wayne Johnson, CEO and co-founder, Encompass Corporation
As the debanking scandal, which hit the headlines after former Brexit Party leader Nigel Farage claimed his bank account had been closed due to his political views, continues to be top of mind for regulators, banks are under increased scrutiny in relation to how Know Your Customer (KYC) compliance policies are applied and customer-related decisions are reached.
It is worth noting that this is not the first example of banks’ decision-making being in the spotlight. In the past, regulators have reacted to potentially unjust derisking strategies implemented by banks trying to balance regulatory requirements with the cost of dealing with certain high-risk business types, including FinTechs and money service bureaux.
With the Financial Conduct Authority (FCA) recently launching an inquiry into whether banks are breaking regulations by unfairly debanking certain customer segments, it is more important than ever that financial institutions demonstrate transparency in their decision-making processes.
Currently, there is an over-reliance on manual processes and physical documents to identify customers and perform KYC, especially when dealing with corporate entities. Working in this way is inefficient, audit trails simply don’t exist, or are scant, and it is impossible to fully explain decisions.
More broadly, when KYC is inefficient, customers suffer a poor experience, with repeated requests for information and lengthy waits to access products and services. While retail banks have innovated and embraced RegTech solutions to offer individual customers seamless digital journeys and an excellent experience, corporate, investment and commercial banks are far behind.
KYC for corporates is an intricate process, requiring in-depth information from a vast range of sources, and remains a significant challenge for banks. It is largely manual, time-consuming, costly, and creates a very poor customer experience.
Furthermore, banks are facing a continuously shifting landscape when it comes to regulations. The processes relied on in the past can no longer respond quickly enough or scale fast enough as pressures increase. Only a technology-first approach can enable institutions to not only keep up with regulatory change but also prove it.
Until now, limited progress has been made in maximising the use of technology in corporate KYC. A key challenge comes from the sheer amount of data consumed to build a full picture of a corporate customer, and its beneficial owners. For technology to play its full part, this data needs to be integrated into internal systems, but the resources required to do this work simply aren’t available.
Today, technology exists to generate customer profiles, specific to a bank’s KYC requirements, on demand. Dynamically generated from the most up to date authoritative data sources, digital KYC profiles contain all the attributes required to make sound business decisions. Designed to be leveraged directly within internal systems, such as CLMs and CRMs, they provide a consistent and accurate view of a customer.
Technology ensures a transparent approach, providing a clear audit trail so that a bank can have full confidence that policies have been correctly followed, activity and decisions are compliant and, importantly, documented to the letter. If required, evidence can be provided quickly and easily for full peace of mind.
Such assurances around transparency, compliance and business effectiveness are crucial to helping banks stay competitive in a crowded market, making the utilisation of digital KYC profiles a must.
By removing manual processes for collecting and analysing KYC data, digital profiles eliminate human error and drive significant efficiency gains. Employees are also freed up to dedicate more time to tasks that really demand their expertise and attention, and to invest more in customer relationships.
Ultimately, this means that time and money can be allocated more effectively, and people resources can be optimised, boosting performance.
We know that the regulatory requirement to perform KYC can be a blocker when it comes to delivering the level of seamless experience that customers of today are demanding.
KYC continues to present a challenge for banks, particularly when considering that manually getting the information that they need to fulfil regulatory requirements can take a very long time – with recent statistics showing some businesses are waiting as long as 12 weeks. This can have a significant impact on customer satisfaction and loyalty, with frustration building as a result of delays.
Technology, however, is the backbone of frictionless customer journeys, with onboarding times slashed and satisfaction increasing as a result of implementation.
By utilising digital KYC profiles, the retrieval of data is also reduced. This means that customer outreach is kept to a minimum, with profiles being built using public and premium data, which saves time and prevents needless action on the part of the customer.
Ensuring the fast and confident identity verification and validation of corporate customers remains a pain point that can negatively impact banks’ future growth. Speed is critical here because if it takes a long time to gather the information needed to make the decisions behind these processes, potential customers could be lost.
This is where the time savings and ease brought by digital KYC profiles can be transformative by, ultimately, facilitating a positive process that helps to increase trust within the current customer base and uncover other opportunities elsewhere.
Reputation is also enhanced by robust processes, accurate data and enhanced operational efficiency, all contributing to a bank’s trajectory in the long term.
It is for these reasons, and more, that the time is now for institutions to focus on technology-powered processes, supported by digital KYC profiles, that can deliver significant gains now and in the future.
KYC stands for Know Your Customer, a process used by banks and financial institutions to verify the identity of their clients to prevent fraud and ensure compliance with regulations.
Digital KYC refers to the use of technology to streamline the Know Your Customer process, allowing institutions to verify customer identities electronically and efficiently.
Compliance in banking refers to the adherence to laws, regulations, and guidelines set by governing bodies to ensure that financial institutions operate within legal frameworks.
Operational efficiency is the ability of an organization to deliver products or services in the most cost-effective manner while maintaining high quality.
Customer experience encompasses all interactions a customer has with a company, influencing their overall satisfaction and loyalty.
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