Incorporate technology
Based on EY experience delivering large-scale KYC remediations, tactical implementation of technology can immediately save 15%- 20% of overall remediation effort by removing manual and repetitive activities via robotic process automation (RPA). Technology implementation cycles have significantly improved over the last several years and are now a matter of weeks vs. months. Application program interfaces (APIs) can be combined with RPA to enable pre-research packets; internal and external documentation packages can be pre-staged ahead of initial remediation review to support more efficient cycle times. Tactical technology should be assessed for both simplicity and effectiveness within each program’s environment; in particular, where remediation requires an organization to meaningfully scale its workforce, technology can provide a self-funding solution by reducing the number of people needed to complete
Track the right metrics
Reporting should drill down into detailed customer information (e.g., file type, risk score, related accounts), but should also capture areas of risks, dependencies (e.g., customer outreach and file approvals), and accountable party information (e.g., owners and aging). Reporting detailing multiple outreaches to customers, team member throughout, and specific quality observations have proved to be particularly effective during remediations. Teams should evaluate whether existing BAU reporting is fit for purpose or whether business intelligence (BI) tools are needed.
Tone from the top
An effective “tone from the top” is needed to properly inform the many stakeholders involved in a remediation and create consensus around common goals and solutions to challenges while ensuring demanding that accountability is maintained.
Improving the customer experience: turning a challenge into a business opportunity
Remediations are commonly a negative experience for customers. Customers view ad hoc requests for information or documentation that they consider private or closely held with skepticism. Information requests that require several people in an organization to collect, review and verify are similarly viewed as an inconvenience and annoyance. Financial institutions can fundamentally change the nature and quality of customer interactions by enabling team members to streamline the outreach process to require that the outreach is properly contextualized, comprehensive and necessary.
Provide customers the “full picture”
Active collaboration and support of the front line is a critical component to a successful remediation. Financial institutions should conduct ample frontline training to enable these team members to appropriately communicate both the basis for outreach and the requirements needing completion, including detailed directions on how to fulfill these requirements. This type of front-office partnership not only improves outreach response rates, but also increases customer engagement and lays the groundwork for the opportunity to positively engage customers.
Contact the right customers, at the right time
Managing customer outreach should focus on minimizing disruptions to the customer experience. At the outset of a remediation, financial institutions should assess the population for opportunities to group accounts by parent customers to leverage customer information across multiple accounts. Operating model considerations, such as tracking the number of outreaches to a customer and determining the right team members (e.g., seniority and functional role), are important components of improving customer outreach.
Contact your customers for “must have” information
Outreach requests should be narrowed before submission to customers. Many firms have begun to invest in third-party data solutions to verify customer information without conducting customer outreach. Alternatively, information or documentation should be sourced from internal systems (e.g., credit underwriting) or publicly available sources (e.g., secretary of state) to resolve remediation requirements. Compliance leaders should evaluate whether existing policies and procedures are overly proscriptive and by extension restrictive in how and where information can be sourced and can consider moving toward more “risk-based” approaches for gathering and verifying information.
Once financial institutions have mastered “the basics,” financial institutions should consider whether there is opportunity to use requests for information to expand existing client relationships. As most remediation populations include customer accounts that have not been refreshed recently (or ever), customer outreach to these customers can prove beneficial beyond completing a compliance exercise. Some customers’ products and services needs have likely changed since their last interaction with the financial institution, and some customers may welcome an opportunity to adjust their product needs.
Enabling long-term success and sustainability
Remediations can serve as the testing ground for longer term enhancements to people, process and technology to support future sustainability. Once remediation activities are stable, financial institutions should take a forward-looking approach and use the remediation as a lens into opportunities to better enable the future program. Commonly, through looking to achieve operational transparency or reduce redundancy or manual effort, there are lessons learned and enhancements created that can be ported into the BAU environment (e.g., operational reporting, robotic process automation, differentiated people models). Additionally, where third parties are engaged to support remediation activities, financial institutions should leverage the vendor’s industry insights regarding KYC processes, requirements, technology and people models as a means to continually identify enhancement opportunities within both the remediation and BAU environments.
