This is part 1 of 4 in a blog series that analyses different aspects of Know Your Customer and Anti Money Laundering compliance. This edition analyses the costs of KYC. KYC is something which is consistently underappreciated in the world of business and costs some businesses millions of dollars due to small discrepancies which can be easily fixed. This post also analyses how you can repair the damage done by incorrect KYC information and how to do it without an expensive and time-consuming manual process.
The importance of data quality has never been more important as it dictates how good the relationship is that you have with your customer. Good data will allow you to increase and develop brand loyalty, while bad data will impair your ability to attend to your customers’ needs.
With 84% of organizations reporting that they suffer from data quality issues in some form, what exactly causes bad customer data? Bad data can result from a vast number of reasons that very few companies are immune from. Missing data, wrong or inaccurate data, duplicated data and Plain old, out-of-date data are all causes for the bad data problem. If a company is unable to eradicate these sorts of discrepancies from its system it can have significant consequences.
Research conducted by Experian, a global information services company, found that poor quality data can cost businesses up to a quarter of their revenue. Bad data can give a company the undesired reputation of being incapable of handling their own business. If a company has this sort of stigma it’s going to find it tough to find new partners to do business with. The same study which took place in America discovered that 32% of U.S. organizations have inaccurate contact data within their databases. This sort of carelessness can alienate investors from wanting to work with a company who would be perceived as unfit to work with at a professional standard.
The impact of bad data can stretch beyond how a company is viewed externally. Bad data can also greatly affect the internal actions of a business which will undoubtedly hinder your ability to improve revenue. Without good analysis and data management sales and marketing teams will be unable to effectively sell and manage prospects as well as look after their customers. Accurate client data is also the backbone to creating a rewarding experience for a customer. Customers demand that they have the most simplistic way to purchase your business’s product. If a customer encounters any problems that are a result of bad data they are more inclined to take their money elsewhere, where it will likely be your competitors who will reap the rewards caused by your mistakes.
Having a lack of high quality data also greatly affects your ability to conduct proper analysis or any operation concerning business intelligence. This will lead your company to make poor business decisions and to possibly enter ventures as a consequence.
It is essential that, as a business, you review your data to eradicate any of the discrepancies that were mentioned above. Failure to do so will cost your company money and be a hindrance to developing any lasting business relationships. However, cleansing your entire customer database may also prove costly and time consuming depending on the size of your business. Ensuring that you maintain accurate customer details can be done by accessing business registers around the world to check and maintain those customer records. This is especially pertinent to regulated industries where good date practices are a legal requirement.
The first critical step to best KYC data management is the data cleansing process. Done correctly, this sets a solid foundation. Automating this can be performed through a rules-based workflow. By reducing the requirement for manual involvement, this process dramatically reduces the time it takes to cleanse entire customer and supplier books which in turn reduces processing costs and times.
The second step to best KYC data management is customer remediation. Customer data should be checked for completeness, consistency, duplication, integrity and accuracy. Businesses must ensure the information they have on customers is managed with the greatest of veracity. Unlike manual processes, when it comes to data remediation, you should be proactive not reactive. Through the use of purpose built rules-based decision engines, the accuracy of customer data and the overall efficiency of your business can be significantly improved.
Real-time event monitoring is the next step and the most important to retain an accurate customer book. By applying specially defined rules that watch for and analyse event changes relating to any customer on an existing customer book change data can be captured in real-time. This step is fundamental to identifying KYC risk and getting your business to the point where it can demonstrate that a best-in-class, transparent KYC and AML compliance process is in place.
We hope that this blog post has been helpful to both you and your business. If you wish to discover more ways on how to improve your business database, visit our website http://www.kyckr.com/
In the next edition of this series we will be discussing different money laundering techniques that are used by drug cartels, corrupt politician and tax evading businessmen. Money laundering is a global epidemic and it is important to know how exactly those who participate in such a serious crime are obtaining their money through illegal methods. It is vital information for you to know, so you and your business don’t become implicated in dodgy deals which could have serious implications.
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