Regulated entities have a KYC duty. Open Banking allows it to be borrowed.
KYC stands for “Know Your Customer” and is the requirement to verify the identity of people who are opening an account for compliance with government regulations about money laundering and terrorism financing.
Many countries are looking to extend their KYC, AML and CTF regulations, further impacting operational demand on regulated entities. These KYC checks have been reported to already cost around 3% of a bank’s total operating expenses.
As these demands increase, new platform opportunities will certainly arise to carry and share the burden whilst providing better ways for smaller entities to facilitate their compliance. These may include capabilities where people can opt in and share or grant permission access to KYC that’s been collected and verified by someone else.
When a user opens their first bank account, they have to go through the cumbersome KYC process. All that data gets recorded within that first financial service provider. With Open Banking giving users the rights to their data, that KYC process can be leveraged, speeding up onboarding and compliance as this previous and often continual KYV and AML checking done elsewhere, can be leveraged by the customer and their other financial relationships.
We call it KYC-Piggyback and it’s a powerful way Moroku and our partnerships are helping smaller banks and mutuals comply and compete with our digital banking solutions.
Integrating Open Banking into the on boarding process removes the need for a back and forth between the bank by streamlining user onboarding, allowing users to connect directly and securely to their bank accounts to share verified real-time account and transaction data including Name, BSB, Account number, Income and more.
This provides immediate identification and verification with the added perks of reduced fraud risks and KYC/AML