Artificial Intelligence (AI) is increasingly hitting the radar of Financial Services firms. AI adoption has the potential to provide firms with a competitive advantage in terms of their controls environment, scalability and cost management.
This article discusses the opportunities AI provides to organisations in the Know Your Customer (KYC) and Anti-money Laundering (AML) spaces, which will not only benefit the firm, but also enhance their customers’ experiences. There will be a follow-up article, which will provide further insight into the potential pitfalls and areas for consideration when implementing this technology.
AI Adoption Challenges
To be become an AI-focused organisation, it requires more than just adopting AI as a new technology. Changes are required to the business model, evolving the firm’s capabilities, to deliver the expected benefits.
The foundation for success is the creation of an AI adoption culture. Once this is embraced and embedded into the company’s operating model, the subsequent challenges just become tasks on the AI journey.
AI Adoption for Customer Onboarding Operations
Onboarding is the first experience a new customer has of an organisation’s capabilities, and all too often it leaves a less than perfect first impression.
Arguably the most demanding exercise for both the customer and the organisation is the capture of the customer’s information and documentation to meet KYC and AML regulations.
Our experience has shown that a customer’s satisfaction will be strongly influenced by:
- how much effort is required to provide the requested information and documentation;
- the elapsed time before the customer can start transacting with the organisation; and
- how often the customer is required to provide further information.
Minimising the customer’s inconvenience and delay will not only make for a happier customer, but also increase the likelihood of repeat business and cross-selling, where further customer due diligence may be required. AI can help address the customer’s satisfaction criteria in ways that traditional technology cannot.
By way of example, dynamic onboarding templates can be built and deployed digitally and securely, requiring the customer to only focus on providing information identified as pertinent by the AI as the customer completes the form. Links to external industry utilities and data extraction from documents can be used to automate the identification and verification steps, assess data gaps and red flags, and generate alerts.
Sophisticated linkage analysis for connected parties, using structured and unstructured data such as online news and publications, social media and a company’s announcements can be built with AI, to identify UBOs (Ultimate Beneficial Owners), and PEPs (Politically Exposed Persons) and other relevant information, in order to assess risks and anomalies. All of which can significantly reduce the time, cost and risk when onboarding customers, with a commensurate improvement in the customer’s experience.
AI can provide a highly refined and accurate risk scoring model which could reduce the customer risk scoring, and thus the required frequency of future customer file reviews and requests for information.
When it comes to screening for adverse news and sanctions, AI adopts a context-driven ‘identify matching approach’, rather than being rules-based, so it is able to screen for a large number of risk signals in multiple languages. In addition, an AI enabled system can self-calibrate, learning money laundering typologies and proactively ascertain specific risks (e.g. geographic, temporal, emerging etc.) from external unstructured data.
Significantly, an AI enabled screening process significantly reduces the number of false positives, thus reducing an organisation’s costs and unnecessary approaches to its customer, whilst substantially enhancing the control environment.
This is just a sample of what AI can do to enhance the customer’s onboarding experience, reduce an organisation’s operational costs and improve its controls, once the necessary cultural shift has taken place.
In addition to extensive business and financial crime expertise, MHC consultants have an AI adoption and implementation capability to support our clients.
If you would like to speak to us, to discuss where the adoption of AI might add value to your organisation, or to support delivery an existing AI Programme, please contact us on firstname.lastname@example.org.