The manual processes were not only labor-intensive but extremely slow, expensive, and prone to error. Now, meeting the 21st-century compliance requirements doesn’t come cheap and many are tempted to cut corners.
Beyond the whims of regulators who tends to take a strict stance, the costs of compliance are a key issue that most financial institutions and organizations are still struggling to come to terms with. It is so costly and difficult that forgetting about them has been a way to minimize costs… that’s until the hefty fines come in or when a scandal shakes up the whole industry.
Just recently and in the wake of a series of costly blunders, scandal-stricken Credit Suisse continues to shed executives. The bank was forced to wind down $10 billion in funds linked to collapsed supply chain finance firm Greensill and suffered billions in losses after family office Archegos imploded. This resulted in Floriana Scarlato, compliance boss at Swiss Universal Bank (SUB), leaving with immediate effect.
Compliance is never easy. But it should be. Until now, it required a lot of effort, from intensive research to getting the right documents, waiting for third-party companies to provide the expected input, and compiling data for the authorities. Doing all these things manually takes a lot of man-hours, sometimes even days or weeks. Making business impractical, even stopping it altogether.
As lawmakers add more responsibilities to compliance officers, the costs of manual processes can be quite significant. This trend will not change, therefore CFOs must define the right approach for their compliance investments: AUTOMATION.
Advantages of Screening Automation
Beyond the obvious lower processing costs once implemented, there are many advantages to using automated systems in handling your company’s KYC and Due Diligence tasks.
Cost-cutting is not only in operations, but also to be found in hiring, managing, and training a large in-house team of compliance professionals. Every time this cost will exceed the cost of using an automated screening system such as Screena, and by far.
Accuracy of data processing is another key benefit you get from an automated system. Humans cannot beat Artificial Intelligence when it comes to data matching exercises. Don’t forget that there are almost infinite lists and permutations to go through when matching names and other data.
A single person can be found across multiple sources as shown by the example of the Libyan ex-leader’s name which has 100+ spellings for Muammar Gaddafi including variations such as Gadhafi, Qaddafi, and Kadafi among others. There is simply no way humans can keep track of all of this, especially as regulations are increasing and business is moving fully digital.
Increasing Costs of KYC
According to a survey by Thomson Reuters, the average cost of meeting and complying with all KYC and CDD requirements for financial institutions is between $60 million to $500 million.
Keep in mind that these averages are for a time when revenues are fast declining and margins are under pressure. The costs don’t include penalties for non-compliance, which can be quite hefty depending on the compliance failure. From 1st April to 30th June 2021, twenty-five banks were fined a staggering $722,275,805 globally for failing to comply with AML regulations.
You are also guaranteed to lose business when clients abandon your company for fear of suffering financial losses due to your newfound bad reputation. These issues should be factored in when trying to cut on compliance costs. The right way forward is to invest wisely in best-in-class KYC software implementation.
Yes, Automated Solutions are the Way to Go
Automation and AI screening are the solutions for today’s ever-increasing KYC and Customer Due Diligence procedures. At Screena, we have built a most effective API-driven platform that provides customers with significant savings by eliminating the mishaps associated with manual processing.
Our industry-leading Name Matching solution is designed to help financial institutions augment their CDD solutions and meet the key obligations of KYC including labor, access to technology, efficiency, and accuracy.
Screena’s automated solution does not compromise on compliance, it never has and never will. It will support you in accomplishing within seconds a large part of your KYC and Due Diligence tasks using advanced algorithms so that your professional compliance officers can concentrate on improving processes and tackling real-life business needs.
You want a reliable Due Diligence solution designed to help you navigate through identities with AI-powered accuracy and make informed decisions. Contact us today to learn more about Screena AI-powered name-matching solutions.