InvestCloud: Why KYC Automation Has the Power To Transform Private Banking
AI Banks Europe

InvestCloud: Why KYC Automation Has the Power To Transform Private Banking

Automation is changing the face of retail banking, from data analysis to decision-making. It has also transformed the onboarding process and most Know Your Customer (KYC) checks can be performed without human intervention. Private banking has been lagging behind in this area, but perhaps not for much longer.

One advocate for the increased use of KYC automation technology in private banking is Alessandro Tonchia, head of strategy for the Private Banking & Wealth division of InvestCloud. Tonchia was a co-founder of Finantix, which merged into InvestCloud in February 2021. Before establishing Finantix, Tonchia was a consultant specialising in process management and CRM. Passionate about the role automation technology can play in KYC strategies, here Tonchia explains why it’s time for private banks to play catch up with their retail counterparts.

Alessandro Tonchia, Head of Strategy for the Private Banking & Wealth division of InvestCloud
Alessandro Tonchia, Head of Strategy for the Private Banking & Wealth division of InvestCloud

Having efficient KYC processes is key for both private and retail banks. It can be the difference in winning or losing clients, ensuring bad actors are not onboarded, and being able to react quickly to changes in customers’ circumstances.

Though the numbers vary between geographies, today a clear majority of retail banks onboard most new customers automatically. The same cannot be said for private banks who continue to navigate through days, sometimes even weeks worth of manual processes with automation playing virtually no part.

There are a number of reasons why private banks remain mired in manual processes, but the key reason is that clients of private banks are quite different to those of retail banks. Whereas retail bank customers tend to have more straightforward financial circumstances and simpler histories, private bank customers can be much more complex on both fronts. High Net Worth Individuals (HNWI) for example, often have assets of different types and in multiple jurisdictions. Fully understanding their wealth profiles and how they might be linked to risky entities and activities requires a level of management and scrutiny that private banks still prefer to be undertaken by humans.

Much of the time analysts spend on managing and scrutinising these accounts is invested in verifying that wealth was earned legitimately. These are tasks for which technology can help. With extraordinary speed and precision, solutions can uncover risks that are difficult to identify manually while preparing insightful materials to support decisioning.

For example, Artificial Intelligence enabling tools can automatically aggregate information on prospects and clients (from watchlists, databases, web search engines, and media archives) and analyse it across different languages – highlighting risks in the subject’s conduct and exposure.

Tools of this kind can analyse more content and sources than an analyst possibly could, in a fraction of the time. Delivered with policy-driven accuracy, they achieve the double goal of accelerating processes and decreasing KYC risk.

Automated analyses include the detection of an array of troubling activity from ownership of sanctioned companies, links to potentially corrupt politicians, histories of violations and unethical behaviours, to the start of legal proceedings against the client. Analysts can then review these results and make much quicker, informed risk assessments.

Additionally, failing to discover new ‘bad behaviour’ in a timely way among existing customers can damage a bank’s reputation as grievously as onboarding them in the first place – whether they are a private or a retail bank. Here, both verticals should be looking to adopt the same AI-enabled KYC processes.

InvestCloud believes it is increasingly important for banks to adopt a continuous monitoring approach with technology providing an ‘eyes always on’ functionality, scanning databases and media sources on a daily basis for risk-relevant information about the entire client base.

An ability to rapidly detect and react to changing client activity and behaviour can also be leveraged for more positive interventions. For example, if a client sells a business or receives a large settlement after a legal case, the relationship manager is alerted that a liquidity event happened (or is about to happen) and can immediately activate a commercial strategy to convert the new potential.

Though it has formidable potential for doing so, KYC isn’t all about mitigating risk to reputation and remaining compliant. It is a powerful tool that allows banks to respond to their customers’ ever-shifting circumstances. It does, however, require full intelligence, and for that, automation can play a significant role.


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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