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Gain Insights into Current Trends and Challenges Impacting the Financial Services Industry

Centralized Questionnaire Management for a Greater KYC Program

Jenna Danko
Product Marketing

The Know Your Customer (KYC) provision has been around for several years and yet still challenges banks.  This financial regulatory rule was mandated by the Bank Secrecy Act and the USA PATRIOT Act of 2003. Section 312 of the USA PATRIOT Act requires U.S. financial institutions to perform due diligence and, in some cases, enhanced due diligence with regard to:

  • Correspondent accounts established or maintained for foreign financial institutions
  • Private banking accounts established or maintained for non-U.S. persons

Financial Institutions capture a plethora of information as part of the client on-boarding process to comply with this regulatory requirement. To capture this information, customers are asked a variety of questions during on-boarding and, once available, responses are shared with compliance teams as part of Customer Due Diligence for risk assessment.

Client on-boarding and Account Management are critical functions for any financial institution, especially before embarking on a relationship with the client. The initial verification, risk assessment, and profiling of the client all assist in creating a relationship between two firms. However, it is this critical function that very often becomes a victim of redundant processes and bad data inputs.

A recent Thomson Reuters survey shone a spotlight on the KYC challenges faced daily by multiple market participants regarding client on-boarding.  A different research article discovered that UK banks are losing around 40% of their applicants due to lengthy and tedious on-boarding processes.

Many organizations maintain these questionnaires in silos as part of a number of client on-boarding systems. The management of these silos tends to require a lot of time and money to accommodate changes.

The foremost issue with this silo approach is an “un-unified Questionnaire Library.”  Keeping an on-boarding questionnaire in different systems or as part of an on-boarding system may lead to an un-unified definition of information. This then requires a huge amount of funding and effort around data manipulation before the data can be fed into a KYC system for record keeping and risk assessment.

Another problem that arises from the silo approach is longer time to accommodate future changes. If a questionnaire is maintained in multiple systems, then all of those systems need to be updated in case of any future changes, which will lead to longer times to accommodate those changes. More systems = higher costs.

One way to tackle the above problems around KYC on-boarding questionnaires is by having a Centralized Questionnaire Management Platform. Rather than maintaining KYC on-boarding questionnaires in multiple systems, it is easier and more cost efficient to maintain them on a centralized platform. This centralized platform should be integrated with all of the institution’s on-boarding systems.

On a broad level, the Centralized Questionnaire Management Platform should have the below capabilities:

  • Capability to define various types of questions, such as free text field, number, lookup, radio button, etc. for financial institutions to define what information they would like to confine.
  • Capability to define various types of questionnaires, such as a basic type questionnaire, a score based questionnaire, which will lead to an overall score based on the responses, etc.
  • Configurable workflow capability to accommodate organizational specific processes.
  • Flexible architecture to integrate with various on-boarding systems.

The main advantage of the above approach is a unified definition of information and data that financial institutions are capturing as part of their KYC process. This can provide better management reporting around customers and a 360 degree view of the business. Investments around data manipulation due to different definitions of information can be avoided too.  By implementing a unified platform, the integration with systems – such as client on-boarding, Know Your Customer, and CIP – will be easier to maintain. Therefore, better integration will allow financial institutions to move towards a better customer experience and seamless client on-boarding processes. A centralized, unified platform for questionnaire management will accelerate any future regulatory changes.

Do you have additional thoughts around this topic?  Please leave your comments below; I’d love to read them. 

Garima Chaudhary is a Senior Sales Consultant for Oracle Financial Services Analytical Applications. She can be at garima.chaudhary AT oracle.com.


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Comments ( 3 )
  • Aman Gokrani Thursday, May 19, 2016

    Does Oracle plan to develop any such system in near future ??


  • Aman Gokrani Thursday, May 19, 2016

    Does Oracle plan to develop any such system in near future ??


  • Garima Chaudhary Thursday, May 19, 2016

    Hi Aman, Yes, it is very much part of Oracle's vision.

    How are your customers currently handling this data capture requirement?


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