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Financial Services
February 15, 2024
In today’s complex financial world, wealth management has gained significant importance as high-net-worth individuals and institutions increasingly rely on wealth managers to preserve, grow, and manage their assets. One of the fundamental processes in responsible wealth management is KYC or know your customer. In this blog, we examine the latest trends in KYC in financial services and explore Hexaware’s strategies, aimed at ensuring the safety and success of our wealth management clients.
KYC is a critical process that involves verifying the identity and background of clients. It is an integral part of customer due diligence (CDD) and anti-money laundering (AML) procedures in the financial industry. In wealth management, KYC plays a vital role in ensuring that wealth managers have a thorough understanding of their clients and can provide personalized financial services while adhering to regulatory requirements.
In wealth management, the KYC process is crucial for compliance with government regulations and maintaining secure client relationships. It plays a pivotal role in verifying and establishing trust, contributing to transparent legal operations and fraud prevention. By implementing stringent KYC practices, wealth management firms not only protect themselves from potential damage caused by illegal activities but also safeguard their clients from malicious actors seeking to exploit the services for criminal purposes.
KYC, a significant part of the client onboarding process, typically involves the following steps:
Wealth managers must adhere to various regulations and guidelines when conducting KYC. A 2022 report by Fenergo, a provider of client lifecycle management and KYC solutions, noted that global enforcement actions for non-compliance with regulations fell by 22% in 2022, totaling $4.2 billion compared to 2021.
Nevertheless, these compliances entail a cost to the wealth management firms. Fenergo’s 2023 report on KYC trends states that while the average number of people carrying out KYC tasks has decreased worldwide (down 14% from 2022), the average cost of carrying out a single KYC review has increased by 17% since 2022 to $2,598.
According to a 2023 research by Chartis, a provider of research and analysis on the global market for risk technology, the US remains a dominant force in shaping sanctions and regulatory measures, helping to push sanctions deeper into the global supply chain.
Some of the key regulatory aspects include:
Hexaware provides a suite of services for wealth management firms to streamline their KYC processes and comply with global Financial Crime Compliance (FCC) regulations by leveraging existing proprietary assets and entering partnerships with leading fintech providers.
One of Hexaware’s key offerings is its KYC center of excellence, staffed by experienced professionals well-versed in global KYC and AML regulations. Through proprietary training tools and methodologies designed to cultivate practical KYC skills, this team delivers scalable services within a short timeframe.
We provide a comprehensive repository of best practices in KYC, industry benchmarking, operational excellence, and a quality assurance framework. This repository assists in optimizing KYC processes, meeting industry standards, and maintaining operational excellence with robust quality assurance.
Through established strategic partnerships with leading fintech companies, we provide transformative KYC and AML solutions. Our goal is to enhance and modernize clients’ KYC programs through innovative and collaborative initiatives.
We invest strategically in both proprietary and partner solutions to enhance client value. By developing cutting-edge technologies and collaborating with industry leaders, we provide clients with immediate efficiency and innovative solutions.
Our KYC outreach solution enables financial firms to manage end-to-end client outreach processes for KYC in a controlled and automated environment. It significantly reduces the time taken to establish and resolve outreach activities through pre-configured distribution templates, business workflows, and integrated digital customer portals.
The solution leverages the Xceptor platform to provide data automation, easy data ingestion, data transformation, and process digitalization.
Our proprietary KYC training simulation tool offers a sandbox environment for financial firms to implement a “hire, train, and deploy” model effectively. It enables hands-on practice for trainees, enhancing their understanding and proficiency in KYC operations. Additionally, support from subject matter experts (SMEs) ensures that ongoing training initiatives are tailored to industry best practices, maximizing efficacy and operational readiness.
To learn how Hexaware can empower your enterprise with futuristic solutions that facilitate rapid digital transformation at scale, visit our website or email us at marketing@hexaware.com.
About the Author
Jamir Savla
Vice-president & Global Head — Wealth Management Consulting
Jamir is an experienced professional with over 18 years in wealth management technology, specializing in digital solutions. He leverages his deep understanding of digital innovation, automation, and problem-solving to deliver strategies that help businesses reduce costs and enhance efficiency. His expertise cuts through the complexities of technology and operations, offering practical solutions and innovative approaches to streamline processes. Through his thought leadership, Jamir has established himself as a trusted resource in the wealth management technology space.
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