21/08/2023 Alexander

Why banks need to implement KYB

The regulatory landscape for banks and onboarding new clients

In the intricate world of finance, the process of onboarding new clients goes far beyond the exchange of account numbers and signatures. In today’s era where regulatory standards are more stringent than ever, banks are entrusted with safeguarding their customers’ assets and maintaining the integrity of the financial system. This is where the concept of “Know Your Business” (KYB) comes into play. KYB is not just a procedural formality, it’s a crucial compliance measure that banks adopt to ensure that they have a comprehensive understanding of the businesses they choose to partner with.


What is KYB for banks?

KYB, or Know Your Business, is an essential subset of the broader anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. Just as “Know Your Customer” (KYC) practices help banks understand their individual clients, KYB aims to provide insights into the corporate entities seeking to establish a banking relationship. This process involves an in-depth analysis of a business’s ownership structure, beneficial owners, ultimate beneficiaries, and other key facets that contribute to the transparency of its financial operations.


The current KYB process is a time-consuming affair

Traditionally, the KYB process in banks involves a labyrinthine journey. Businesses looking to partner with a bank are required to physically visit a bank branch and present a barrage of documents that establish their identity, ownership, financial standing, etc. These documents are then painstakingly scanned and manually uploaded to the bank’s internal systems. Subsequently, compliance teams invest substantial time in manually reviewing these documents to ensure they align with the bank’s risk assessment criteria. This method, while designed with good intentions, is undeniably time-consuming, prone to errors, and often regarded as a substantial annoyance by the very clients it aims to serve.


Revolutionizing KYB with cutting-edge technology

As the financial landscape continues to evolve, the emergence of advanced technological solutions becomes paramount. As we explore the revolutionary capabilities brought by technology, let’s delve into the transformational benefits that are poised to redefine the KYB landscape for banks:

  • Streamlined Compliance: Accelerates KYB checks and enables banks to meet regulatory requirements while fostering stronger client partnerships
  • Integration: Seamlessly integrates with existing systems to eliminate manual data entry and reduce errors
  • AI-Powered Validation: Leverages advanced algorithms to ensure submitted data aligns with risk parameters, expediting decision-making
  • Audit Trail: Automatically generates timestamped audit trails to enhance transparency and simplify regulatory audits
  • Enhanced Customer Experience: Minimizes paperwork and physical visits, providing a more user-friendly and efficient process for clients

In conclusion, KYB isn’t just another compliance protocol because it’s a cornerstone of responsible banking in an interconnected world. As the financial landscape continues to evolve, embracing advanced technology for compliance becomes imperative. By automating processes, enhancing accuracy, and delivering a more streamlined experience, banks are empowered to meet regulatory expectations and forge stronger, more efficient partnerships with businesses seeking to be part of the global financial ecosystem.

Book a demo, to experience the future of banking compliance with streamlined processes and enhanced accuracy.

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