An Urgent Call for KYC Optimization - A global market study calling for KYC innovation and collaboration

An Urgent Call for KYC Optimization - A global market study calling for KYC innovation and collaboration

Protiviti and the International RegTech Association (IRTA) conducted a global study to investigate the effectiveness of existing (AML) know your customer (KYC or AML/KYC) processes, their impact on customer experience across various jurisdictions and the efforts by financial institutions to innovate KYC controls. This study focuses on the optimization of KYC processes. It provides a blueprint for adopting more efficient and effective KYC processes that improve customer experience and promote financial inclusion.

KYC stakeholders recognize the need to work smarter

Current KYC controls and processes are manually intensive and time-consuming, frequently result in poor customer experience and can hinder financial inclusion. FIs can overcome these roadblocks by adopting digital solutions and digitally enabled shared platforms to optimize KYC processes. KYC optimization also requires the engagement of government and regulatory agencies to adapt existing regulatory frameworks and mechanisms and develop new ones as needed.

Key Enablers

  • Expanded use of KYC digital solutions, such as artificial intelligence, machine learning and distributed ledger technology (DLT), will reduce time and cost of KYC operations.
  • Establishing and utilizing digitally enabled KYC shared platforms will eliminate redundancies in processes and improve customer experience.
  • Use of both KYC digital solutions and shared platforms will dramatically enhance quality of data and make other interrelated processes, such as transaction monitoring, more effective.

Key Roadblocks

Factors preventing wider adoption of digital solutions and shared platforms include:

  • Differing understanding and viewpoints among regulators and FIs over the impact of new digital technologies on regulatory outcomes and burdens.
  • Lack of clarity around the responsibilities of stakeholders in mandating, adopting and developing standards and commercial models for public-private shared services.
  • Concerns over data strategy and integrating legacy systems with new digital solutions and shared platforms.
  • Difficulty on the part of FIs with evaluating the many unproven digital solutions in the marketplace.
  • Conflict between KYC and data privacy requirements can prevent data sharing.

Getting There

  • Regulators need to clear the path for innovation by developing consistent regulatory standards and mandating the development of common data models to support KYC optimization, including enabling secure information sharing. Key activities include adapting existing regulatory frameworks and mechanisms and creating new shared industry assets to support KYC optimization.
  • KYC stakeholders should form public-private partnerships to enable data sharing and operationalize KYC shared platforms. Clearly articulating best practices for the development of shared platforms and clarifying roles and responsibilities of stakeholders will enable and accelerate data sharing.
  • FIs should design a KYC optimization strategy supported by their boards and senior management. This means prioritizing data integrity and data governance initiatives and committing to modernizing legacy systems that house KYC data.
  • Digital solution vendors should deepen their understanding of KYC processes and increase stakeholders’ understanding of KYC digital solutions. They should either broaden their solutions or partner with other vendors to address KYC challenges more holistically.
  • Regulators should foster a culture of tech activism rather than one that is tech-agnostic. Tech activism requires regulators to be actively technology-informed, and to develop views on specific technologies without endorsing actual vendors.
  • Regulators should support a competitive marketplace for continuing development of innovative digital solutions.


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Michael Brauneis, Protiviti Chicago
Michael J. Brauneis
Managing Director