How technology fights FinCrime while enhancing regulatory compliance

Know Your Customer (KYC) and anti-money laundering (AML) transaction monitoring compliance processes are critical tools in banking’s fight against financial crime, but they rely on access to high-quality data about customer accounts, products, transactions, and more. Despite industry-wide investment in expensive KYC programs, slow and laborious operational processing is often still required, which is costly to the business, can cause lengthy delays to customer onboarding, and poses an increased financial crime compliance risk.

There’s clearly an urgent need for a step change in the battle against financial crime by looking at ways to make KYC processes more efficient and effective. EY was approached by a bank wanting to do just that.

Like many banks, this client had a significant KYC remediation backlog, which was subject to regulatory scrutiny. The bank realized that tackling this operational processing issue in isolation was insufficient to address its broader financial crime remediation efforts.

The bank understood that the pace of financial crime is relentless and that customer trends toward more digital ‘anywhere, anytime’ banking solutions – which has accelerated during the pandemic – presented a greater challenge to the bank in how it identifies legitimate customers while blocking fraudsters. A solution that only solved a current KYC backlog would do little to protect the bank against this significant, growing risk exposure.

The bank recognized that to protect, transform and grow their business and enhance their reputation, they needed a partner to help them solve this complex issue and future-proof themselves against the evolving financial crime threat landscape. By working in partnership they would be able to accelerate and better integrate a more agile and stable , cost-effective KYC process, which would also help them clear their backlog of non-compliant files, reduce costs, drive efficiency and move to a growth agenda.

In reviewing both the banks immediate KYC processing requirements and its broader financial crime prevention vision, EY saw the opportunity to bring together their deep business and industry insights with the scalable enterprise cloud platform and digital technologies from Microsoft and Pega. The EY Global Financial Crime platform resulted from more than two year’s work with Microsoft and Pega and leverages the power of the EY KYC solution with Microsoft Azure and the Pega platform. This combined solution transforms large-volume KYC operations. It reduces manual input, increases data quality and optimization, and in doing so, helps offset financial crime.

“Microsoft Azure enables EY to provide a solution that helps this bank process vast amounts of data faster and more accurately, which frees up analysts to identify potential financial crime threats”, says Patrick Craig, EY EMEIA Financial Crime Technology Lead.

The solution is an innovative, powerful and scalable financial crime tool for banking, which has the potential to reframe the sector’s battle strategy against financial crime.

EY Global Financial Crime platform: Building through innovation

EY orchestrated a hackathon to explore what a new approach to KYC could look like at the bank. EY performed strategic architecture reviews with Microsoft to find out how much of the end-to-end KYC process could be automated. EY combined the resulting learnings with insights from Microsoft on product builds, leveraging DevOps and serverless computing, to create a scalable and secure EY Global Financial Crime platform. As well as being able to protect individual banks, the platform satisfies the financial services sector’s enhanced regulatory and security demands, which reinforces its industry-wide potential.

The EY KYC solution is one of the major components of the EY Global Financial Crime platform, which automatically collates internal, external and trusted customer data into a single view, displayed using the Pega platform, for an analyst to review and identify any potential financial crime risks. The Pega-powered case management and workflow tool handles the entire customer onboarding process, including data collection, identification and verification; screening and disposition; and ongoing operations monitoring. This all takes place in a cloud environment, available as-a-service for banks without the internal resources to effectively manage KYC operations. It removes much of the manual effort required to gather the right information to decide whether to provide a potential customer with banking services.

Not only does the KYC solution reduce human effort through automation of activities and straight-through-processing (STP), it reduces the level of human intervention required for managing exceptions relating to key risk decisions. It transforms the bank’s risk management systems using the latest machine learning technology to increase both the efficiency and effectiveness of risk management throughout the KYC process.

The platform also supports a customized deployment architecture—an architecture based on a microservices design approach, which provides flexible, rapid deployment and simple integration with incumbent enterprise solutions.

Through its strategic relationship with Pega, EY was able to quickly design and deploy a customer outreach portal based on Pega’s offering. Pega supported the integration of this portal with the existing Microsoft solution.

The resulting platform can rapidly scale to meet client demand while providing country-specific resilient hosting quickly and securely. This all serves to reduce risk exposure and protect reputation.