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A single view of the customer is now frequently required for compliance, risk management, marketing, and sales and servicing purposes. However, this requirement is often handled separately within each business function. Given the fact that regulatory “know your customer” (KYC) requirements are mandatory, banks can leverage the investment to address broader customer information management demands. This can drive the transformation of existing legacy assets into an interconnected solution in which customer data is reconciled across all data sources leveraging a common process. The future KYC solution (depicted in a recently published report KYC, Single Customer View, and Information Management) will reduce the total cost of owning and managing customer data, as well as keep that data updated and enable a single view of the customer.

The KYC solution will expand to cover broader business areas

In Ovum’s opinion the future KYC solution will consist of processes similar to those that are common today: initial screening, decisioning, and ongoing monitoring. However, both the input and output channels are likely to be expanded to incorporate the ability to use the solution across the enterprise. The future solution is likely to manage customer data (via customer master data) in a closed-loop environment, meaning that information will flow from systems such as customer relationship management (CRM) and anti-fraud via business process management (BPM) engines, while output will be fed back so that the continuum of information will be assured. Ovum expects a further evolution of CRM and BPM technologies into so-called dynamic CRM capability. This will enable the management of customer information according to their lifetime (in terms of relationship with a bank), as opposed to product lifetimes.

Single customer view is a must-have component

As banks turn their focus to getting to know and monitor their customers better, getting a single, comprehensive view has become more important than ever. This is critical not only for growing revenues and profits while minimizing credit and fraud risk, but also for ensuring compliance. Incorrect records, duplications, and inconsistencies will alienate customers and trigger compliance issues. A single view of the customer’s relationship with the bank also means a single risk view of the same customer. It is therefore important for banks to create dynamic customer profiles that can be amended with every new event that affects the customer. This could be related to changes in credit profile, fraud risk, expected profitability, or propensity to sign up for the next best offer. The records must be stored in a customer information solution, which will resemble existing KYC systems, as they will require customer data capture and ongoing monitoring. Ovum expects banks to go through a long process of creating a single customer view, as well as a single risk view, which will lead to the merging of today’s KYC functionality with other systems that contain customer information.

Creating the future KYC solution will involve people, processes, and technology

The ideal solution requires a combination of people, processes, and technology. It starts with people taking control of the customer data belonging to their business. Data can only be trusted when there are people directly accountable for its accuracy, timeliness, and completeness. The solution also requires formalized processes to govern customer data through its entire lifecycle, from data entry through to validation, integration, maintenance, and end of life. With stakeholders from the business and IT formally involved, and with processes in place for consistently managing customer data, organizations can then apply technology to automate and integrate that data, and to enforce business rules and policies throughout the lifecycle.