A global study of more than 1,000 C-level executives across corporate and institutional banks, published by client-onboarding specialist Fenergo, offers a view on how much of a burden KYC represents for many institutions.
Financial institutions are spending millions of dollars every year inefficiently onboarding and maintaining clients, according to the research. The survey, conducted in August this year, found that almost 30% of firms are dedicating between 31% and 40% of their entire compliance budget to meeting their KYC obligations.
This is reflected by the number of full-time employees dedicated to KYC-related activities, which totalled between 2,000 and 2,500 staff for 21% of firms surveyed, between 1,500 and 2,000 for 31% of firms, and between 500 and 1,000 for 12% of survey respondents. Overall, more than 80% of respondents have between 1,000 and 2,500 employees working on KYC tasks.
The survey found that, on average, over half are spending between $1,500 and $3,000 to complete just one client KYC review. More than 10% of respondents said they were spending $3,000 to $3,500, 15% were spending $2,500 to $3,000, 19% were spending $2,000 to $2,500, and 20% were spending $1,500 to $2,000.
The findings also showed that over half of financial institutions are spending between 61 and 150 days on KYC reviews for clients, with 8% spending 150 to 210 days on the task.
Much of that time is spent gathering and inputting data across multiple systems. Some 90% of respondents said labour-intensive KYC impacts their ability to make better risk decisions. However, the data also shows that financial institutions are now focusing investment on automation with 62% prioritising spend for technology.
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