The recent regulatory developments surrounding payment banks have jolted the fintech industry into a stark reality check. It’s a resounding reminder of the pivotal role stringent Know Your Customer (KYC) protocols and rock-solid Customer Due Diligence (CDD) processes play in compliance with BFSI.

As industry insiders grapple with these challenges, one thing becomes crystal clear: taking shortcuts during customer onboarding is a risky gamble.

The stakes?

Sky-high fines, measured in crores, for KYC-related violations and the looming threat of business forfeiture. Yet, some argue that ramping up compliance means digging deeper into already razor-thin margins.

In response to this, we recommend 7 solutions that help navigate the complex landscape without sweat or breaking the bank!

Put a robust BFSI compliance architecture in place

Compliance is not a one-and-done task. It is also not simple. It’s vast and repetitive, with a bouquet of issues that need an arsenal of advanced solutions empowering seamless compliance, robust risk mitigation, and sustained growth.

1. Customer Due Diligence (CDD): Swift & Meticulous

CDD solutions are unsung heroes, often ignored for simpler KYC solutions. But they are the trusted choice of BFSI leaders for a reason. Automating customer due diligence is the first step to precluding regulatory relapses.

“The solution conducts real-time demographic checks and verifies customer information, striking a delicate balance between speed and risk mitigation.”

2. Customer Entity Resolution & Matching: Turbocharging Onboarding

A state-of-the-art entity resolution solution automatically compares the demographic details and more a customer provides during onboarding with KYC details. It authenticates customer IDs in real time, leaving no room for manual errors and ensuring compliance for BFSIs with regulatory guidelines.

“It not only validates the provided information but also assigns a score to each parameter upon a successful match for complete due diligence. It also matches the data against the existing details in the system, preventing duplication, a key problem FIs face.”

3. Global Watchlist Name Screening: Safeguarding Reputations

Global watchlist and sanctions screening fortify your customer base against fraud, identity theft, and money laundering. By assessing customer data against 2100+ global watchlists, including Dow Jones and Reuters Data, UNSC/OFAC, RBI, SEBI, and MCA in real-time, it can weed out individuals or entities:

• Listed on international watchlists
• Subject to sanctions
• Associated with politically exposed persons (PEPs) or state-owned companies (SOC)

“Stay compliant with Anti-Money Laundering (AML), Enhanced Due Diligence (EDD), and Combating of Financial Terrorism (CFT) mandates by central banks across the world.”

4. Network Relationship Discovery: Fraud Detection

An advanced network analysis solution determines non-obvious and hidden relationships between customers, going beyond surface-level associations to unveil potential threats and vulnerabilities. It can dig up complex money laundering schemes that are not apparent through traditional methods.

“By uncovering intricate connections between entities, it is instrumental in identifying patterns indicative of potentially fraudulent activities.”

5. Customer Centricity: Consolidated Accurate Consistent Data

A unique customer ID (UCID) serves as your fortress against regulatory storms. A single, accurate, and consolidated view of customer information across various products and services ensures that customer data is consistent and up-to-date, reducing the risk of discrepancies and enhancing compliance for BFSIs with regulatory reporting.

“Customer centricity also enables quick and accurate verification. This efficiency ensures adherence to KYC regulations and mitigates the risk of identity-related fraud. More importantly, it offers a far better experience for existing customers.”

6. Customer Golden Record: Single Source Of Truth

Unifying customer data at the enterprise level with Customer Golden Record facilitates precise customer identification and reduces the risk of overlooking critical information during compliance checks.

“It also creates a trail of customer data changes and compliance-related activities, simplifying audit processes and ensuring transparency. Thus, supporting regulatory reporting requirements.”

7. Collateral 360: Reshaping Risk Mitigation

A unique solution, particularly for housing finance companies and vehicle finance companies, detects if a collateral has a history of prior financing or pledges. The deduplication solution checks whether the same house, land or vehicle is used as collateral for any other loan at any time by any person, proactively identifying your risk by rooting out fraud and bust-out schemes.

The path to compliance requires a holistic approach

Hefty fines. Legal action. Business restrictions. And finally, clamp down.

That’s not counting the almost irreparable damage to reputation. The consequences of lax compliance are severe and can cascade into business turmoil. Banks, fintechs and FIs need to take extra care for compliance, and that’s best served by embracing advanced, automated technologies that are also designed with privacy in mind.

The solutions should ensure that customer data is handled responsibly, and sensitive information is protected to meet stringent data privacy and security measures.

Choose Posidex for unmatched compliance. Don’t risk questionable behaviour, oversight, or anything in between!

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