Trends that will shape KYB and onboarding going forward

March 27, 2024

Ebooks , Education

In business, partnership is much more than a legal contract. A strong commercial relationship is one where both parties are committed to each other’s success. It should also be anchored in mutual trust.

Know Your Business (KYB) processes are essential for keeping business partnerships transparent and compliant, helping each party understand exactly who they are about to engage with. This necessitates a comprehensive evaluation of company details, legal standing, ownership structures and more.

However, traditional KYB strategies are struggling to keep pace with the constantly changing landscape. A significant obstacle many companies face is the need to gather and verify critical data and documents that are dispersed across a wide array of sources. This issue is exacerbated when businesses operate across multiple jurisdictions and in multilingual environments. Each jurisdiction has its own set of regulations, databases and official languages, further complicating the collection and analysis of data. This creates complexity which not only slows down the KYB process but also increases the likelihood of errors and oversight.

A report by OvationCXM on business banking’s customer experience found that businesses encountered significant challenges and frustrations during onboarding. Three out of four businesses gave up in the middle of onboarding a new financial product or service due to an overly complicated process.

Considering these challenges and the evolving landscape, it’s essential for companies to understand – and get ahead of – the following key trends impacting KYB and onboarding strategies.

Trend 1: A shift toward real-time verification

In a recent Regulatory Outlook report, EY noted that one key trend in the financial and commercial landscape going forward will be the rise of instant payments. As the pace of transactions accelerates, organisations will need to ensure that they have robust measures in place to promptly verify the identity and legality of their corporate customers.

Real-time monitoring and analysis play a key role here, equipping organisations with the tools to enable instant business verification. This speeds up the onboarding experience and mitigates risks, like fraud, as they arise.

Another significant trend to keep on the radar, according to EY, is the expanding scope of financial crime compliance. As regulatory obligations in this space extend to sectors beyond traditional financial services, this will require more companies in more industries to ensure they have watertight KYB processes and tools in place.

Trend 2: Regulatory change is picking up pace

Companies operating in or aiming to expand to the Asia-Pacific (APAC) region will also need to navigate a complex mix of international and domestic regulations. This regulatory environment is in a constant state of flux.

Various jurisdictions in the region are also starting to enforce stricter regulations on data transfer across borders. Some examples include:

India:
The recently completed Digital Personal Data Protection Bill allows for cross-border data transfers except to countries as yet to be identified as “blacklisted”. Additionally, India’s financial regulatory bodies have required that regulated entities ensure their data be stored within India.
Indonesia:
Authorities recently highlighted the importance of protecting consumer data within regulated financial-technology companies. Going forward, commercial banks must ensure their electronic system data centres and disaster recovery centres are in Indonesia, with overseas data centres permitted only after receiving approval from the regulatory body.
Mainland China & Hong Kong:
Data exchanges between Mainland China and the Hong Kong-Guangdong-Macau Greater Bay Area are expected to evolve following a recent memorandum of understanding. It remains to be seen how this will impact data transfers from Hong Kong internationally in the medium-term.

Changes in data protection and cross-border data flow regulations across APAC could significantly impact KYB and onboarding processes. International organisations active in the APAC region, particularly those spanning multiple jurisdictions, might face difficulties accessing national databases and containing other crucial information needed for conducting KYB checks, including details on key personnel and ownership structures. Navigating these complex legal frameworks could be resource-intensive. To comply with data transfer restrictions, for example, companies might need to establish local data processing facilities, which could increase operational costs.

As countries such as India introduce stricter data localisation requirements and specify conditions under which cross-border data transfers are permissible, firms will need to adapt their KYB processes to ensure that data collection, storage and processing comply with these new regulations. Alongside the growing global emphasis on data protection, there’s a need for KYB systems capable of managing data in a manner compliant with both local and international standards, without compromising the speed and efficiency of verifying and onboarding new business partners.

Trend 3: Increased adoption of AI-driven technology will grow

Advancements in technology enable companies to secure a competitive edge by integrating innovative digital solutions into KYB practices.

Leveraging technologies with automation and AI capabilities, such as machine learning and natural language processing, enhances data handling. AI algorithms can extract and process large volumes of data quickly and accurately, often in real-time. This allows for quicker decision-making and faster onboarding of new clients or partners. These technologies improve auditability, accountability and governance while controlling costs.

However, the effectiveness of RegTech solutions varies, and firms must ensure their compatibility with global data protection, privacy and cybersecurity standards.

“New technologies have the potential to make anti-money laundering (AML) and counter terrorist financing measures (CFT) faster, cheaper and more effective. They can improve the implementation of FATF Standards to advance global AML/CFT efforts, ensure financial inclusion and avoid unintended consequences such as financial exclusion.” – Financial Action Task Force (FATF)

Trend 4: Multilingual KYB solutions are the way forward

The vast linguistic diversity across the Asia-Pacific region has a significant impact on KYB processes. Firms need a strategy for managing KYB data and documentation in numerous languages and dialects to ensure accurate verification and risk assessment. Some countries also have laws that require KYB documents to be accurately translated into the official language.

This can be incredibly challenging, given the complexity of Asian languages and the fact that the onboarding process involves a thorough analysis of company information, financial and legal documents, and UBO data. Manually reviewing and translating these documents is both time-consuming and costly, with a direct impact on the speed and cost-efficiency of the onboarding process. Over and above that, translation errors pose considerable regulatory and reputational risks.

Some firms have been using machine translation tools to address these challenges, but the quality of these tools varies and they often provide literal translations which miss many nuances. Going forward, more advanced technology will become more readily accessible.

State-of-the-art automated translation technology, such as that offered by AsiaVerify’s KYB solutions, is already available in the market to overcome language barriers. AsiaVerify offers unparalleled translation capabilities by providing direct access to authoritative government registry information, which is accurately translated in real-time. Additionally, the platform ensures translated content is directly linked back to the original documents, enabling firms to create a reliable audit trail for their KYB processes.

In conclusion – Why AsiaVerify is an ideal technology partner

In expanding into APAC’s dynamic markets, AsiaVerify excels as a trusted partner for accurate KYB results, with deep local expertise.

Our sophisticated machine learning, artificial intelligence, government registry connections and other state-of-the-art systems ensure our clients find irregularities and identify blind spots that our competitors miss.

Our solutions are designed to balance verification speed, accuracy and cost-effectiveness. Clients switching to AsiaVerify have reported an 86% cost reduction, 95% faster onboarding and a 99% increase in accuracy, showcasing our platform’s exceptional value.

Get in touch to discover how our specialist team can help you enhance your KYB, KYC and UBO processes across the APAC region going forward.

If your company wants to operate with confidence and transparency in international markets, it is essential to implement a solid KYB process. If you want to know more you can consult our guides on: