Singapore banks lose clients due to KYC inefficiencies

The company notes that Singaporean banks are experiencing the highest client loss worldwide due to KYC inefficiencies. The report provides an analysis of the time and cost implications for regional and global banks conducting KYC tasks.

The response of Singaporean banks

While banks in the US, the UK, and Japan face similar challenges, Singapore’s banking industry is experiencing more compliance breakdowns, highlighting the need for reform. Fenergo’s report states that banks in Singapore are spending more time and resources on KYC processes, an integral part of AML compliance, than any other region surveyed.

91% of financial institutions attribute high client abandonment rates to poor data management and slow workflows. Moreover, 79% of banking executives claim that manual KYC processes are a key blockage spot that disrupts customer experience and slows business operations. Around 47% point to outdated compliance infrastructure, which hinders digital transformation and contributes to inefficiencies. Fenergo notes that the issues discussed are no longer a back-office issue, but a boardroom one.

Although only 1% of the banks surveyed automated the majority of their KYC and Singapore is known for its reticence to adopt transformative tech such as AI, the report showcases a growing adoption of AI automation. Banks that fail to digitally improve the processes risk losing customers and have ineffective KYC and onboarding practices.

Banks and financial institutions turned to AI automation to improve KYC processes, with 38% of them planning to implement AI-powered solutions to improve compliance workflows, optimise verification accuracy, and reduce onboarding times. Another 30% of financial institutions aim to improve data accuracy using AI-driven compliance tools.

Additionally, these inefficiencies come at a time when Singapore’s financial institutions are required to comply with stricter AML regulations that took effect in 2024. These regulations were launched as a response to the high-profile money laundering incident of 2023, where ten Chinese nationals were charged for laundering USD 2.2 billion earned from criminal activities abroad.