KYC compliance costs banks EUR 50 million a year

Wednesday 4 September 2019 13:00 CET | News

New research from Mitek and Consult Hyperion has revealed that KYC compliance is costing banks EUR 50 million a year.

The report The Cost of Compliance and How to Reduce It hasfound that following new EU Anti-Money Laundering (AML4/5) and Counter-Terrorist Financing (CTF) rules extending the scope of KYC requirements, the annual cost of punitive non-compliance fines has risen to EUR 3.5 million. When things go wrong, these fines could soar into the tens or even hundreds of millions. But it’s not all about the financial and business costs. The risk of reputational loss, losing license to operate, and even personal liability of senior management are also increasingly significant for banks who get KYC wrong.

However, fines aren’t the only growing problem when it comes to the hidden costs of KYC. The potential cost of losing just a few percent of new customers to complex manual KYC processes is now as much as EUR 10 million a year. After five years, the cumulative lost opportunity could cost banks in excess of EUR 150 million.

The cumbersome onboarding is a key driver behind a staggering 56% abandonment rate for banking customers (up from 40% two years ago). Customers often abandon the process as soon as they’re asked to visit a branch face-to-face with their passport and utility bills. As the younger generation begin to turn to challenger banks providing a seamless in-app experience, traditional banks must respond to these demands or face losing new customers.

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Keywords: KYC, Mitek, Consult Hyperion, report, compliance, AML, onboarding
Countries: World

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