How to Speed Up KYB Checks and Unblock Bottlenecks

In some ways, Know Your Business processes are a lot like going to the dentist. They might be essential, but they can be a real pain, especially if not done by a professional. Onboarding business clients is a delicate balance of careful due diligence and preventing drop-offs during the user journey. This is easier said than done, but with the right strategies and tech solutions, KYB processes can go from bottlenecks lasting days to a matter of minutes.

Why KYB processes are getting more complex 

If you’ve found yourself getting annoyed at increasingly complex onboarding for businesses, you’re not alone. A Censuswide study highlights how complexity is the biggest challenge businesses face during onboarding, followed by clunky UX design and data inaccuracies. And the smaller your business, the more complex this process seems.

The complexities are complicated by definition, but the reason for this complexity is fairly simple. As the financial world and criminal threats have changed, KYB processes have needed to change in response. In the increasingly complex game of cat and mouse between regulators and potential criminals, businesses get stuck in the middle with mounting regulatory scrutiny when onboarding business clients.

The financial world’s shift into the digital realm has exposed many regulatory weaknesses, and stricter KYB processes are now needed to verify company identity, structure, ownership, and legitimacy. These requirements are mandated under global frameworks like the Financial Action Task Force recommendations and regional laws like the EU’s 6AMLD and the US Bank Secrecy Act.

It’s also worth remembering that, by its very nature, verifying an entity in KYB is inherently more complex than verifying an individual. From collecting company documentation and verifying Ultimate Beneficial Owners to sanctions screening, there are so many hoops to jump through in KYB, it’s no surprise it can get overwhelming.

How to drive businesses mad: bottleneck to bottleneck

To stop potentially shady characters from onboarding, businesses end up being forced into Kafkaesque bottlenecks that can significantly increase frustration. To make matters worse, 35% of companies still rely entirely on manual processes for KYB onboarding that not only waste time but are also error-prone. This is particularly common among larger companies, which is bafflingly bureaucratic, especially considering how advanced automation tech is nowadays.

The bad news, however, is that some bottlenecks may be inevitable. For example, it’s hard to avoid lengthy beneficial owner identification when the ownership of a business spans multiple countries with opaque registries. But many obstacles can be avoided with high-tech solutions that reduce the number of bottlenecks, making KYB processes more reliable, faster, and, dare I say it, more enjoyable. 

Also remember that clunky UX design is the second-most reported complaint in KYB.  If you think of onboarding like the first time a business interacts with a company, fragmented and poor UX design make for a terrible first impression.

So, how can we make KYB processes as painless as possible?

Simplify things with helpful tech solutions

KYB automation 

I will never understand why so many companies still use manual KYB processes for their tedious and repetitive admin when automated tools can do it for them. Tech solutions can automate things like document parsing, data extraction, and validation, which makes the whole process faster and more reliable.

If these solutions are introduced at scale, they can make a considerable difference. When the Kingdom Bank, which operates in over 50 countries, implemented automated workflows to verify businesses, they reduced their average verification time from around three days to nearly two minutes.

Recent innovations in tech have also made automation a lot more accurate. You can use automation in everything from AI-driven OCR tools when extracting and validating data to conducting checks against databases.

Real-time access to databases

There is a huge number of APIs out there that businesses can use to access up-to-date company registries and databases in real time. This significantly reduces the reliance on customer-uploaded documents. It also lessens the burden on the end user, makes drop-offs less likely, and makes catching criminals all the more likely. Win-win-win! 

Businesses can make use of government APIs (like the UK Companies House or Estonia’s Inforegister), global corporate data providers like Dun & Bradstreet, Orbis, or KYB platforms offering integrated data feeds like Sumsub.

Think how to make life easier for businesses… and harder for criminals 

Is it worth the risk?

Not all businesses pose the same level of risk. A digital marketing agency in Berlin will not carry the same profile as a shell entity registered in a secrecy jurisdiction. Knowing what red flags to look for and applying a risk-based approach means you can tailor just how in-depth your KYB processes go based on the nature and risk of the business.

Dynamic risk scoring into low, medium, and high categories based on a multitude of factors like location, device, and behavior can show you who needs closer attention. This means you can apply simplified due diligence for low-risk entities, and enhanced due diligence only where necessary.

Some businesses, for example, use a risk-scoring engine to segment business clients. Low-risk companies go through automated flows, while high-risk applicants get routed for manual review with deeper scrutiny. This means businesses that are more likely to be legitimate face an easier verification process at onboarding while those with red flags get further attention.

Don’t forget your end-user is a human being

It sounds simple, but when there are so many factors to consider, user experience is often overlooked. Even just giving clear instructions, guided flows, and real-time status updates can do a lot to reduce abandonment rates.

Sometimes the easiest improvements can make the biggest changes. These include things like dynamic checklists, estimated completion times, real-time feedback on uploaded documents, or pre-filled fields using registry data. 

Users often feel ignored in overly bureaucratic KYB processes, but listening to their complaints can make a real difference. Try and get systems in place where staff can flag user experience issues and create feedback loops using customer support. That way you can make sure your onboarding process is as seamless as can be without sacrificing rigorous checks.

That way everyone’s happy. Well, other than the malicious actors out there.