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By Claus Christensen, CEO & Co-Founder


On 29 September 2020 Know Your Customer turns five.

When my co-founders and I first embarked on our journey back in 2015, anti-money laundering and KYC processes were still mostly manual and paper-based, especially for business customer onboarding. We believed that the right RegTech solution could solve this problem and lead to better user experience, stronger compliance, more efficiency and better outcomes all around, and that’s what we set out to build.

Almost 2,000 days, a host of loyal customers and more than fifty additional co-workers later, looking back at the initial mix of minimal market knowledge, business expertise, gut instincts and inspired optimism that got us started in the first place makes me smile.

To celebrate this important milestone, I want to look back at where we are now versus where we were then, not simply as a company, but as an industry overall. Here are the ten key areas that I feel have changed most drastically over the past five years:


  1. The level of awareness around KYC and client onboarding has grown significantly, becoming almost “mainstream” as a concept. This is in part due to the series of scandals about AML breaches that have dominated news headlines for the past few years, but also as a result of the proliferation of digital and virtual banks. If signing up for a new bank account – and the verification steps which that entails – was once a very sporadic occurrence, the rise of Revolut, N26, NEAT, Chime and the likes has made us all more avid consumers of new financial products.


  1. However, challenger and virtual banks haven’t simply made the concept of KYC and client onboarding more mainstream. They have also changed customers’ expectations of how easy, digital and fast a client onboarding experience should be. If, until recently, visiting a branch to provide a paper utility bill as proof of address was not unusual, this is definitely not the case anymore. Even established and more traditional FIs have now realised that providing a frictionless customer experience has become a requirement that cannot be underestimated.


  1. The prominence and scope of AML regulations around the world have continued to increase over the past few years. In the European Union, the 2015-2020 period has seen the entry into force of AMLD4 & 5 and the publication of AMLD6. The directives have fostered greater transparency on company’s shareholders (through the institution of UBO registries), driven adoption of the risk-based approach, increased the scope of AML regulations to new sectors and extended the criminal liability of legal persons for AML breaches. In parallel, more and more jurisdictions around the world introduced new AML/CFT requirements, often following one of the four existing models for e-KYC and ID verification.


  1. As AML requirements grow more stringent, regulators’ understanding of RegTech and its ability to foster on-going compliance has also intensified. From calls to caution and restricted sandbox initiatives, regulators are now openly promoting the use of RegTech, especially in the area of digital onboarding and AML. Already in March 2020 the Financial Action Task Force released its Digital ID Guidance, stating that non-face-to-face onboarding and transactions conducted using trustworthy digital ID can be lower-risk. But it was the pandemic the fundamental factor that accelerated the shift. A FATF report on COVID-19-related ML risks and policy responses, published in May, highlighted that several national regulators had begun to encourage “the use of responsible digital identity and other responsible, innovative solutions for identifying customers at onboarding and while conducting transactions”.


  1. According to a 2018 Deloitte report on “Digital transformation for the risk and compliance functions”, one of the constant obstacles to compliance innovation has historically been the continued view of compliance and internal audit organisations as “cost centres” rather than “strategic business partners”. However, I would argue this view has recently become less prominent. As risks connected with money laundering and terrorism financing have increased for businesses and senior execs involved, and the opportunities for a better onboarding process through digitisation got ever more evident, so has the view of compliance as a key and highly strategic function within the business.


  1. When we first started, the pace of digitisation in the retail onboarding space was already accelerating, with a number of vendors and solutions entering the market. The KYB space, on the other hand, wasn’t as ready for disruption, still involving mostly manual and paper-based processes. Factors like changing regulators’ attitudes – see the HKMA’s most recent circular released on 24 September – and the rise of new FinTech players focused on business accounts (e.g. Neat, Qonto) have acted as digitisation catalysts in the area of corporate client onboarding.


  1. The greater online availability of official company information has been essential in fostering this digitisation of corporate client onboarding. Back in 2015, the number of company registries that offered a connection via API or even a simple online portal was extremely limited. Even in the European Union, documents from the Cyprus registry could only be obtained as paper copies requested in person. Thankfully, our assumption that the trend towards registry digitisation would intensify proved to be correct. Our solution now provides registry access for thirty-five jurisdictions around the world, and our team is currently adding several new connections every month.


  1. In the early days of Know Your Customer adoption of relatively new technologies such as cloud computing, artificial intelligence, machine learning and advanced optical character recognition – all of which are leveraged by Know Your Customer’s solutions – was very limited across financial services and regulated sectors in general. But that has now changed. McKinsey forecasts that between 40% and 90% of banks’ workloads globally could move to the cloud within a decade. Similarly, a survey on AI in Financial Services conducted by the World Economic Forum and published in February 2020 reveals that 85% of surveyed FIs are using some form of AI. While this year’s pandemic has undoubtedly shown the many advantages of cloud deployment, one of the reasons for the massive shift in AI adoption might be simply competitive pressure. According to the survey mentioned above, 50% of FIs expect a significant competitive threat from tech companies leveraging AI to enter the financial services sector.


  1. Another change we have noticed refers to financial institutions’ attitude towards the agile methodology, especially when working with younger tech companies that have embraced the lean start-up approach from day one. The way I see it, agile has the potential to de-risk digitisation processes and tech partnerships for all types of financial institutions by building integrations and customising solutions via small and manageable iterations, testing assumptions and addressing issues as they arise, rather than trying to map the whole journey before you have even started writing one single line of code.


  1. It has become a bit of a cliché to say this, but I do believe that one of the most significant legacies of 2020 will be the general attitude towards remote working. At Know Your Customer, we made a conscious decision to set up our company as a distributed team from the start. For us, remote working has always meant access to a much larger pool of talent and the ability to provide coordinated support in key markets to our international customer base, maximising our business growth. In 2020, we have seen how compliance teams can also reap the productivity and flexibility benefits generated by remote working if empowered by digital compliance solutions in the cloud and protected by a robust security infrastructure. And we believe this shift in perspective is here to stay.


Thank you to all our clients, staff, partners and community members that have been part of our journey so far!

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Last updated on May 9th, 2023 at 08:55 pm

Claus Christensen

Claus Christensen is the CEO & Co-Founder of Know Your Customer. His vast array of previous experiences includes founding a technology company that develops email server infrastructure products for 60,000+ global customers and serving as VP Electronics at Thielert Aircraft Engines. A regular contributor to leading industry publications and a recognised expert in the anti-money laundering and financial regulation space, Claus is also the host of the RegTalks podcast and a senior lecturer of the Centre for Finance, Technology and Entrepreneurship (CFTE)’s RegTech Course.