KYB is broken: We’re partnering with Detected to fix it

The KYB market is ripe for disruption, as our Chief Revenue Officer, Paul Kizakevich, notes:

“Feedback from customers on the Detected KYB offering has been outstanding. It’s clear that, like us, they believe the Detected team is changing the game when it comes to know your business processes. If you’re frustrated with an inefficient, manual KYB operation, I’d highly recommend finding out more about our partnership.”

To learn more about how we’re bringing a new, combined KYC/KYB offer to the market, read this blog from Liam Chennells, CEO of Detected:

Different regulatory requirements in every market. Different forms, formats, deadlines, and expectations from every enforcement body. Sound familiar? We thought so.

This fundamental challenge could describe many parts of the due diligence process, whether the entity in question is a person or a business. Know your business (KYB) processes include the added complexity of requiring checks on businesses and persons, piling more regulatory arbitrage onto compliance teams. Moreover, the sources of all this information may or may not be accessible depending on the jurisdiction. In the UK, within the realm of GDPR, much can be accessed easily, but in the US, even after introducing the Corporate Transparency Act, this information is much more protected.

Put simply, business owners become the forgotten – but critical – source of information about their company and its ownership structure. Public and government sources alone won’t be enough. 

Logically, firms should secure this information during a sign-up process that is personalized to them and requests as little information as possible – right? 

However, when Detected, ComplyAdvantage’s KYB partner, engaged with financial institutions, they discovered a process that looked more like this:

1. A customer is sent a one-size-fits-all form that includes 30+ questions.
2. Once completed, the application is received in a back-end system. 
3. An analyst reviews the application and uses various tools to investigate.
4. The analyst emails the customer and asks them to fill in the blanks. 
5. When the customer has provided the missing information, an analyst manually approves their application, followed by periodic reviews against steps 2-4. 

The Detected team found that while one or two steps in this journey may be optimized, no single provider could fix all five. They also found many teams resigned to these inefficiencies as inevitable parts of the KYB process despite the significant bottom-line impacts. 

The business impact of inefficient KYB

Decreased revenue due to:

• The opportunity cost of a longer onboarding process: If it takes five days to onboard a customer rather than 80, that’s 75 more days the company can profit from the relationship.
• High customer drop-off rates: Losing 50 percent of customers due to a cumbersome process means that much of a company’s true revenue potential will be unrealized. 

Increased costs due to:

• High levels of manual effort: Without efficient, scalable technology, hiring more people is the only way to handle growing KYB requirements. 
• Multiple data providers: The internal cost of managing providers for business data, ID verification, and screening is significant – paying for the services without benefiting from an economy of scale and hiring people internally to manage them. 

When companies come to Detected with these challenges, their team recommends these steps: 

• Assess the current state: Conduct a thorough analysis of existing processes and identify bottlenecks or inefficiencies. Speak to everyone affected, including end customers.
• Define objectives: There are four: Decreased onboarding times, reduced customer drop-offs, less manual team effort, and consolidating data providers. Calculate the impact on the business if these were all improved by 50 percent and subtract the costs to form a business case. 
• Confirm gaps: Ensure the current team and processes can’t meet these objectives.
• Engage stakeholders: Involve other key executives early to secure buy-in and alignment that using third-party technology is the right approach.
• Send a two-phase RFP: Use phase one to gather high-level cost estimates and timelines, which help to secure the budget, followed by phase two for a detailed vendor analysis.
• Conduct vendor due diligence: Ensure vendors can deliver a solution that achieves the project’s objectives while adhering to regulatory requirements.
• Select a vendor and implement: Choose the vendor that best aligns with the stated goals and implement the technology with their support.
• Change management: Prepare a strategy for training and onboarding teams to ensure smooth adoption of the new system. The vendor must support this.
• Monitor and optimize: Track key performance indicators post-implementation and regularly optimize processes to achieve long-term success.

The Detected solution

Detected’s mission is to deliver an exceptional experience for any company to validate the business they want to work with. Its platform has five core components:

1. Case management: Web-based secure case management manages all applications, reviews, and configurations. It is designed as a day-to-day tool to support compliance and operations teams.
2. Global risk, fraud, and compliance network: Automatically gather rich profile data from the global risk, fraud, and compliance network.
3. Decision and automation engine: Assign a risk score using thousands of data points and any combination of complex logic. Based on this score, actions in case management can be automated.
4. Customer portal: Accelerate the onboarding process – and time to revenue – for the right customers and products.
5. Ongoing monitoring: Monitor clients to ensure ongoing compliance throughout their lifetime.  

ComplyAdvantage and Detected

Detected and ComplyAdvantage are partnering to deliver an integrated KYC/KYB process for our customers: