Financial services firms all around the world are struggling to keep up with evolving, increasingly complex Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Since the 2008 crisis, firms have been hit with $36 billion in KYC, AML, or sanction related fines, with penalties in 2019 increasing by more than 160% compared to 2018. This led a tier one global investment and corporate bank to reach out to Capco for help in reducing the cost of KYC and providing a better customer experience.
Capco's blend of industry expertise, KYC and regulatory knowledge coupled with strong analytics & data capabilities to build smarter solutions in client lifecycle management/operations stood out to the client. Using our multi-disciplinary teams, we drive greater effectiveness and provide deeper insights which can be tailored to a firm’s strategic business priorities.
As well as the pressure of tight regulatory deadlines, a big challenge was data governance and quality. The bank’s data was housed in silos across different business departments, controlled by different stakeholders and had several quality issues.
Capco was tasked with:
To meet this challenge, we assembled a team of three data scientists, one data analyst, a CLM & KYC expert and a process analyst. Combined, the team had a wealth of industry experience and technical skills in data wrangling, feature engineering, process mapping and Machine Learning, using tools such as Python and Celonis.
The team did the following:
Conducted exploratory data analysis on all the relevant datasets to understand how the data was structured and uncover relationships between the datasets
Cleaned, aggregated and joined together these datasets to create a single, enriched dataset which included details such as complexity of files, fungibility between locations and processing time and quality scores for different KYC teams as well as business variables such as cost to automate per location / system, ability to hire or relocate FTEs to regions and working hours per location
Build models to explore different business outcomes:
A senior MD at the client commented, had been ‘a real gamechanger’, helping them to achieve the following the business benefits:
Today, the increased efficiency, transparent capacity modelling and effective introduction of automation has enabled the bank to be more aligned to regulatory KYC requirements. The bank also remarked that the models have proven ‘invaluable’ and were ‘executed brilliantly by Capco’.