KYC: too many cooks?

At the best of times banks are reluctant to share ideas and information with each other, but it is clear that in some cases there is no discernable advantage to differentiate. KYC, for instance, is one of them, as I discussed during this piece in the IBS Journal in May. Today’s news that Swift has added six major banks to its KYC service, launched earlier this year, raises the question once again: Why does the industry have so many KYC utilities?

The likes of Genpact/Markit, DTCC and Thomson Reuters operating in the vast securities market is one thing, but the competition between KYC Exchange Net and its platform KEN, Accuity with its Banker Almanac, and Swift in the correspondent banking market does seem like it defeats the point. Swift is leading the race in terms of numbers (it has twelve banks signed up, with Barclays, Deutsche Bank, Erste Group Bank, HSBC, ING and Raiffeisen Bank International joining today), but KEN has users such as Commerzbank, Société Générale and Standard Chartered signed up, with more to inevitably come.

Each service has different data requirements, stored in different locations and accessed via different web interfaces. Whilst moving away from bilateral KYC is obviously a step in the right direction, we now face the likelihood that there will be no comprehensive KYC portal for banks to access, with no common standards and integrity of data, which invariably plays back into the hands of the perpetrators of the activity KYC is designed to stop. It is difficult to continue to make the case for KYC being a commodity for banks when there is clearly business to be had for the suppliers.

Leave a comment below to have your say on the goings on in the KYC space.


Follow Jan on twitter