By Carole Avis, CRO, LGI, Legal & General
What for you are the benefits of attending a conference like the ‘Risk EMEA’ and what can attendees expect to learn from your session?
The Risk EMEA conference enables risk professionals in finance to learn about innovation in their sector, network with other risk professionals and increase their knowledge on a wide range of topics as well their own area of specialism.
The session will focus on the use of technology to enhance KYC practices, the benefits and potential pitfalls of change. It will also consider the impact on the customer and potential impacts on certain customer groups such as vulnerable customers.
How can risk professionals move towards biometrics?
Some of the challenger banks are already using this technology in their KYC processes and more traditional high street names are following fast.
Risk professionals can move towards biometrics by reviewing customer journeys especially digital ones and ascertaining how biometrics can be used. This will involve working with 1st line colleagues to source appropriate technology, usually trialling via a pilot to test and learn before moving to full implementation for a journey. Additional checks should be in place initially and sampling on a regular basis is required to ensure that the new process is effective.
Why is KYC in an IT based world a key concern?
KYC in an IT based world is a key concern because of the almost universal requirement for dealing with customers digitally throughout the lifetime of their relationship with your organisation. There will always be pressure to make this as frictionless as possible but with rigorous KYC. Technology can help with this and there have been a number of projects in the FCA regulatory sandbox which have sought to use machine learning and blockchain to verify documentation against a reliable source to address this issue.
We have to be cognisant of the potential for new KYC processes to be abused given the increasing sophistication of financial crime and its ability to hide/steal identity. Therefore, customer data security and encryption will be a crucial issue to ensure that there are no leakages that might facilitate identity theft.
What are the challenges of customer identification technology and how can we move to remote based technology using cameras?
The challenges of using customer identification technology are the cost, time and potential vulnerabilities. The technology has to be built into existing customer journeys. The success of camera use will depend on the quality of the document image and reliability of the algorithm that assesses this against the photo image. It will also be important for it to perform well and not cause significant delay in on-line journeys.
Sourcing appropriate technology and being sure that it has no vulnerabilities that would allow it to be deceived by those intent on hiding their true identity is essential. Maintaining currency will also be an issue. While technology may meet security requirements initially, criminals may find ways to mislead the technology and so it will be important to ensure that any software has frequent updates to deal with vulnerabilities identified.
What do you see ahead for the future for monitoring discrimination?
Technology may have inbuilt biases so that it might make the recognition software less accurate for some sectors of the population. It is important that any such issues are identified at pilot or MVP stage and addressed before such technology is embedded in a financial service provider’s processes.
Customers who are vulnerable and have little access to online technology or do not use a mobile phone may struggle to meet the KYC requirements of financial organisations. We have to consider how any new technology complies with vulnerable customer practices in our organisations and the requirements of regulators in this regard.