ID Verification - KYB

The SVB Black Swan Event is About to Cause a KYB Tsunami

Jason Howard

January 20, 2023
Table of Content

The swift failure of Silicon Valley Bank and resultant fallout has made significant waves since the news first broke on Friday. The bank held the deposits for many startups, which left those companies scrambling to access their money and meet payroll. 

But beyond the implications for the wider economy, there are important implications for all banks globally. 

Not just former SVB customers, businesses of all kinds globally are seeing what’s happening at SVB and re-assessing their operational risks; specifically by adopting a multi-bank risk strategy. The SVB failure has shown the risks for businesses that hold all, or most, of their cash at one institution. Even companies that previously held this strategy may opt to work with a greater number of banks.

This sudden spike in new clients can overwhelm existing onboarding processes for many banks; very few are ready for this influx of potential new business customers. However, banks that have the proper Know Your Business (KYB) processes in place and can quickly and efficiently onboard new business clients can also turn this crisis into a competitive advantage and a way to increase their market share.

Overcoming KYB Challenges

Many banks however, struggle when it comes to KYB for a number of reasons. Chief among them is the sheer complexity of conducting KYB checks, especially if you are using largely manual processes. The KYB process can be time-consuming, which can cause delays and affect the customer experience. This can lead to the disaffected clients. The flip side of this is companies that are not being thorough enough in their KYB checks and opening themselves up to fraud and potential regulatory action. Banks need an automated, but accurate, method to conduct KYB.

Another challenge is around data – specifically data not being shared across the organization. Fragmented access to data and legacy systems can increase operational and onboarding costs in addition to impacting compliance. This is especially relevant for the banking industry, where many institutions have data residing in different silos. Financial firms also need to ensure they are using the right data, that is, the most up-to-date data from the most authoritative sources such as government databases. 

Finally, too many organizations lump KYB in with KYC. KYB compliance should be its own discipline with its own processes to ensure optimal outcomes. 

How to do KYB Right

For the optimal KYB experience, banks need to combine the right technology with reliable data sources. This can include implementing technology that can automatically extract data from documents and pre-fill required forms with that information, which not only increases operational efficiency but reduces the manual input required by the user. That information should then be automatically checked against government and other relevant proprietary and  third-party databases to ensure the verification of every business stakeholder. This part is critical; you cannot just rely on self-reported data when it comes to KYB.

The due diligence does not end after onboarding, however. Firms will need to continually monitor their business clients for potential fraud or financial crime. You should have the capability in place to detect any suspicious changes or impending risks in real-time. This will provide long-term protection for both your business and clients.

The Caf Difference

Leading banks trust Caf for automated verification and faster onboarding of more corporate clients. Using Caf’s business verification solution, organizations can streamline their KYB processes to validate entities, improve risk-decisioning and ensure compliance with changing regulations at lower costs.

With Caf, you can personalize and optimize client journeys by orchestrating customized workflows to validate identities, manage all users, enhance risk-decisioning and monitor results.

With a potential influx of new clients, banks need to be assured of onboarding only legitimate entities that do not engage in fraud or other criminal activities. Doing so means you can ıncrease revenues while reducing the costs of regulatory compliance and keep your bank safe. Click here to learn more about how Caf can help with all your KYB needs today. 

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"The SVB Black Swan Event is About to Cause a KYB Tsunami"