How we helped a tier 1 investment bank avoid $100M of remediation costs
One of the world’s largest investment banks, headquartered in Western Europe, met with us initially to discuss how to help them with ‘top up’ research where their clients expanded across new geographies and thus their KYC files needed to meet additional country-specific regulatory requirements.
“We bought Arachnys as we knew it would provide us to have confidence in every KYC profile that we create, to avoid any future remediation, and secondly it would let us build these profiles much faster.”Head of Operations, CIB
The bank quickly saw the value in going much further with us, excited by the very first demo. They had faced a remediation cost of over $100M within the previous 12 months and wanted to avoid a similar cost happening again. Needless to say, this was coupled with intense regulatory pressure.
Simultaneously, the front office staff were desperate that the bank could onboard customers faster, but were unable to do so since the process was complex and the periodic review workload and deadlines meant it was hard to prioritize new client onboarding.
The result was that at C-suite level, the executive team had even ended up reviewing manually all new clients before subjecting them to KYC given the cost involved in the process.
The reason why the remediation project was so large and why the time to onboard clients was so slow, was that the CLM implementation had proved very challenging, largely due to it being an on premise and outdated system. The result was that there was an enormous amount of manual data entry and manual decisioning over where to find information, with many junior staff struggling with QA failures, often around UBO calculations. Working faster just led to more mistakes, and more mistakes led to an increased workload. Whilst the bank had an 85% QA pass rate target, it had never been met.
The good news was that whilst the bank was under immense cost cutting pressure, driving the desire to avoid future remediation, they saw the way to achieve this was through technology investment. While the bank had developed custom pieces of software before, they were keen in this case to use Arachnys because of our approach – we productize market requirements into our platform rather than carrying out bespoke development. This means we can maintain minimal setup costs, deliver faster and to a much higher standard.
A large RFP process was run, and Arachnys were delighted to be selected due to our ability to handle structured and unstructured data, and our process coordination capabilities.
As we see with many banking clients – the client knew the outcome that was required, but getting the detail right across a global client base’s onboarding and review policy was going to be tough. Arachnys provided a project team who travelled to many offshore locations with the client, running a full Analysis and Design, documenting current state and desired state processes with all relevant stakeholder groups. This made it simple for the executive sponsor of the project to present his plans to the regulator in the relevant countries, and given the project represented an improvement in their process, it was quickly accepted.
“Arachnys will help us make sure we can run 4,000 KYC cases a week, to avoid massive remediation costs.”Managing Director of CLM, CIB
Given the size of the implementation, we implemented a well thought-out governance structure, with regular project meetings, including Quarterly Business Reviews taking place with executives present from both sides. This industry-information sharing has allowed Arachnys to partner with the client not just in providing today’s solution, but in ensuring we maintain a high level of product roadmap alignment, in order that as the institution’s needs change, Arachnys is productizing these market requirements, and can help educate the bank on the rest of the market.
The platform is now in production, and cases that were taking 9 hours now take around 30 minutes, with far fewer mistakes. The bank has achieved a completely transparent audit trail, with full data providence. Given that KYC is the entry point of external data into the organization, and now the level of assurance over data quality is much higher, the bank is now looking at leveraging this data in other systems such as their transaction monitoring and AML alert clearing activities, to find further cost savings and process quality improvements through reduced duplication.
What I’ve loved in my role at this implementation was how much of a difference we’ve been able to demonstrate – they now truly have achieved global process standardisation, and are in a much better position to keep on top of their KYC workload. We’re able to provide metrics on throughput to bring better clarity than they’ve ever had before, but moreover, I’m excited that this implementation – as a flagship KYC customer – will change the way the industry thinks about KYCAndrew Lord, Business Analyst, Arachnys
Jim is a Financial Crime Intelligence professional with experience at major financial institutions, Fintechs and quasi-governmental bodies. Jim is a specialist in using data to investigate complex financial crime and communicating those findings to senior; military, government and business leaders.