The post is written by Willem-Boudewijn Chalmers Hoynck van Papendrecht who is a Senior Consutant at CapGemini. I also highly recommend you give Boudewijn a follow on Twitter where he can be found tweeting at @BouChalmers
I want to thank Boudewijn for taking the time to write the response, I also feel it adds quality to the discussion on KYC that has proven to be so popular. So here is the article:
KYC in Private Banking
During my holidays in US I read the blog about KYC in Private Banking and all its ‘negativities’. I was not able to respond earlier but did not stop thinking about the fair statements made. It is clear that the importance of KYC is understood, but not the level of detail and effort required. More important, nothing is mentioned about the window of opportunity created by the KYC moment. During the Client-Onboarding process real client insights become available. Additionally this is the client’s first contact-moment with the FA/Bank after becoming client.
I am not saying KYC as the industry knows is the best invention in the regulatory area, but I really believe there are several ways private banks and FA’s should have a more positive viewpoint. There is a momentum in order to give the client the understanding of the added value of KYC and the FA having the opportunity to really get to know the client better. Nowadays, KYC is mainly approached in an administrative way these data will be forgotten in a client – advisor relationship.
The fact that in responses to the blog, apologies are made to clients for doing KYC, is in my opinion the best way to actually lose the client. How are you able to create the trust and added value of the firm you are working for? Use the moment of KYC, one of the regulatory demands with the highest impact on client and the firm, to kick-start your relationship.
Regulations in general are currently approached in isolation instead of being part of the firm’s strategy. This increases the negative opinion on this area from client and FA. On top of that, firms are not communicating the added value of the firm’s strategy to their FA’s to let them have constructive discussions about regulatory requirements with their clients. Making clear the importance of doing this because of e.g. client protection, maintaining transparency and reducing clients risk is a starting point and also makes the clients aware of their own responsibilities in the way we are doing financial services. So KYC is a must do, but get everything out of it!