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5 Advanced Capabilities to Look For in Customer Due Diligence Products

by James Musoba
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Your financial institution’s Customer Due Diligence (CDD) program plays a key role in ensuring that criminals cannot take advantage of your business. This is because, much like finance industry regulators as well as banking, financial services, and insurance (BFSI) companies, financial criminals are also exploring the applications of digital innovation. As a result, these criminals’ methods of infiltrating and exploiting financial institutions are evolving with the changing technology.

Of course, it’s in your organization’s best interest to prevent these malicious entities from compromising the integrity of your systems and data. Otherwise, these incidents can significantly damage your brand’s reputation in a scandal and cause your company to incur fines due to non-compliance.

These potential harms highlight the need for your organization to invest in a good Customer Due Diligence program that can effectively screen your current and prospective customers. To perform this primary function with exceptional efficiency, a CDD solution should have advanced capabilities that will enable it to respond to the changing needs of your financial organization.

With that in mind, here are some advanced capabilities you’ll want your updated CDD program to have:

A Streamlined Onboarding Process

BFSI companies that make use of legacy CDD solutions are often stuck with a slow onboarding process for their new clients. With older software, it takes a lot of time to gather information about prospective customers, check and verify details, and analyze data to ensure that the company is not exceeding a certain level of risk for accommodating a client.

In the digital age, where retail and corporate customers alike are used to real-time responses from their service providers, a time-consuming onboarding process simply won’t do. As such, BFSI companies must make an effort to find a CDD solutions provider that offers a streamlined process without compromising adherence to compliance guidelines.

A 360-Degree View of Each Entity

Gathering information on a particular client or transaction can be difficult. Data from each client must be collected from a variety of sources, with many of these sources maintaining files in a wide range of formats.

Fortunately, modern CDD solutions offer BFSI companies a 360-degree view of their clients. These solutions can be programmed to collect information from trusted sources and interpret and translate data into a standard format. This standardization enables the screening team to have a much better understanding of each customer. Some CDD solutions can even look deeper into missing or inaccurate details, such as customer information that may be spelled differently between sources.

Aside from processing prospective customers, these CDD solutions can also upgrade customer profiles and determine if a particular client should be reviewed and if the case should be escalated.

Smart Event-Based Triggers

Retail and corporate banking consumers alike develop patterns when using financial services. Their every transaction is recorded, and this information helps a CDD solution establish how a particular customer typically uses a BFSI company’s products and services. Hence, a sudden change in how an entity manages and uses its financial resources can be a telltale sign that the account has been compromised.

A modern CDD solution can alert the financial crime and compliance management (FCCM) team of any changes in a particular client’s transaction patterns or data. It can also carry out periodic reviews of customer accounts, prioritize an account’s review process, and reevaluate customers to determine their current level of risk.

A Watchlist Interface

Watchlists serve as a primary source of information for financial institutions. These lists clearly indicate the individuals and organizations that other BFSI companies and regulators have deemed to be involved in suspicious financial transactions and illegal activities.

To make it much easier for screeners and investigators to procure and analyze data from watchlists, many modern CDD solutions have a dedicated watchlist interface. This is a practical tool for creating, screening, and investigating batch and individual customer profiles.

Efficient Client Risk Rating Features

Every customer that a bank accommodates carries a particular level of risk, and some customers have a higher level of risk compared to others. Thus, having the capability to identify the risk rating of an entity is a boon to financial institutions.

If, for example, a bank can immediately recognize high-risk customers, the organization can devote more resources to scrutinizing the said entities. Meanwhile, low-risk customers can go through the regular screening process used by the bank. This will make the CDD program more efficient, as it will dedicate more resources to customers and cases that require more stringent screening.

Enable an Enhanced Investigation Process for Your Organization with Modern CDD Programs

Aided by digital tools, a CDD solution that’s designed for the digital age can do more than screen customers. It can determine the level of risk that a customer poses, access and standardize data from multiple sources, detect changes in customer activity, provide an encompassing view of customer profiles, and make the screening process more efficient and effective. This makes it an invaluable tool in deterring and investigating financial crimes which, in turn, can help protect the reputation and customers of BFSI companies. If you’re shopping for your company’s next CDD solution, make sure that you choose a program that offers the features discussed above.

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