Cracking the code of perpetual live KYC in digital finance

The financial sector’s Know Your Customer (KYC) practices have evolved from a fixed approach to a more dynamic and continuous one called perpetual KYC (pKYC). Firms are increasingly switching to pKYC as a less labor-intensive and more efficient method of managing compliance and regulatory norms. Napier COO, Greg Watson, has provided insights into this transition, detailing how traditional KYC processes are usually resource-heavy and can negatively impact businesses. By contrast, pKYC’s automated nature ensures that customer data remains accurate, adheres to regulatory standards, and does not burden customers. Watson predicts that the rising demand for compliance maintenance coupled with the need for frequent updates without putting undue stress on clients will contribute to the growing popularity of pKYC. However, this change poses the question: is pKYC’s dominance over traditional KYC inevitable in the long run?

Traditional KYC functions at set intervals within the customer relationship, while pKYC offers real-time, ongoing due diligence. Watson says the latter resolves many problems of the former, such as the operational overhead associated with conducting periodic refresh cycles. Watson notes that organizations often have to redirect resources to meet regulatory requirements, adversely affecting new business. He also notes that regulatory approval and compliance requirements are further challenges faced by traditional KYC, and pKYC can help address these issues more efficiently.

Watson concludes by suggesting that the rising necessity to maintain compliance for larger customer bases in a regular and less burdensome way is pushing pKYC to the fore. It remains to be seen whether pKYC’s takeover of traditional KYC is an inevitable long-term trend.