EU banks struggle with KYC and AML budgets, but biometrics help applications worldwide

European banks are dedicating the majority of their AML (anti-money laundering) and KYC (know your customer) budgets to manual processes that cannot be scaled to meet the costs and risks of growing compliance demands.

The findings come from a new report from Ondato, which suggests that several large EU banks are spending €14.25 million (roughly US$14.78 million) per year on AML-related expenses on average, keeping compliance mainly at the operating cost level.

KYC, for instance, usually accounts for 40 percent of all AML spending, on which individual banks spend €22,984 ($23,845) daily. However, only 26 percent of that amount is invested in technological solutions that could reduce operating costs and scale to keep up with future growth.

“Manual KYC is simply ineffective. It’s time-consuming and leaves banks susceptible to human error, further inflating the cost of compliance,” explains Ondato CEO Liudas Kanapienis. 

The executive adds that manual processes could be more easily scalable. This was evident, Kanapienis adds, for banks worldwide that were overwhelmed by the unprecedented increase in sanctions imposed on Russia following its invasion of Ukraine.

“Compliance specialists simply cannot handle the current workload, and normal banking operations are being greatly slowed down as a result,” Kanapienis concludes.

Onfido partners with HYPE on biometric onboarding

On the other hand, several firms in Europe and elsewhere are gradually adopting biometrics and automation technologies to help companies reduce KYC and AML costs.

Onfido is one of them, with the company recently joining forces with Italian neo-bank HYPE.

As part of the collaboration, Onfido will automate customer onboarding using its biometrics and document verification technologies. 

According to an announcement on the company’s website, the move will enable HYPE to scale as they meet demand, accelerating the onboarding of customers.

Initial estimates suggest that, by deploying Onfido’s biometric onboarding solution, HYPE has reduced document verification time from 24 hours to a few minutes.

HYPE has confirmed it has designed a hybrid of automatic and manual checks relying on Onfido’s platform for automation, improving user experience while also keeping low operational costs.

Onfido’s biometric technologies were also discussed in relation to the future of payments in a new BBC Two series presented by mathematician and author Dr. Hannah Fry.

Airtel bank now supports Aadhar biometric KYC

Meanwhile, in India, Airtel Payments Bank has confirmed it will support biometric KYC checks via the Aadhar infrastructure.

Spotted by the Financial Express, the move will see Airtel customers link their bank account to their Aadhar card. During the KYC verification process, they will be asked to confirm their identity via one-time passwords (OTP) or biometric fingerprint authentication.

“This safe and secure authentication process has been made possible by the efforts of the UIDAI, which is a huge step in furthering the cause of inclusive banking in the country,” Anubrata Biswas, Airtel Payments Bank CEO, says in a statement.

“This KYC facility uses AI/ML based Face Authentication RD Application, which helps in the prevention of fraudulent activities by cross-checking an individual’s photo with the image captured in Aadhaar and allows secure customer onboarding.”

iDenfy and SupplierPlus join forces on AML screening

The last company on our list today is iDenfy, which recently announced a partnership with SupplierPlus to automate compliance and ensure a better customer onboarding process.

SupplierPlus is a Supply Chain Finance (SCF) platform that aims to enable corporate buyers to reallocate working capital from optimal payment terms while also increasing their suppliers’ cash flows.

“Our team believes that closing the security gap with robust AML compliance tools is essential in today’s digital age, not only for regulatory obligations but for ensuring your company’s operational efficiency,” says iDenfy CEO Domantas Ciulde.

“We’re glad to partner with an organization with a similar approach to fraud prevention.”

iDenfy has also recently launched a new solution to perform proof of address checks.

Article Topics

AML  |  biometrics  |  digital identity  |  document verification  |  financial services  |  iDenfy  |  identity verification  |  KYC  |  onboarding  |  Ondato  |  Onfido  |  selfie biometrics