Any companies using automation to streamline their Know Your Customer (KYC) process, whether it’s to onboard B2C or B2B customers or enable anti money-laundering (AML) protocols, need to understand the complementary role manual fallback can also play in their workflow. Julien Duméry, Global Sales Director of Webhelp KYC Services, examines why automation can only take you so far.

In 2023, plenty of banks are using automated solutions that allow them to handle and verify complex documentation on a highly-automated basis. It’s an approach that saves time and money. In this article though, we’re going to look at the essential role manual handling can play alongside automation, and how a hybrid solution that combines technology with human expertise can be transformational across the whole customer journey.

Let’s start with the basics. A bank is digitally onboarding a new customer and uploading their ID forms, but for some reason it’s being rejected by the automated process. There’s no clear reason why – it could be because the picture is fuzzy, or because it’s unclear. Maybe a stray finger got in the way of a scanner.

But because this is a false positive – a mislabeled security alert effectively – it creates an issue that needs to be dealt with. Perhaps around 3-4% of ID documents are initially rejected every day, largely due to software that struggles to decipher a particular alphabet or type.

Which is where the flexibility of manual fallback kicks in. A bank armed with a cohort of skilled agents working to very rapid SLA 24/7 turnarounds, is able to manually eyeball the ID and confirm, in the back office, that it’s a genuine, authentic piece of identification. The process never skips a beat.

Manual fallback works seamlessly alongside automation because when resourced correctly, it’s simply part of the customer journey that melds technology with human talent.

Why manual fallback is crucial in handling complex documents

Alternately, when you onboard a company within a bank, that company has to share many documents including its financials, corporate registration, company house registration numbers, Ultimate Beneficial Owner (UBO) elements, and more.

These documents pose a far bigger challenge than ID checks. It’s a huge mass of data, with quite a lot of files that can’t be sorted using automation, due to the complexity of the content of some of the documents. For example the information you need might not always be in the same place in each document, on the same page, or in the same format, hence needing human intervention to find it. Someone will have to analyse and check them before either they get the green light or they’re rejected because they don’t match up with official data sources, like Companies House in the UK for instance.

In these cases, manual fallback works seamlessly alongside automation because when resourced correctly, it’s simply part of the customer journey that melds technology with human talent. So a new customer can register, share all their documentation and normally within 24-48 hours, the onboarding process will be complete.

The customer doesn’t need to know (or care) that there is a skilled cadre of people sitting on the other side of the process, able to review what needs to be reviewed manually, because the rest is handled automatically.

How manual fallback helps compliance with UBO regulations

The organizations requiring this system of checks and balances include banks as well as regulated institutions like insurance companies, marketplaces, gambling platforms and more. All of them have to ensure the ongoing financial propriety of their clients on a regular basis.

That means making sure clients haven’t been recently listed on sanction lists for example. It also means making sure that they still own the company. Sometimes the ultimate beneficial owners (UBO) change but the company might have failed to declare it, or failed to update their company data.

Sometimes the right information isn’t shared at the right time, which might see banks needing to run a remediation program, or perform an anti-money laundering (AML) check on a UBO.

If any of the data hasn’t been updated, for whatever reason, someone will need to investigate and attempt to put it right. All of this falls into the remit of manual fallback and handling.

Do you have the right people in place?

The problem facing plenty of these organizations is simple: they’re simply not able to scale up rapidly. Let’s say you’re a corporate bank working in M&A and you’re working on a deal that involves an American company buying a European company: so there are two different, separate jurisdictions involved.

The documentation can be handled by both sides but at the end of the process (as the crunch point for the deal approaches), it is often very senior management, ultimately responsible for a merger or acquisition, who end up spending large amounts of time manually checking or requesting documentation.

It’s obviously questionable whether this type of work is the best use of their well-remunerated time. That’s why increasing numbers of companies tend to outsource these lower-value operations. It enables them to fix what could otherwise be a painful process, and protect their senior talent from burn-out (caused by spending huge amounts of time on tasks like manual handling).

Outsourcing manual fallback instead is an opportunity to create a virtuous loop, where a partner is selected who can do it more cost-effectively, with the proper bandwidth to ensure that the whole process is also smoother, easier and faster, both for the financial player involved and their customers.

Whether you’re a bank or an insurance company, you’re audited by the regulator and so it’s not something you can afford to get wrong.

Why automation can only ever be part of the solution

Let’s say you’re using an API (the interface that allows two applications to talk to each other) plugged into your technology platform, which is enabling you to conduct real-time automated checks.

That’s fine up to a point, but realistically you will need to be able to conduct more thorough analysis and investigation of data, because – especially in very regulated operations – you simply cannot risk missing something. Whether you’re a bank or an insurance company, you’re audited by the regulator and so it’s not something you can afford to get wrong.

Whether it’s the Head of Compliance in an organization or the Money Laundering Report Officer they will need to put in controls that give them greater agility, flexibility and quality.

When a system is entirely automated, it’s hard to change those processes once a product has been integrated into an overall workflow. Exceptions become hard to handle, particularly in daily operations on top of existing workloads. That’s why having a human behind the scenes who’s able to go into a middle office or back office and handle those exceptions, can be very helpful.

You also need operational expertise (because one size doesn’t fit all)

Perhaps a bank is being threatened with sanctions by the regulator because they haven’t run a remediation of their customer stock for a long time, and the regulator’s telling them they have a limited time period – maybe 1 year – to ensure that 100% of their customers data is checked and updated. That could be millions of files, for millions of customers, made up of everyone from digital natives to senior citizens.

A good portion of those checks can probably be automated, but the rest will require manual handling. The bank’s existing teams can’t handle it because it’s a mammoth year-long task and they are already assigned elsewhere.

How will they begin to set up the operations center needed to be able to handle everything from electronic documents to mailed-in envelopes from older customers who don’t have smartphones or laptops? While automation may be right for digitally native clients, how do you deal with the kinds of customers whose habits are still suited to the 20th century rather than the 21st?

Let’s take another example where a strong operational partner is needed. Following the invasion of Ukraine, banks need to be able to identify accounts with links to the Russian state. When a regulator orders them to freeze Russian assets, their data has to be up to date. Where are account owners domiciled? Who are they, who do they work for, what do they own? All of this is work that needs to be done in a very short time, and it’s where a strong manual fallback team truly comes into its own.

What should you look for in your manual fallback partner?

The first question to ask yourself is do you want to rely on your own technology? If not, you’re looking for a BPO who can provide the technology platform, with the operational scale and expertise to help you handle the spectrum of challenges we’ve discussed here, offering the right technology as well as the right people.

Then consider where you want those people based, because it’s obviously a cost. Each territory will have its own regulations to consider too. You need a BPO partner with experience of regulatory operations, able to source smart, multilingual talent to deal with complex documentation. The right partner will have great global reach so that there is flexibility for you in where those people are based.

Ultimately, in a multi-billion dollar industry you’re looking for a partner who can go far beyond simply manually certifying an ID check in a customer onboarding process. You’re looking for a well-resourced partner with heavy-duty operations expertise able to help you tackle serious challenges.

At Webhelp we support our clients with a modular end-to-end proprietary platform, in tandem with a team of 5000+ KYC experts operating globally in over 80 languages, processing millions of documents each week.

So whether it’s the recruitment, training, retention or attrition of those experts, we take the pain away for our clients. If you’d like to talk about what tailor-made KYC could look like for your customers, let’s talk.