“Mutualization and standardization
are critical as the banking community
continues to trend toward automation,”
says Schulten. “In that regard, Swift’s
KYC Registry may be a game changer
because it’s collaborative and not a com-
mercial venture, unlike other platforms
to exchange KYC.”
The platform, which the banking
cooperative rolled out to its banking
membership in 2014, permits users to
upload and store a flexible mix of public
and private data—such as entity identi-
fication, ownership, management struc-
ture, business activities and tax informa-
tion—using a single format. The launch
followed several months of testing with
global corporations including BMW,
Siemens and Unilever.
“The result means we can now upload
our data in a standardized format, reduc-
ing the need to provide data in multiple
formats to each of our banking partners,”
says Rosanna Summerville, manager of
Global Transaction Banking and Processes
at Unilever. “They, in turn, will no longer
have to request KYC data every time they
need it. It delivers efficiencies for us both.”
Corporate access to the Swift registry
started with 18 corporate groups and 16
global banks, representing 7,000 banking
relationships. Participation has grown
robustly since the launch, says Claeys, with
around 180 legal entities representing 70
corporate groups as of the end of August.
“Rather than trying to onboard as
many corporates as possible,” Claeys
explains, “the initial rollout has been
staged to help ensure that all data com-
ing into the registry is comprehensive and
up to date.”Since corporate access the KYC
Registry has been live for less than a
year, it’s too early to measure its return
on investment. But the corporate bank-
ing manager for one of its early adopt-
ers, Pepper Financial Services, said at the
launch that the company hads already
saw some benefits from using the registry
to manage its KYC data in a simpler and
more secure fashion.
Besides providing central storage for
users’ KYC data, it could develop into
a two-way street, with Swift informing
platform users if the data they submit-
ted was clean, suggests David Bannister,
senior analyst at Aite Group, a financial
services research and consulting firm.
Clean KYC data can also help treasuries
further automate and increase the speed
of payments issued from their accounting
software or enterprise resource planning
platforms, Bannister says: “International
payments have tended to be reasonably
direct and are becoming more and more
intraday, like other things.”THE FED WEIGHS IN
Across the pond, the US Federal Reserve
last year announced plans to create an
instant interbank settlement system,
dubbed FedNow. Early last month, the
central bank announced that it would
launch the new service in phases some-
time in 2023 or 2024, despite criticism
from the financial services industry.“The rapid expenditure of Covid
emergency relief payments highlighted
the critical importance of having a resil-
ient instant payments infrastructure with
nationwide reach, especially for house-
holds and small businesses with cash
flow constraints,” Federal Reserve Board
Governor Lael Brainard said in a prepared
statement.
Errors such as incorrect account num-bers or subsequent KYC queries by banks
remain a thorn in the paw for automated
payments, however. “Corporates cannot
[respond to queries] effectively if they
keep getting an unacceptable error rate
that requires a lot of human interven-
tion,” says Bannister. Automation may
correct many common errors, but cor-
porates would like to be aware of issues
before a payment bounces, he adds.
A second benefit of using clean KYC
data is that it would reduce the number of
banking relationships corporates need to
maintain, say the experts. The Thomson
Reuters survey found that global corpo-
rations have 11 banking relationships on
average, while regional corporations, mid-
sized firms and smaller companies typically
have nine, seven and four, respectively.
One in 10 UK-based respondents went as
far as to claim more than 50 banking rela-
tionships at the global level. At the regional
level, 30% of UK respondents and 26% of
US respondents said they have 10 or more.
“Once you get to multinationals, they
could have an insane number of banking
relationships,” says Bannister.
According to the Swift-EuroFinance
study, more than half of corporate treasur-
ers whittled down their banking roster to
avoid lengthy KYC processes that can hurt
those relationships. “The corporates always
wanted to simplify their banking relation-
ships,” Bannister notes. “Now open bank-
ing allows them to.” ■“Corporates always wanted to simplify their
banking relationships. Now open banking
allows them to.” —David Bannister, Aite Group
53Claeys, Swift: It’s clear simplifying KYC
processes remains a priority.