I’ve been a concierge for years as it’s better than working. The last few have been spent at a bank. Not just any old bank, an investment one, in heart of London. Initially the terminology being bandied about, stuff like KYC and AML, perplexed me. KYC generated images of drunks stuffing fried chicken into their faces and AML reminded me of AMC, an underrated digital TV Channel. Never one to enjoy being left out of the loop, I Googled KYC and to tell the truth, was none-the-wiser. Why did this, the most obvious of requirements need stipulating and, why was this stipulation causing such a tizzy amongst those of us toiling in the old Square Mile?
Surely banks know their customers? With a clear view of a punter’s spending, a counting-house often has a better understanding of them, than the said customer’s nearest-and-dearest? For instance, there is the odd occasion that my overdraft’s breeched due to funds transferring out of my account and into that of a certain bookmaker’s. Giving my bank a deeper insight into my interest in the Sport of Kings than, the long-suffering and ever wondrous, Mrs Concierge. Long may it continue.
That KYC search generated 120,000 results. The first page of which was full of companies selling their version of KYC’s requirements. I had imagined 'Know Your Customer' to be a template set by the government akin to the Ten Commandments but rather, it consists of ‘Guidelines’.
The thing about guidelines is that they are open to interpretation and interpretation creates space for manipulation and that, generates leeway for wiggle-room. Which of course is great. Well, up until the moment the Regulators rock up with a ten million pound fine, it is.
Between studying the horses and signing people in/out of the building, I’ve taken an interest in the banking game and arrived at a couple of conclusions. In relation to the regulatory guidelines most banks take a reactive stance that leaves them attempting to cover every possible take, on each and every guideline. This route is usually taken in conjecture with, at least one, high-priced consultancy company. These firms never seem to tire of new ways of presenting the same problem.
The issue here, is which consultancy’s interpretation of KYC is right? Once a bank starts down this path it often leads, in an effort to cover all the bases, to employing numerous companies but while following each guide-line to the nth degree may safeguard your bank from falling foul of the regulators, it may also leave it devoid of time, money, or inclination, for new business… That, simply becomes too nerve-wracking.
A less complex and more cost-effective route in a bank guaranteeing itself a fine free future is at hand. This route however, entails addressing ‘Internal Client Data’ AKA ‘The Enemy Within’. Banks plough millions into IT projects doomed to failure rather than dealing head-on with the nightmare of remediating and reconciling Legacy and Siloed Data systems, stretching back, in some instances, over thirty years. Many of these systems are so antiquated that the present-day workforce has no comprehension of how they operate and the concept of updating them is so daunting, it’s long been abandoned. For, as dilapidated as these systems might be, the client data they hold, is irreplaceable.
The financial sector’s auxiliary industries are acutely aware of the issue and have spent years devising wondrous ways, to circumvent it.
Thing is, you can build the world’s most expensive hotel on the beach of its most exclusive resort and erect an invisible force-field around it. One that’s safeguarded to withstand the force of an atom bomb but, and I’ll go a pound to a penny here, your hotel is still going to sink.
There might be others but the only company I know that have managed to remediate incorrect, incomplete and outmoded Internal Data is ICX4.
Got to go-
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Nigel Dickinson · May 4, 2018 at 10:53 am
Another great piece of writing and insight Mick.
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