Private banking COOs and risk heads at the Hong Kong Appway Sphere of Banking conference expressed caution when deating whether private banks should incorporate e-signatures into their KYC processes.
While a survey conducted at the conference shows that 68% of respondents believe that private banks would be willing to electronically sign contractual documents when opening accounts, many attendees said that private banks should also give clients the option to sign manually.
“From a pure security perspective, it is important to let our clients know that we are able to cater to them from a number of different ways,” said one COO at a Hong Kong-based private bank. “The issue is that there is still a fear of failure. While digital KYC, including e-signatures, can improve the client experience, in the event of a hiccup in the process, manual processes are safer as clients know they can always go directly to the branch. I’m not completely sold on the idea.”
Almost half of the respondents (48%) surveyed said that the key objective of automation in the onboarding process is to help improve the customer experience.
A Hong Kong-based senior risk manager at a wealth management firm added that for “high-level clients”, particularly tycoons and owners of multinational corporations, e-signatures and the ability to carry out KYC processes digitally would be beneficial from a customer experience and compliance perspective.
“High-level clients are constantly travelling,” he said. “They are very busy people, therefore, onboarding for them involves sending a relationship manager overseas to join them on their golf trips with thick piles of documents. Sometimes we even send two RMs so that the other can act as a witness. In these circumstances, digital solutions can help cut down operational costs and save time for RMs.”
Waiting on the regulator
Private banking COOs and tech experts said their hesitancy to fully integrate e-signature capabilities into their banks’ KYC processes is due to a lack of regulatory guidance from Hong Kong’s regulator.
“What is the regulator’s perspective on e-signatures? What is acceptable and what is not?” asked the COO.
Similarly, a senior risk manager said that the banking industry typically takes a “wait-and-watch” approach when it comes to implementing new technologies. “While tier 1 banks will have first-move advantage, the second and third tier banks would rather wait till the technology reaches a maturity stage rather than adopting it when it is being trialled and tested still,” he said.
Digitisation of KYC on the rise
Last year, Appway introduced a new function that allows clients to sign electronically, in order to make due diligence tasks more convenient. The option to sign digitally does not sacrifice security and regulatory compliance, according to Appway. The tech firm noted that digital signatures reduce document workflow cycles from days to minutes, saving financial institutions time and money.
Private banks in the region are warming to the idea of using automated KYC processes in light of intensified regulatory scrutiny. In May, Credit Suisse Private Banking announced the rollout of an automated client onboarding tool for new clients domiciled in Singapore who wish to open accounts with Credit Suisse’s Singapore branch.
Deutsche Bank Wealth Management’s Sudhir Nemali has said that the German lender aims to roll out its client onboarding tool in Asia by the end of the third quarter of this year. And, the private banking arm of Bank of China International (BOCI) is also developing a client onboarding tool for its high net worth clients.
All three banks have used Appway to build their client onboarding tools.
A survey by Asian Private Banker and Appway, conducted last November, showed that private banking COOs and technology heads were sceptical about fully-digitised client onboarding processes. Indeed, at the time, none of the banks surveyed used internet-based portals or mobile/tablet apps for client onboarding, with 25% saying that their client onboarding processes were paper-based while 75% said they used both manual and digital means.
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