10 key reasons behind the AI/ML impact on the KYC processes in banks

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10 key reasons behind the AI/ML impact on the KYC processes in banks

Banks are among the biggest sources of unstructured data on various aspects of financial operations, including KYC processes. At the same time, banks always seek ways to get more value out of this information — both in terms of reducing their expenses and generating more revenues through cross-selling and up-selling their products. Thus, the banks are among the biggest consumers of AI/ML technology, as it enables KYC automation and provides many more applications.

Below we discuss the 10 key reasons behind the impact of AI/ML technology on KYC processes in banks:

  1. Enhancing Customer Due Diligence (CDD) checks
  2. Chatbots
  3. Monitoring of regulatory updates
  4. Reduction of false positives
  5. SAR filing automation
  6. Workflow automation within CDD
  7. Link analysis for UBOs
  8. Banking KYC automation
  9. Enterprise-grade KYC compliant toolkits
  10. Precise risk scoring

Let’s now briefly cover each point.

Enhancing Customer Due Diligence (CDD) checks

According to research from Dow Jones and ACAMS or Association of Certified Anti-Money Laundering Specialists, nearly 50% of the alerts processed during the manual banking KYC checks are false positives. This is clearly unacceptable, given the amount of time and effort wasted on processing them, and the resulting poor customer experience. Instead, AI-based KYC checks compare the device fingerprinting and other details provided by the customer with the data available in Trustchain – the global reputational knowledge base. This allows to pinpoint dubious customers and known fraudsters much more accurately.


Chatbots are one of the most popular features with today’s tech-savvy bank customers.request from the banks. AI is great at erforming repetitive tasks like filling in the registation forms. Using NLP or Natural Language Processing tools to quickly analyze the input data helps cut on initial KYC checks time significantly.

Monitoring of regulatory updates

In order to remain KYC compliant, banks and financial institutions should stay up-to-date on the latest changes to various KYC laws and regulations across the globe. Yes, a simple script might be enough to monitor the official sites for updates, but an NLP algorithm can analyze the texts verbatim to highlight the topic involved in the latest update. 

Reduction of false positives

By employing AI/ML algorithms trained to compare hundreds of parameters of very event in real time, the banks can ensure CDD checks take minimum effort and bring in much less false positives.

SAR filing automation

System Analytics and Reports (SARs) are much easier created and handled when ML algoithms help organize a wealth of unstructured data to visualize it as graphs, piecharts and other easy-to-consume data forms.

Workflow automation within CDD

The recent and upcoming updates to KYC regulations concentrate on ensuring the transparency of audit for every check and decision. KYC automation enables this by logging every event and linking it to data source to provide unbiased in-depth decision-making with clearly traceable results.

Link analysis for UBOs

Ultimate Beneficial Owners or UBOs of every transaction might be Politically Exposed Persons (PEPs) or companies/individuals affiliated with them. By combining behavioral anlysis, device fingerprints, Trustchain records and a plethora of other factors, modern KYC tools like Covery help the banks identify potentially risky customers at every transaction.

Banking KYC automation

Initial and ongoing KYC checks take up a significant part of any bank’s budget. By automating the most routine and time-consuming aspects of KYC processes, the banks can free up resources to quickly process the most complex cases. Aside from saving a ton of money and effort, this also significantly improves customer experience.

Enterprise-grade KYC compliant toolkits

One of the biggest benefits of using automated KYC to bank systems is creating a centralized ecosystem easily integrated with th rest of the toolkit.Using clear APIs to interact with CRMs, billing processors, risk scoring tools and other instruments enables the banks to ground their KYC decisions of on-point, precise and trustworhy data.

Precise risk scoring

As KYC is a continuous process, risk scores for every customer must be dynamically updated during every transaction. Automation of AML/KYC checks, real-time transaction monitoring, behavioral analysis and device fingerprinting allow to update risk profiles of every customer on the go, highlight and block suspicious transactions at once.


Banks, as well as any financial organizations, have to ensure their customers are who they say they are. This allows nipping the fraudulent activities in the bud, reducing the numbers of malicious chargebacks, optiizing allocation of resources. KYC automation using AI/ML-powered tools like Covery ensures you stay on the safe side while remaining flexible, responsive and providing great customer journeys.
Should you have any questions on how Covery can help your business — contact us today!