Out-Law News | 16 Sep 2013 | 3:45 pm | 2 min. read
Morgan Stanley and HSBC are working with business processing sourcing provider Genpact and financial information company Markit to build technology that can help streamline back office functions.
The new service will establish "an industry-wide golden copy of certain client reference data", according to a joint statement issued by Genpact and Markit.
"An industry solution for client onboarding and KYC (know your customer) has the potential to deliver benefits to our clients and help drive higher standards, consistency and best practice," David Burnett, chief operating officer of HSBC global banking and markets, said. "We are pleased to be involved in the design of this service."
Robert Casper, managing director and global head of enterprise data and services at Morgan Stanley, said that the initiative "could deliver real benefits for our clients while helping us achieve efficiencies in the constantly evolving space of client data".
KYC is a term that broadly refers to the due diligence checks banks are obliged to conduct to ensure that their customers are who they say they are, are not involved in money laundering activities or involved in financing terrorism, for example.
Genpact and Markit said that the new service being created would allow businesses to interact faster with clients, provide for "significant cost savings through operational and technological efficiencies" and reduce the need for "multiple demands for documents and information".
"Centralising the collection and management of KYC documentation creates massive efficiencies for the industry and can save large firms tens of millions of dollars per year," Jeff Gooch, managing director and global head of processing at Markit, said. "Through technology and the standardisation of processes, we can increase data quality, speed operations and improve compliance."
Sandeep Sahai, senior vice president and business leader of Genpact's capital markets and IT services unit, added: "We will bring end-to-end thinking and frameworks to our shared services solution, which will be cost effective and flexible, allowing these clients to become better able to adapt to market volatility and changing regulatory requirements."
Last year Intellect, the trade association for the UK technology sector, criticised data and information sharing practices within banks and said that the "siloing" of information negatively affected the economy, by preventing lending to small businesses due to poor collation and sharing of credit risk data, as well as the knock-on effect of preventing regulators from being able to have a "holistic view" of the banking system.
Intellect said that banks should move to a "central", cloud-based system for non-competitive elements of their IT infrastructure.
"A central utility of shared services ... opens up the possibility of benefits for banks themselves (reduce costs, reduced levels of fraud, better risk management, enhanced [Know Your Customer systems]), for consumers (more responsive banks, demand-led service provision) and for the economy as a whole (greater competition in the banking sector, increased access to the banking sector for new entrants, increased stability)," Intellect's report said.