KYC processes rely heavily on human labor, incurring significant labor costs and potential for error, with little standardization between banks or within banks, with records often being individually maintained. This requires a significant workforce to execute, which accounts for some but not all of the costs at hand, and, in 2016, banks took an average 24 days for customer on-boarding.
On-boarding an individual customer could cost anywhere from $20,000 to $30,000. Major financial institutions spent up to $500 million annually on KYC, with an average cost of $60 million for each institution, with it also increasing costs of customer on-boarding, with a 19% increase from 2016 to 2017 and 16% from 2017 to 2018.
Currently, ongoing monitoring is an essential element of effective KYC procedures. However, to effectively monitor bank accounts involves setting up daily and monthly limits for transaction amounts and constantly checking for unusual bank account activity. Both of these tasks rely heavily on human effort, and as such, come at a high labor-cost and with great potential for human error. The result is that the current process is inefficient and in need of increased automation.