In May this year several leading Nordic region banks joined together to propose a shared Know Your Customer (KYC) utility. DNB Bank ASA, Danske Bank A/S, Nordea Bank AB (publ), Svenska Handelsbanken AB (publ) and Skandinaviska Enskilda Banken AB (publ) have all decided that working together may be the best way to service large and midsize Nordic corporates.
Compliance and data security has been getting harder to manage for several years now. It’s a necessary component in the fight against financial crime, but it increases the cost of servicing genuine customers and it makes life harder for those customers. Customers often struggle with KYC information requirements, which may be needed by several banks all in different formats.
All this means that basic transactions take much longer than they should because of the increased administration and this also increases the risk of errors being made during the transaction. However, the regulators are constantly increasing the compliance burden because the KYC requirements are the best way the banks can fight fraud.
These banks have joined together because in their view there is a need for a single consolidated and more efficient way to serve their customers. The banks have proposed a joint venture called Nordic KYC Utility. The focus will be on developing an efficient, common, secure and cost-effective Nordic KYC infrastructure. The founding banks will own and operate the joint venture, but the plan is to also offer services to third parties.
The initiative is intending to improve the Nordic financial environment by promoting greater cooperation and efficiency and to reduce the level of financial crime in the region. This is still just a proposal from the banks though. The establishment and operational start of the joint venture company is conditional upon approval of the European Commission under the EU Merger Regulation and the company will be established later this year if approval is granted.
Banking is a highly competitive industry, but it is also highly regulated – for a good reason. If approval is granted for this initiative then I believe it will not only make the fight against fraud easier, it will allow all the banks to make their processes more efficient. – That’s going to be good news for all the banks and their customers too.I