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Payments network Swift has opened its KYC registry to corporates, allowing them to manage and share KYC data with their banking partners.

The go-live for corporates follows a testing period with 18 corporate groups including BMW, Spotify and Unilever, which was supported by 16 global banks representing over 7,000 corporate-to-bank relationships on Swift.

Swift’s KYC registry is an online portal that was set up in December 2014 to enable the Swift community to collectively address the global compliance challenge by allowing users to manage and share due diligence information. This helps to ease the burden of compliance with KYC requirements, a job that is extremely inefficient and mired by time-consuming, manual processes and the duplication of efforts.

Until now, membership of Swift’s registry has been limited to financial institutions with correspondent banking activities, who use the registry to conduct KYC on their correspondents. Instead of each bank having to reach out to its counterparties to gather the information individually, they can, through the registry, find it all in one place.

The opening of the service to corporates tackles a key pain point for corporate treasurers, who often have to provide KYC data in multiple formats to meet the regulatory requirements of each banking partner, which is costly, time-consuming and inefficient.

According to Swift research, over 90% of treasurers report that responding to KYC requests is more challenging today than it was five years ago. In addition, over 50% reduced the number of banks they work with to avoid lengthy KYC processes, negatively impacting banking relationships.

This new launch means corporates can now structure their KYC data in accordance with a standardised baseline, agreed by banks and corporates across the globe, and checked for completeness by Swift. On the system, corporates remain in control of their data, and can choose which banks have access to their KYC data, as well as update their records in real time.

Addressing pain points

Although this latest development is simply the opening up of an existing service to a wider user base, Bart Claeys, head of KYC and reference data at Swift, tells GTR that the network used the pilot to gather views from corporates around cumbersome KYC processes. “Overall, the pilot has been pretty successful and has demonstrated that corporates want to maximise efficiencies from participating in such an initiative and expect a great user experience. Questions came up around the extensiveness of the baseline and on the types of data and documents that are requested. The advantage of our collaborative approach is that we create a forum where corporates can understand the regulatory drivers and why banks are asking for certain types of information, but at the same time this lets banks reflect on the types of questions that they are asking, and whether by comparing these with global standards there are opportunities for harmonisation.”

Rosanna Summerville, manager of global transaction banking and processes at Unilever explains: “By participating in Swift’s working group, we were able to collaborate with our banking partners and other corporate groups to address challenges faced by both sides of the KYC process. The result means we can now upload our data in a standardised format to Swift’s KYC registry, reducing the need to provide data in multiple formats to each of our banking partners, who in turn will no longer have to request KYC data every time they need it, delivering efficiencies for us both.”

To blockchain or not to blockchain

Solving the KYC issue has long been a focus for many industry players, with varying degrees of success. Although blockchain initiatives in the space have gained some, limited momentum, utility-based solutions such as those of Bloomberg and Refinitiv have closed down, reportedly due to low uptake.

“If you look at the landscape today, I think it is fair to say that Swift’s is the only truly global central KYC utility which remains in the market. One of the reasons for this is that cracking and solving the KYC problem is not easy. It is something that takes time to address, and of course, even if you come up with a great solution, it still takes time for banks or corporate to change policy, to feel comfortable with the technology, and to look at embedding it into their business processes,” says Claeys. “One of the differentiators for us is related to our setup as a cooperative. We are not a commercial venture that is looking at some point for a very specific return, we are not reliant on such a return, we are there to bring the global financial community together in the best way.”

For proponents of blockchain technology, the KYC issue represents the perfect use case. As opposed to centralised solutions, this new technology eliminates third-party data aggregators and centralised repositories of data. Instead, it utilises the power of the distributed, immutable ledger to drive greater operational efficiency through a digital process flow and a streamlined way to access real-time up-to-date customer data. Through blockchain, any participant in a network will, with the right permission, be able to view a record, and the blockchain will give them full transparency on how information is entered, by whom and when it was verified. However, Swift stands by its centralised model.

“We have a centralised solution first of all because at the time we launched the initiative the technology was not ready or mature. With KYC, there is also a need for a centralised authority to define the standards and to validate the KYC information. We have our solution, the platform is running, and we have all of the banks connected and working with it. To further enhance automation, we offer a range of APIs. As we start to see more value from DLT and blockchain in this context, we will obviously further explore these solutions. If other solutions using DLT emerge, it will be very important to look at how platforms can interoperate with one another.”

The system is now live for all Swift-connected corporates globally. Over time, Swift also says it aims to extend its KYC registry to non-Swift connected corporates.