In today’s shifting economy, corporate and investment banks face intense pressure to accelerate onboarding and strengthen Know Your Customer (KYC) solutions. The critical choice? Do you build or buy the right solution?
Navigating the complexities of KYC—from data management and regulatory adherence to seamless client experience—demands tools that not only reduce risk but also enhance efficiency. Today, banks encounter significant challenges when onboarding corporate clients, often exacerbated by complex corporate structures and obscured ultimate beneficial ownership. Corporate clients have to endure lengthy and friction-filled processes, due to a lack of automation, stringent regulatory requirements, and no universally agreed-upon procedure within the industry.
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Data orchestration, automation, collation, mapping, entity resolution and maintenance are huge obstacles for banks developing their own KYC solution.
The benefits of CDI platforms
Added complexity arises in proving data provenance for all data attributes that make up a KYC profile. Therefore, industry leaders are increasingly turning to advanced automation and corporate digital identity (CDI) to address these challenges.
To tackle these obstacles, CDI platforms can build comprehensive digital risk profiles from authoritative public data and private data obtained directly from the corporate client. With accurate, real-time insights integrated directly into onboarding workflows, banks can transform both KYC processes and client experience.
CDI platforms can play a critical role in delivering on broader digital transformation strategies and accelerating ROI. For instance, banks must ensure they have accurate and succinct data and processes in place before embarking on programs to effectively introduce new technology like artificial intelligence (AI), complex technology implementations such as CLMs or advanced initiatives such as perpetual KYC (pKYC) programmes.
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By GlobalDataBut time is of the essence. With client expectations high and a low tolerance for outdated processes, banks need to act fast to remain competitive.
So, answering the question of whether to build custom KYC systems or invest in advanced SaaS solutions is key for banks wanting to remain competitive in 2025.
Overcoming the challenges of client onboarding
There are many challenges when onboarding corporate clients in KYC processes, and these hurdles are often costing banks and financial institutions time, money and technology resources.
The onboarding process has typically been a lengthy, friction-filled journey, that can cause frustration to both banks and clients.
With a lack of universal requirements and data sharing across geographies within the industry, every client often must undergo multiple KYC processes, as they onboard with a new bank and periodically throughout the client lifecycle.
This lack of a universal standard and repeated processes can lead to client dissatisfaction due to delays and frustration at repeated requests for the same information about their business, to meet stringent regulatory industry requirements.
These challenges often cost banks precious time, revenue and reputation, which has led many financial institutions to consider their digital transformation strategy and how building or buying a KYC solution can help mitigate these challenges for both the bank and its clients.
To build or buy?
The decision to build or buy a KYC solution often hinges on a bank’s broader technology strategy. Banks may typically opt for a pre-bought solution from a trusted vendor, balancing both flexibility and compliance needs, whereas a custom in-house built solution must adapt to multiple different use cases, adding not only complexity but time and money too.
Banks and financial institutions considering the cost factors between buying or building a KYC solution must recognise the strategic factors that may help make the decision. Any corporate or financial institution embarking on a digital transformation journey must seek a solution that not only integrates with their legacy systems today but also allows for evolving regulatory complexities and new technologies to be scaled up in the future.
Those seeking a fast start can opt to buy a solution that addresses their most pressing use case, while carrying out complementary transformation projects as part of a broader roadmap. This approach will deliver early benefits and strengthen the business case for longer term initiatives.
Typically, maintaining outdated technology is a significant expense for banks, with resource allocation of 80% of IT budgets for maintaining existing systems, 10% for regulatory updates and only 10% for technology innovation. These cost dynamics present a universal challenge of balancing IT innovation with other critical banking functions.
Therefore, when choosing to build or buy a solution, banks need to consider, not just the time to deployment and the return on investment, but also integrating the technologies within the existing banking IT ecosystem.
But despite this, third-party KYC solutions, such as cloud-based CDI platforms, offer more opportunities for banks and financial institutions. For instance, buying a KYC solution often presents banks with increased scalability opportunities, allowing access to the latest technology designs and innovations that may be hard to replicate and maintain with an internal in-house-built solution.
Navigating integration hurdles
Alongside the challenges and considerations of whether to build versus buy KYC solutions, banks also must consider any integration challenges that may arise when deploying a built or bought KYC solution.
Ensuring seamless data exchange and compatibility between KYC solutions and existing technology, such as client onboarding and client lifecycle management platforms, is paramount. However, variations in system architectures can make integration work complex. This is where in-house builds and teams reveal their limitations quickly. Once a solution is built, it must be maintained to keep up with continuously evolving technologies and compliance requirements, all requiring additional integration work. However, buying a SaaS solution allows banks to integrate once and then shift the responsibility for maintenance to the vendor.
It is the vendor’s role to ensure the solutions are cutting-edge and consistently aligned with changing regulatory and compliance requirements, future-proofing a bank’s IT ecosystem. Banks often find that keeping up with differing compliance rules is easier and simpler with a vendor solution, while the responsibility for compliance still lies with the bank or financial institution, the vendor can help ease this pressure by ensuring a KYC platform makes it easy to meet regulatory standards and rapidly adapt to regulatory change.
The integration of any new applications to existing architecture also requires close vigilance to identify and address any vulnerabilities to data security and confidentiality.
Reputable vendors will be well versed in these areas, bringing valuable knowledge and experience to the integration process. Integration is a key stumbling block for many transformation initiatives, and extra brainpower and skills can help maintain pace and quality.
Shaping the future of KYC
KYC solutions, such as CDI platforms, are the key to eliminating long process times and friction-filled bottlenecks for clients. By leveraging digital identity for their corporate and institutional clients banks can ensure that their journeys are seamless and efficient.
But the question still remains, whether to build an in-house solution or buy?
In 2025, the strict divide between building and buying is fading and banks are increasingly adopting a combination of in-house and vendor solutions. While certain aspects of KYC processes, such as risk decision engines, are often managed internally, other components such as CDI profiles, compliance updates and continuous client monitoring are more efficiently handled by pre-bought KYC solutions.
But banks must act now. Whether this is a pre-built, bought or hybrid KYC solution, banks must ensure they acquire capability to integrate CDI profiles within their client onboarding process. This will allow banks to accelerate their speed to value, deliver a faster ROI and streamline their KYC processes for corporate clients. Ultimately enabling delivery of the client experience that clients expect.
Howard Wimpory is KYC Transformation Director at Encompass Corporation
