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How banks can embrace KYC as a strategic customer-centric experience

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EY Finland

Multidisciplinary professional services organization

4 minute read 03 Dec 2025
Related topics
Financial services
Banking and capital markets

The Know Your Customer (KYC) operation isn’t just a regulatory requirement; it’s a chance to connect. Banks should rethink it as a customer-first, insight-driven experience.

In brief:

  • KYC is evolving from a regulatory task to a strategic customer engagement opportunity.
  • Banks should redesign KYC to be intuitive, data-driven and customer-first.
  • Smarter KYC builds trust, improves compliance and unlocks commercial potential.

What if KYC could be a relationship builder, not just a regulatory burden?

Today, the approach often relies on generic questions about assets and future transactions, which can be challenging for customers to answer. Whether it is a new purchase or unexpected family needs, forecasting transactional behavior is not always straightforward.

By rethinking the KYC process, banks have the opportunity to tailor questions that reflect individual customer needs and behaviors. This not only increases customer satisfaction but also allows banks to provide more personalized services.

The question remains: Is it possible to make the KYC process more customer-focused while still meeting regulatory requirements? Embracing this challenge could redefine the banking experience and foster better relationship with the customers. 

Understanding the regulation and customer perception

The key to enabling a customer-centric approach within KYC begins with a thorough understanding of the regulatory requirements. These requirements are closely linked to key areas of financial crime prevention, such as transaction monitoring. 

Customer participation is essential in the KYC process. While most customers are willing to provide the required information, enhancing the user experience can significantly improve the response rates and overall satisfaction. By designing KYC questions in an efficient and visually appealing way, banks can present themselves as modern and efficient institutions that care about their customers.

Harnessing data to help customers

Data-driven insights can significantly enhance the KYC process and overall customer experience. By using historical data, banks can design KYC questions that are more relevant and easier to answer.

For example:

Last year you made 23 deposits. Do you anticipate a similar pattern this year?

Last year you made cash withdrawals in France, Spain and Portugal. Will you continue this trend, or are you planning to visit additional countries?

Such targeted questions will allow customers to provide more accurate responses and more pre-populated fields for the customer to verify.

KYC questionnaires are among the few direct interactions customers have with their bank outside of product and service usage. Optimizing this experience can strengthen customer trust and build long-term relationship.

How EY can help

What’s changing?

The perception of KYC processes is undergoing a significant transformation. Traditionally viewed as a mere regulatory obligation, KYC is now being recognized as an opportunity to enhance customer engagement and satisfaction as one of the few opportunities to engage with customers. Banks are beginning to realize that KYC questions can be more than just compliance checks; they can serve as valuable touchpoints to understand customer preferences and behaviors. This shift toward a more customer-centric approach not only meets regulatory requirements but also fosters a deeper connection between banks and their customers.

 

As the financial landscape evolves, banks must adapt their KYC strategies to align with changing customer expectations. By prioritizing customer experience in KYC processes, banks can create a more seamless and engaging interaction that encourages customers to share vital information. This evolution is not just about compliance; it’s about building trust and loyalty in an increasingly competitive market.

 

What banks can do next

Here are nine key strategies that banks could leverage to transform the KYC process:

  1. Reframe KYC as a customer engagement tool
    Shift the focus from compliance-driven questioning to understanding customer needs and preferences, fostering a more engaging dialogue.
  2. Enhance user experience in KYC processes
    Invest in intuitive design and user-friendly interfaces that make the KYC process feel less burdensome and more supportive.
  3. Utilize advanced analytics for tailored interactions
    Leverage data analytics to gain insights into customer behavior, allowing for personalized KYC questions that resonate with individual customers.
  4. Implement continuous feedback mechanisms
    Establish channels for customers to provide feedback on their KYC experience, enabling banks to refine processes and address pain points effectively.
  5. Educate customers on the value of KYC
    Communicate the importance of KYC not just as a regulatory requirement but as a means to enhance their banking experience and security in order to create a transparent communication with the customers.
  6. Foster a culture of compliance and customer care
    Encourage collaboration between compliance teams and customer service to ensure that KYC processes are both compliant and customer-friendly.
  7. Explore the commercial potential of KYC
    Understand customer needs through tailored KYC questions and offer suitable products. This offers commercial benefits to both the customer and the bank.
  8. Employ wallet-first onboarding
    Accept verifiable credentials from trusted issuers — bank accounts, education, proof-of-address — so customers share less and move faster.
  9. Conduct network-aware risk assessment
    Rather than focusing solely on submitted KYC information, map connections and analyze transaction behaviors for proactive risk management.

By embracing these strategies, banks can transform KYC from a necessary obligation into a meaningful interaction that enhances customer satisfaction and loyalty.

 

The future of KYC extends far beyond the realm of money laundering prevention. It is about creating seamless customer experiences that foster innovation in products and services, driven by insightful customer analytics. By embracing this approach, banks can enhance collaboration and boost customer retention, ultimately paving the way for long-term, profitable relationships.

Summary 

KYC is no longer just a regulatory checkbox — it’s a strategic opportunity to deepen customer relationships. By shifting toward customer-centric design, data-driven insights and intuitive experiences, banks can transform KYC into a meaningful touchpoint. This evolution not only improves compliance and operational efficiency but also builds trust, loyalty and commercial value. The future of KYC lies in its ability to connect regulation with relevance — making every interaction count.

About this article

EY black logo
EY Finland
Multidisciplinary professional services organization
EY Finland is a globally connected, multidisciplinary professional services organization driven by our purpose: building a better working world – for our clients, our people and communities.
Related topics
Financial services
Banking and capital markets

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.