AI and know your customer: What’s next for customer trust in financial services

Know your customer (KYC) has always been a balancing act. Financial institutions need to onboard customers quickly while meeting increasingly demanding regulatory requirements.

But that balance is getting harder to maintain. KYC still often relies on fragmented data, manual reviews and endless document checks. As onboarding volumes rise and financial crime becomes more sophisticated, these processes are becoming too slow and expensive, and they’re also difficult to scale. Meanwhile, customers expect a quick and painless experience.

That makes KYC much more than a compliance requirement. It also influences your customers’ first impressions of the institution they’re trusting with their money. Done well, it helps you understand who you’re dealing with, manage risk and make onboarding easier. Done badly, it frustrates customers, delays revenue and increases both operational and regulatory risk.

AI can help solve the KYC dilemma

Improving one part of KYC has often meant compromising somewhere else. More controls meant slowing onboarding, while faster onboarding increased risk. At the same time, tighter compliance requirements added cost and complexity.

AI and advanced analytics can help you change that equation. Instead of just automating existing manual processes, you can rethink how KYC works, using better data, smarter workflows and more risk-based decisions.

AI can verify and validate documents, detect anomalies and potential risks in real time, and reduce false positives in screening and monitoring. It can also bring together the data you need for customer due diligence, while advanced analytics can give your operations teams a clearer view of case backlogs, quality issues, bottlenecks and customer interactions.

The aim isn’t to remove people from KYC but to use their expertise where it matters most. When AI takes routine reviews off experienced teams’ hands and improves their access to contextualized, high-quality information, they have more time to spend investigating complex cases that genuinely need human judgment.

What this looks like in practice

A large European bank needed to remediate 2.1 million customer records while moving from manual processes to a controlled digital KYC workflow. Doing both meant redesigning how the work was done while a major remediation program was already underway.

NTT DATA configured the digital KYC workflow platform in three and a half months and, over the same period, ramped up the remediation team to 250 people, including training and certification. The two-year project combined remediation strategy and execution with case management, data migration, dashboards and reporting, workforce training and multichannel contact-center support. Case processing reached a 99.5% quality and accuracy score, and average handling time fell from eight minutes to five. The project also delivered about $750,000 in savings through improvements to processes, workflows, technology and reporting.

But KYC transformation isn’t only about clearing a remediation backlog. Another major banking program shows how KYC can evolve from remediation into ongoing managed operations. The work expanded across customer onboarding, enhanced due diligence, periodic and ongoing reviews, screening triage and customer outreach. Teams loaded customer records into risk tools, followed up on missing documentation, checked registries and untangled complex ownership structures, while working with relationship managers and customers on complex cases.

With our support, the operation handles around 100,000 periodic reviews a year across different risk tiers. Completion of corporate preassessments has increased from 50% to 80%, while onboarding turnaround times have fallen by about 15 days. The results show what KYC can achieve at scale: greater speed and scale without giving up the control that financial institutions need.

Move AI into day-to-day KYC

While the potential of AI is well understood, turning that potential into meaningful change within your KYC operations can present a challenge. Legacy technology, inconsistent data, regulatory scrutiny and disconnected processes all make it difficult to move beyond one-off or siloed experiments.

Start by understanding where KYC is getting stuck. Which records are incomplete? Where are cases getting stuck? What causes quality issues? How well is customer outreach working? And which repetitive tasks can be automated safely without weakening oversight?

Answering those questions helps you identify where AI can make a practical difference — but technology alone won’t transform KYC. Processes, data, controls, governance and people all need to work together.

In practice, that can mean redesigning standard operating procedures, building quality assurance into workflows, connecting trusted data sources and giving your teams a clearer view of backlogs, bottlenecks and quality issues. It also means applying automation selectively: reducing manual effort where machines can do the work reliably without weakening human oversight.

Build trust with well-governed AI

AI also needs to be introduced responsibly. In a regulated environment, it must be explainable and auditable, with clear governance over what the technology can do, where people remain accountable and when a case needs to be escalated.

For example, AI agents can analyze procedure guides to pinpoint repetitive tasks and opportunities for automation and recommend next-best actions to case teams. However, they should operate within clearly defined controls and human-supervised workflows, rather than becoming a black box for consequential decisions.

The opportunity can be substantial. In one banking environment, analysis of more than 2,100 procedure guides identified 75 reusable automation opportunities. Instead of starting with a broad ambition to “use more AI,” the institution could see precisely where automation could improve KYC refresh and customer-contact operations — and build a practical roadmap from there.

Do business confidently — with satisfied customers

AI is changing what’s possible in KYC. It can help you onboard customers faster and detect risk earlier, all while managing KYC more consistently throughout the customer lifecycle.

It also presents an opportunity to move beyond the compromises that have defined KYC for years. Speed doesn’t have to come at the expense of control, and stronger compliance doesn’t have to mean more friction for customers.

With the right combination of data, workflow design, human expertise and responsible AI, KYC can give you greater confidence in who you’re doing business with and deliver a better customer experience from the start.

What to do next

Read more about NTT DATA’s Banking and Financial Services Solutions to see how we can help your organization make the most of AI.