Posted on on September 16, 2025 | by XLNC Team
KYC is supposed to be the first step in building trust with a new customer. But for many banks and financial institutions, it's the first point of friction. Applications stall, follow-ups drag, and the customer is left waiting not because they're high-risk, but because internal processes are stuck in slow motion. What should take minutes ends up taking days. And when competitors offer near-instant onboarding, delay isn’t just inefficient it’s disqualifying.
Most institutions believe they’ve modernized. The app looks sleek, the branding feels fresh, and the chatbot works fine. But behind the scenes? KYC still relies on staff manually reviewing documents, jumping between systems, and sending emails to get things done.
The result?
Repetitive delays in account approvals
High customer drop-off rates during onboarding
Rising operational costs to manage compliance teams
Constant worry about audit readiness and data traceability
It’s not the technology that’s missing it’s the process that’s out of date.
Here’s the uncomfortable truth: most of the pain in onboarding doesn’t come from difficult customers. It comes from how institutions handle the simple ones.
Verifying a standard government-issued ID shouldn’t take more than a few seconds. Screening a customer’s name against a global watchlist shouldn’t require a team of analysts. Sending a status update shouldn't need a phone call.
When these basics depend on human effort, three things happen:
Costs balloon. You need more people just to maintain average turnaround times.
Errors creep in. Manual tasks aren’t just slower they’re more prone to inconsistency.
Scale becomes impossible. You can’t 10x your customer base and expect the same team to keep up.
And while your team struggles to keep up, your competition is onboarding the same customer in minutes with less overhead and fewer errors.
Customers don’t compare your onboarding experience with other banks. They compare it with ride-hailing apps, food delivery, and digital wallets. If they can sign up elsewhere in three minutes and it takes you three days, they’ll move on.
Even worse? You won’t hear back from them. They’ll just vanish.
That’s not just a loss of revenue. It’s a loss of trust before the relationship even begins.
KYC is no longer just about compliance. It’s a branding moment. It shows customers whether you’re prepared to make things easy for them or not.
A fintech lender in India ran an internal audit and found that 28% of users who started the loan application process abandoned it at the KYC stage. The reasons were simple: uploading documents twice, long wait times for verification, and unclear communication.
After they restructured the process to include automated ID checks and real-time verification status updates, their approval turnaround dropped from 24 hours to under 15 minutes. Most importantly, conversion jumped by 19% in one quarter.
They didn’t build anything revolutionary. They just took manual checkpoints out of the equation.
Many teams know their current approach is flawed, but they’re stuck.
They worry about replacing human judgment. Or about breaking compliance by over-automating. Or they believe that fixing KYC would mean overhauling their entire tech stack.
But the truth is, you don’t need to change everything. You just need to stop relying on people for things that don’t require people:
Verifying an ID
Matching names to a watchlist
Updating a status field when a document is received
Sending reminders for missing information
None of these should need a human in the loop. Yet in many institutions, they still do.
This isn’t about eliminating people. It’s about letting people focus on what they’re actually good at: judgment, empathy, decision-making.
When your skilled operations team is busy comparing scanned IDs and checking names in spreadsheets, they’re not reducing risk. They’re being underused.
The goal isn’t to go “fully digital.” The goal is to build intelligent workflows that handle what’s repetitive and leave space for what’s strategic.
Let’s talk numbers.
A typical KYC analyst can review 30 - 40 applications per day. If you’re onboarding 1,000 users daily, you’d need 25 - 30 people just to keep up. That’s before you factor in sick days, hiring, training, and errors.
Now consider the cost of drop-offs. If even 15% of your potential users quit halfway because of poor KYC experience and if your average user generates ₹4,000–₹6,000 annually that’s tens of lakhs in lost revenue every month.
Add to that the cost of compliance failures. Late filings, inconsistent logs, missed updates regulators don’t wait for excuses. They issue fines.
You’re not just losing efficiency. You’re bleeding money invisibly.
Let’s say your KYC process is currently 100% manual. You don’t need to jump to 100% automation overnight. Here’s a phased approach:
Automate document capture and ID verification first. These are rule-based, predictable, and easily scalable.
Instead of chasing updates across Excel files, emails, and shared folders, bring every case into a single KYC dashboard. Even if you keep people in the loop, you gain consistency and traceability.
Set up auto-reminders for missing information. Trigger status updates without human action. This keeps customers in the loop and reduces inbound queries.
Most onboarding journeys follow the same path. Focus human judgment on the outliers, not the entire flow.
Every action whether automated or manual should leave a digital trail. That way, when the audit arrives, you’re not scrambling for logs. You’re already ready.
A well-run KYC system doesn’t feel “automated.” It feels effortless.
Customers upload once, verify once, and receive real-time updates.
Operations teams see clean dashboards, not cluttered inboxes.
Compliance teams get traceable logs, not excuses.
Leadership sees reduced costs, fewer errors, and faster growth.
You don’t need massive investment to get there. You just need to start removing the friction that’s been normalized for too long.
If you still need someone to manually check every KYC field, approve every document, and notify customers manually, you're not operating like a fintech. You’re trying to modernize from the outside while clinging to outdated routines on the inside. The financial race isn’t just about who has the best app. It’s about who removes friction fastest and keeps it out. You can’t scale with legacy habits. And you can’t compete when every customer touchpoint depends on someone manually pushing it forward.
Still managing it with spreadsheets and email threads? Or have you found ways to simplify and scale?Let’s talk. Drop your experience or questions in the comments or message me directly.It’s time to make onboarding a strength, not a struggle.
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