In the Netherlands, multiple apps have been developed to extract relevant financial information from government websites. This information is a solid base for MiFID II, KYC and some GDPR requirements.
Gathering information from the government used for tax purposes saves both the client and the wealth manager a lot of time. A required value like the risk capacity can be calculated using these information sources.
Both the client and the wealth manager can focus on the most important part of the services of a wealth manager and that is the question of what the required risk is to reach the investment goal. Another important part is determining whether the required downside risk matches the risk appetite of a client(s). We wil explain this situation in the following paragraphs.
If we refresh the data for each client each year, we will have a solid data quality. The GDPR even requires this.
MiFID II requirements
MiFID II introduced, amongst other things, improved Know Your Customer (KYC) requirements in January 2018. MiFID II has an impact on the type and the validity of information that needs to be collected about a client. The SCOPE KYC Cloud solution, a digital wizard that provides the necessary questions and answer fields, guides the entire client inventory process in a structured manner. The inventory process and the questions are based upon applicable regulation and legislation. This process covers the following, among many other things:
The personal situation;
- The client’s experience and knowledge;
- The financial position;
- The goals of the invested capital;
- The risk acceptance of the client through scenario analysis;
- Discussing and finalising the KYC process by signing contracts.
A report is automatically generated which covers the entire KYC client inventory process, which can be signed by the client and the wealth manager. MiFID II is also an ongoing concern. It spans the whole customer lifecycle within the wealth management company. The personal situation (things like family members and composition) and the financial situation can be entered automatically but has to be checked by the wealth manager.
The GDPR adds a few new interesting requirements for wealth managers, such as the following:
- Transparency: the person whose data are being processed is fully aware and has given his permission whilst being aware of his rights. By allowing the client full access to his or her stored data, this requirement of complete transparency is met. The process toacquire the data needs client approval because the client has to log in to the Dutch DigiD system.
- Limitation: the personal data is collected and used for a justified and legal purpose and is not to be used for other purposes. The SCOPE KYC Cloud solution has straightforward limitations that are set by applicable regulations.
- Data limitation: only the data that are necessary for the goal of the product can be collected.
- Trueness: it is vital that personal data are correct and stay up-to-date. By allowing the client to update his or her data, it can be ensured that the data is correct.This is a lot to take in. However, help is around the corner, at least in the Netherlands.
The Dutch Government introduced DigiD (Digital ID) for Dutch citizens. Similar things are happening in other European countries, often called E-ID.
On the Internet, a Dutch citizen can prove his or her identity by logging in with the DigiD. Your DigiD consists of a username and a password of your choice. This can also be a two-step process with text message validation. With DigiD, the Dutch citizen gets access to hundreds of Dutch government websites that contain a lot of (financial) information.
A DigiD data collection app
In the Netherlands, a few manufacturers saw an opportunity to collect data from government websites. Using the DigiD of a citizen, their apps access various government sites and collect relevant financial information like the complete personal situation, the financial position and information about pension(s).
The process is being executed under the control of the client who gets a special access code for the app and who has to download the app. The client sends the collected data to a KYC application like the SCOPE KYC Cloud Portal. An import function is available to store the relevant information in the KYC survey.
This process can be repeated and a number of major Dutch banks are using this mechanism every year and to ensure that they have accurate customer data.
Besides the accurate and reliable high- quality data, there are other advantages. It saves a lot of time for both the customer and the wealth manager. The KYC process focuses on the feasibility of the financial goals and the risk required to achieve the defined goals. It is not a question and answer session concerning information that is available on the Internet.
Conclusion and future
The SCOPE KYC Cloud portal is a new and innovative concept for wealth managers. The SCOPE KYC Cloud solution is never finished, it is a continuous effort to improve the client experience and the supporting features for wealth managers, while adapting to the ever-changing regulations and legislation. One of the recent features is the support of the Ockto app to work as described.
If you want or need more information about any of these subjects, feel free to contact us. If we cannot answer your question, we have a lot of professional friends and colleagues that can assist.