The power of a blended approach to KYC build v buy

The longstanding debate between building or buying a Know Your Customer (KYC) solution is shifting to a new opportunity – blended KYC.

A hybrid approach to KYC solutions offers financial institutions the best of both worlds. Accelerating delivery by combining in-house control with the fastest and most effective external solutions.

Rather than choosing between building or buying, banks can strategically integrate pre-built components for rapid deployment while customizing key areas to align with their desired design. This approach not only ensures compliance, scalability, and cost efficiency but also enables agility in an ever-evolving regulatory and operational landscape.

The challenges of building in-house

Developing a proprietary KYC system may seem ideal for control and customization, but it comes with significant hurdles:

• Slow implementation – years of development can render solutions outdated before launch.
• Ongoing costs and maintenance – updates, compliance changes, and maintenance demand continuous investment.
• Complex data orchestration – managing structured and unstructured data requires advanced technology beyond traditional IT capabilities.
• Scalability issues – adapting to constantly evolving regulations strains internal resources.

Many banks that embark on the in-house route ultimately experience “builder’s regret,” realizing that the costs, compliance burdens, and operational inefficiencies outweigh the perceived advantages.

Why buying a KYC solution can work

Investing in a pre-built KYC platform allows banks to bypass many of the build challenges, benefiting from:

• Rapid deployment – quick integration speeds up onboarding and compliance improvements.
• Automated compliance updates – ensures seamless adaptation to changing regulations.
• Operational efficiency – automation minimizes manual work, improving accuracy and resource allocation.
• Real-time risk insights – advanced analytics enhance oversight and decision-making.
• Scalability – continuous vendor-driven enhancements ensure systems remain future-ready, while development costs are distributed across multiple users, reducing the financial burden.

Why a hybrid approach is the future

While buying a KYC solution offers speed and efficiency, some banks hesitate to fully rely on third-party platforms due to concerns about customization, data sovereignty, and regulatory oversight. A fully in-house system, on the other hand, may deliver control but often lacks the agility needed to scale effectively.

This has led many financial institutions to explore a hybrid model that balances both approaches, allowing them to maintain strategic control while leveraging vendor technology for automation, data enrichment, and regulatory updates. By adopting a blended strategy, banks can mitigate risk, reduce operational burdens, and optimize cost efficiency while ensuring they remain adaptable in a rapidly evolving regulatory landscape.

The best of both: A blended KYC approach

A blended KYC model combines the control of in-house systems with the efficiencies of vendor technology, offering the best of both worlds. With this approach, banks can:

• Maintain core compliance control – banks can oversee key regulatory functions.
• Accelerate Return on Investment (ROI) – pre-built solutions integrate with existing workflows, minimizing disruption, enhancing efficiency, ensuring compliance, and accelerating ROI through rapid deployment and reduced customization needs.
• Enhance agility – seamless updates keep pace with regulatory changes.
• Strengthen risk management – real-time monitoring improves compliance oversight.
• Optimize costs – lowers development expenses while preserving flexibility.

How Encompass powers a blended KYC model

EC360 provides corporate banks with a flexible, integrated KYC framework that merges in-house systems with external efficiencies. It unifies public and private data into a Corporate Digital Identity (CDI) for comprehensive client visibility.

EC Private Outreach facilitates direct corporate engagement, ensuring efficient collection of private company data – essential for compliance and onboarding.

With automated entity resolution and identity verification, EC360 removes bottlenecks, accelerates onboarding, and enhances the client experience. Intelligent automation reduces manual work while maintaining accuracy and compliance. Additionally, EC360 seamlessly integrates with Client Lifecycle Management (CLM) systems, supporting in-house, vendor-powered, or hybrid KYC models.

Making the right choice for the future of KYC

The build vs. buy debate is no longer black and white. Banks must balance control, efficiency, and cost-effectiveness to stay ahead.

• Building provides control but demands long-term investment.
• Buying accelerates implementation but may limit customization.
• Blended solutions offer agility, efficiency, and compliance adaptability.

With regulatory demands increasing and client expectations rising, the time to act is now.