Oscillating between ‘Know Your Customer’ and ‘Know Your Bank’

In a previous post, we examined some elements of Know Your Customer (KYC) programs. Now I’m going to drill deeper into what happens when the interests and objectives of customers, banks and regulators don’t converge.

In many cases, this gives rise to disconnects or the possibility of disconnects. For example, when the interests/objectives of the bank and regulator don’t converge, lapses occur. Or when the interest/objectives of the bank and customers don’t converge, experience lags. And when the disconnect is between the customer and the regulator, alternate mechanisms evolve.

Let’s examine the effects of non-convergence between customer and the bank.

Over the past few weeks, we have seen considerable coverage of a situation arising from this disconnect at a very large bank in the U.S. There was improper conduct on the part of the bank, creating considerable lapses and a serious customer experience problem.

Reputation Institute’s RepTrak indicates clearly that the drivers of reputation (Product & Services, Governance, Innovation, Performance, Citizenship, Workplace and Leadership) have remained fairly consistent since 2013. The problematic bank’s RepTrak was barely above a “Weak” ranking, with only Product & Services and Performance at “Average” ranking. The other five categories were in the “Weak” ranking.


Are we surprised by the results? In fact, a look at the data shows no surprise despite some progress made in improving scores.

So, really, as Aretha Franklin would say, “who’s zoomin’ who”? Should the emphasis be on Knowing Your Bank (KYB) instead of Knowing Your Customer?

Imagine a customer demanding a reputation score at the same time the bank demands a credit score as part of opening an account. It just doesn’t happen because of a number of factors, regulation being one. However, it is lapses such as those on display in the recent U.S. case that causes us to pause and think: Is the issue about unbanked/underbanked or people who just don’t want to bank?

 What do you think?


Do ‘Know Your Customer’ programs really work?

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