Nearly 40% of businesses in the UK have deliberately abandoned their application for banking services in the past year due to slow due diligence processes, according to a new study.
RegTech specialists Encompass Corporation surveyed 200 large and medium-sized businesses, and found nearly a third (29%) now trust challenger banks and FinTech providers more than traditional banks.
Additionally, the research found that businesses plan to prioritise spending cyber security over anti-financial crime compliance in 2020, with 44% putting plans in place. However, a large 81% of organisations agree that they are confident in their understanding of exposure to financial crime and that they already have the processes in place to address it.
Nearly half (44%) do not regularly put customers and suppliers through formal Know Your Customers (KYC) processes. And 60% admitted to that has been no training for staff about how to be compliant with the Fifth Money Laundering Directive (5MLD).
Wayne Johnson, CEO and co-founder of Encompass, said: "It is disappointing that complex, expensive and overly-long due diligence processes are preventing British businesses from getting access to the finance and banking services they urgently need.
"Everyone recognises that it’s vital to ensure correct background checks on new customers to prevent money laundering and criminal activity, but these checks should not act as a hindrance to legitimate companies gaining access to the credit and services they require."
"It's time that banks and financial service organisations harnessed the power of analytics and automated solutions to swiftly and securely adhere to these important compliance processes. Doing so will unblock the logjam and get companies the access to necessary financial support during this challenging time, and without delay."