KYC Platform

1. PROJECTS QUESTIONS

Answers to question in this chapter are mandatory!

In which stage of the development is your idea?

Just an idea

How does your idea contribute to the improvement of financial services in Western Balkans 6 region?

Since there has been an obvious increase of importance of data management, our KYC Platform could be considered as an online platform based on the process of ingesting, storing, organizing and maintaining the data created and collected by the banks and financial institutions from Montenegro. It would provide an effective data management and analytical information to help drive operational decision-making and strategic planning by the Central Bank of Montenegro, banks and financial institutions, business managers and other end-users.

According to the fact that the KYC Platform would compromise the databases provided by the banks and financial institutions from Montenegro, it is obvious that the data on the KYC Platform have to be considered as a corporate asset that can be used to make more-informed business decisions, improve communication between all involved parties, optimize business operations and reduce costs, all with the goal of preventing fraud and cybercrime the Western Balkan countries are exposed to. 

Our KYC Platform would contain different datasets that have to be well-organized, accurate, reliable, and easy-to-read, updated and properly managed. It would meet the regulatory compliance requirements, including data privacy and protection laws such as GDPR. 

Finally, it would be implemented as a solution for monitoring suspicious transactions (such as transfers, deposits, and withdrawals) and protecting the economy from fraudulent payments. Transactions that the monitoring system flags as suspicious need to be investigated in order to determine whether the alert is a legitimate hit or a false positive. This means that the end-customer behavior and transactions would be screen in real-time. Creating an integrated platform consisted of many databases would result in minimizing the security risk, improving the organizational effectiveness, and protecting the country from suspicious and illegal activities in the banking sector. 

What technologies does your idea rely on (please also specify programming

languages and frameworks)?

As for technologies, we use: HTML, CSS, TensorFlow, JavaScript, PHP, Python (programming languages) and Google Colab (free super-computer) to develop artificial intelligence.  Since we cannot get datasets from banks, we use datasets from Kaggle.

Our idea would be based on an integrated platform, defined as a “KYC Platform” managed and monitored by the Central Bank of Montenegro. It would consist of databases provided by all banks and financial institutions operating business in Montenegro. These databases would encompass information about banks’ clients (both physical person and legal entities) coming not only from Montenegro, but also from all other countries. This data should be true and up to date, as well as updated in accordance with changing circumstances. It would provide an insight into the clients’ personal information, a history of transactions made by clients, their financial state, ability to refund a credit etc. 

This data would be exchanged between all parties and will be available on the online platform. It would help in building a trust which is considered as the most important currency in the digital world. It would meet safety and security standards meaning that only authorized parties (the Central Bank of Montenegro, banks and financial institutions from Montenegro) would be able to get access to the KYC Platform and conduct further decisions. The fraud incidents, security breaches, cybercrime and anti-money laundering would be prevented thanks to standards that would be met when developing our idea. 

While developing our idea, a close attention has been put on the issues caused by money laundering, as a type of financial crime. Anti-money laundering (AML) refers to the activities financial institutions perform to achieve compliance with legal requirements to actively monitor for and report suspicious activities. It would be helpful for understanding security risk trends and adopting the right strategy to minimize security breaches, as well as ensuring the sustainability of economy and protect it from cyber fraud. To clarify that the banks and financial institutions are responsible for meet all directive and regulations prescribed by the law. The quality of the datasets provided by the banks and financial institutions should meet the highest quality standards. 

All team members have been investigating the topic for the Hackathon’s competition to get themselves familiar with the Know Your Customer Know Your Customer (KYC) standards. We have been thinking about the possible software solution that can be designed to protect financial institutions against fraud, corruption, money laundering and terrorist financing. This requires reading more about the issues the banks and financial institutions are trying to solve and understand the consequences they have on the national economy. After a couple of discussions, we have come up with the idea, split the responsibilities and assigned the tasks to each team member. 

The main responsibilities of our team member include:
- Anđela Vlahović as Data Analyst
- Lolita Mikhailova as UI/UX Designer
- Ivana Ćorović Delić as Software Developer
- Nikola Lešić as Software Developer

Supposing that we got the prize fund, we would do our best to transform our idea to final product, which could be used for improving the entire banking sector in Montenegro, as well as banking sectors from the Western Balkans. 

Being aware of the importance of healthy economy and a wide range of internal and external factors that have a huge impact on its development and stability, we would make a lot of efforts in providing its implementation and functionality. 

2. BUSINESS MODEL CANVAS

Answers to question in this chapter are not mandatory. 

If you want your project description to be of better quality, we recommend that you answer as many questions as possible.

KEY PARTNERS

Who are our Key Partners?

Who are our key suppliers?

Which Key Resources are we acquiring from partners?

Which Key Activities do partners perform?

According to the fact that the Key Partner is defined as any entity a business needs to rely on to achieve its value proposition, our Key Partner would be the Central Bank of Montenegro, as the supreme institution of the monetary system of Montenegro. On the other hand, apart from the Central Bank of Montenegro, additional key partners would also be all banks being a part of the Montenegrin banking system and financial institutions operating business in our country. All parties would play an important role in our project implementation and its administration. Their primary task would be to support and enhance both decision-making processes impacting the national economy and its safety from cyber-attacks and money laundering. 

Our Key Suppliers would also be the Central Bank of Montenegro, as well as banks and financial services doing business in the territory of Montenegro. 

The Key Resources we would acquire from them would be current possessed datasets about their clients, i.e., both physical persons and legal entities. They would be used for creating a dashboard containing consolidated information about the clients. These dashboards would provide a broader insight into the clients’ history, their behavior, their transaction flows, quality of doing business etc. 

KEY ACTIVITIES

What Key Activities do our Value Propositions require?

Our Distribution Channels?

Customer Relationships?

Revenue streams?

The key activities our Value Proposition requires involve:

1. Setting up a platform for the KYC Platform managed and monitored by the Central Bank of Montenegro

2. Classifying data/databases possessed by the Central Bank of Montenegro by using neural networks, as well as the banks and financial institutions from Montenegro

3. Creating a dashboard that would show classified data and make projections based on Key Performance Indicators (KPIs)

4. Generating reports that would be used for conducting a deeper analysis of the end-customer segment (especially for those clients whose behavior and transactions might relate to some suspicious and illegal activities)

5. Generating reports with suggestions for overcoming issues our end-customers/clients might have (these reports would be created by the Consulting Agency on request of clients interested in getting a better insight into their current financial health and suggestions that can be used for its improvement)

The mean communication between the Central Bank of Montenegro and the banks and financial institutions would be conducted through the KYC Platform, i.e., the online platform using the communication tool integrated in the platform itself (such as email). Our KYC Platform would operate through Indirect Distribution Channels because the communication between the KYC Platform and the end-customer base would be established by a Consulting Agency, playing a role of the intermediary party. The Consulting Agency would provide different reports generated to provide end-customers support and enhance their performance when overcoming different issues. The Consulting Agency would not have the direct access to the KYC Platform. Instead of this, the KYC Platform would send the reports containing the basic KPIs needed to conduct the analysis, make conclusions and suggestions for those clients interested in further information and suggestions.

The crucial reason for creating the KYC Platform would be to accelerate the digitalization of banks and financial institutions, with the special emphasis put on the detection of security risk and its prevention. At the beginning of launching our KYC Platform online the main form of revenue stream would be the recurring revenue in the form of subscription fee. As we have already explained, the Consulting Agency would be the intermediary partner between the KYC Platform and the end-customers. It would create and provide detailed reports for end-customers: 

1. For example, why their credit application has been rejected?

2. What do they need to improve for get a positive response from the bank they have sent the credit application to?

3. What categories of costs should be reduced to enhance the liquidity risk (important for individuals)?

4. What categories of costs should be reduced to improve their overall performance quality and KPIs such as profitability risk etc. (important for legal entities)?

Once the KYC Platform has been set up, performance monitoring and tuning must be done to maintain acceptable response times on database queries that users run to get information from the data stored in it. Other administrative tasks include database design, configuration, installation and updates, data security, database backup and recovery, and application of software upgrades and security patches.

KEY RESOURCES

What Key Resources do our Value Propositions require?

Our Distribution Channels? Customer Relationships?

Revenue Streams?

(Types of resources: Physical, Intellectual, Human, Financial)

The main inputs and assets our Central Registry would need to function effectively include:

• The Internet because our KYC Platform would be an online platform 

• The Central Bank of Montenegro that would be responsible for managing and monitoring the KYC Platform itself

• The banks and financial institutions providing all necessary databases 

On the one hand one category of end-customers would be our Key Partners (the Central Bank of Montenegro, banks, and financial institutions from Montenegro). They would not only provide the required inputs for the KYC Platform, but also use it for decision-making. 

On the other hand, additional relationship would be established between the Consulting Agency and end-customers (clients of the banks and financial institutions), because they would be requested for more details and all necessary explanations, they might be interested in. For example:

• The end-customer / banks’ client has applied for a credit loan

• The bank he/she has chosen would conduct an analysis of its application considering the available data that can be obtained by signing into the KYC Platform

• The banks’ final decision whether to accept or reject the client’s credit application would be explained to end-customers in form of the report providing an overview of the client’s current financial state and suggestions on what can be done to make it better and increasing a chance of getting the credit

VALUE PROPOSITIONS

What value do we deliver to the customer?

Which one of our customer's problems are we helping to solve?

What bundles of products and services are we offering to each Customer Segment?

Which customers needs are we satisfying?

Data Analytics has become a part of various industries. The banking/finance sector is no exception. Big Data requires advanced analytics. Otherwise, the data collected by the bank lies waste in the silos and ends up increasing expenses. Analytics help process big data and use the insights to make better decisions.

Our KYC Platform could be imagined as a dashboard containing various sections such as: - Clients, Transactions, Analytics, Reports and Revisions. Every client will have his own page with all information and explanation of why he is classified in a certain category. Clients section consists of general infographics classified by risk groups and a detailed client search. Transactions page consists  of general infographics classified by risk groups and a detailed transaction search. Analytics section consists of detailed infographics about customers and transactions related to risk groups. Reports section consists of reports that are being declared by banks about their client's questionable actions or transactions with explanations of the denunciation. Revisions section consists of information and infographics about revisions that are being conducted every 2 years (A -  low risk group), 1 year (B - medium risk), 6 months (C - high risk). 

As an online dashboard it would afford many benefits to its end-customers:

• Accumulate information in one place with key aggregate metrics. Thanks to this, the decision-makers (banks and financial institutions from Montenegro) would not have to spend a lot of time reviewing numerous data sources: tables, reports, lists, registers. 

• Automate analytics. The interface displays information ready for analysis. Necessary, supplemented calculations and visual representation could be made, so that a significant part of the work has already been done for the end-customers. 

• Reporting, Analysing, and Presenting Data in Real Time

• Speed up the decision-making process. Studying the raw documentation takes hours, while the dashboard has everything you need. 

• Key data is always available, and it takes no more than 10 minutes to review it. It reflects on the situation and highlight problem areas.

• The dashboard clearly shows in which segment the indicators fell and what are the KPIs a close attention must be paid to. A well-designed dashboard saves time, shows the actual state of business and processes, and helps in decision-making.

• The Dashboard is a powerful tool to comprise relevant information in a single view providing graphical overview of the status 

• It would provide an easy-to-read real-time user interface, showing graphical presentation of the status (snapshot) and historical trends of an organization based on KPIs to enable decisions

• It would be developed as a hybrid dashboard meaning that it would consist of:

  • Business intelligence dashboard designed to the Central Bank of Montenegro in accessing, visualizing, and analyzing the data bases

  • Information radiators designed to spread the information about the status of clients 

  • Management dashboard designed to provide a support for decision makers

• Dashboards offer a solution. By condensing multiple reports down into visuals, such as graphs charts, tables, and metrics, and displaying those visuals on a single page, analytics dashboards allow business decision-makers to review significant amounts valuable information at a glance. 

CUSTOMER RELATIONSHIPS

What type of relationships does each of our Customer Segments expect us to establish and maintain with them?

Which ones have we established?

How are they integrated with the rest of our business model?

How costly are they?

The relationship between our KYC Platform and end-customer segment would be established by the Consulting Agency, playing the intermediary role in the communication process between these parties. The Central Bank of Montenegro, banks and financial institutions from Montenegro would exchange all data through this platform.

CHANNELS

Through which Channels do our Customer Segments wants to be reached?

How are we reaching them now?

How are our Channels integrated?

Which ones work best?

Which ones are most cost-efficient?

How are we integrating them with customer routines?

Channels we would use for reaching out to our end-customer base could be described as customers’ touch points that play an important role in the customer experience. They would represent the avenues that link theKYC Platform  to its target customer segment. 

The main channels that would be used for reaching out to our end-customers are direct channels including:

• The Internet which is available 24/7 and gives the opportunity to establish 2-way communication between the Central Registry Platform and end-customers

• Telephone, which is a good way to establish a relationship, create leads and reach customers living in remote areas.

• E-mail that is easily customizable to different customer segments and allows for easy modification

CUSTOMER SEGMENTS

For whom are we creating valve?

Who are our most important customers?

The main customer segment we would offer services would be:

• The banks and financial institutions operating in Montenegro: 

  • They would have access to the dashboards created from databases available on the KYC Platform 

  • They would use them for further analysis and decision making

• The end-customers, i.e. banks and financial institutions’ clients 

  • They would have the option to choose one of the available subscription packages and get reports from the Consulting Agency

  • These reports would contain more information on the issues they might be dealing with, such as rejection of the credit application submitted to a particular bank

COST STRUCTURE

What are the most important costs inherent in our business model?

Which Key Resources are most expensive?

Which Key Activities are most expensive?

(Fixed Cost [salaries, rents, utilities], Variable costs, Economies of scale, Economies of scope)

There are many factors that should be considered when determining the cost of our Central Registry’s development. Its development is a complex process determined by the number of roles, the number of pages, the complexity of the design, the number and size of databases, and the number of third-party integrations. 

The development process would include the following 3 phases:

1. Design

2. Implementation

3. Maintenance

The level of Maintenance costs would be determined by the Hosting, which is the basis for launching a website on the Internet. These costs would depend on the type of tariff plan chosen.

Since our KYC Platform is a software-based solution the costs of its development lie in direct correlation with its complexity. This aspect involves several matters, such as the number of features, the complexity of features, and the level of customization. 

Another major aspect to include in the cost estimation of website development is UX/UI design. 

Essentially, a software design is the visual interface you see once you enter and navigate through the software. Generally, software design and development consist of:

1. User Interface (UI) that refers to the visual layout of elements that together form the user interface. It should not only be attractive but also allow the functionality and deliver a pleasant experience.

2. User Experience (UX) that refers how easily and smoothy an individual interacts with the software. It includes all the visual elements the user sees in the interface, including the icons, spacing, typography, color schemas etc. It requires creating mock-ups for helping us identifying how the users navigate through the website.

REVENUE STREAMS

For what value are our customers really wiling to pay?

For what do they currently pay?

How are they currently paying?

How would they prefer to pay?

How much does each Revenue Stream contribute to overall revenues?

According to the previous explanations, our business model would consist of 3 parties: 

• the Central Bank of Montenegro

• The banks and financial institutions operating in Montenegro

• The Consulting Agency that would play the intermediary role between the KYC Platform and the end-customer segment

The main revenue stream would be generated from subscription fees, meaning that it would be made from continuous provision of a service. The Consulting Agency would offer its services (reports to end-customers filled with more detailed information and suggestions on how to improve some segments which are problematic) based on monthly / quarterly and yearly basis. To clarify, the amount of subscription fee would depend on the level of details included in the report, as well as on the time for which the end-customer would pay upfront.