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Case study
KYC Automation for a German Payments Fintech
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Challenges
The client was experiencing critical bottlenecks in its KYC and customer onboarding processes as it scaled operations across multiple European jurisdictions. Its existing systems required substantial manual intervention, creating delays in merchant onboarding and increasing compliance risks as the volume grew.
- Merchant Onboarding Delays: The manual verification process took 3-5 business days per merchant, creating a significant backlog and delaying revenue generation from new clients.
- Cross-Border Compliance Complexity: Operating across 17 countries required navigating different regulatory interpretations of AML and KYC requirements, forcing the compliance team to maintain multiple process variations.
- Escalating Operational Costs: To manage growing volumes, the client added compliance staff at an unsustainable rate, with the team growing from 8 to 23 people in 18 months.
Aspagnul Solution
- Intelligent Document Processing: Custom computer vision and NLP models analyzed merchant documentation with 99.2% accuracy, automatically extracting and validating key information from diverse document types across different countries.
- Dynamic Compliance Workflows: Configurable compliance paths automatically apply appropriate verification requirements based on merchant type, transaction volume, and specific jurisdictional regulations.
- Integrated Risk Scoring: Sophisticated risk models assessed merchant profiles using traditional and alternative data sources, enabling appropriate verification intensity and ongoing monitoring.
Timeline & Process
Integration Approach
The KYC automation system connects the client’s existing technology landscape through multiple integration points. A secure API layer established connections with the core payment platform for merchant account creation and activation.
Custom connectors are linked with the existing CRM system to maintain a unified customer view while enabling automated status updates. The solution implemented specialized database integration with transaction monitoring systems to incorporate merchant activity into ongoing risk assessment.
Secure external API connections enabled automated verification against regulatory databases, watchlists, and identity verification services. All integrations maintained end-to-end encryption with comprehensive logging for audit purposes.
Compliance Considerations
The solution addressed multiple regulatory frameworks essential for payment service providers operating across Europe:
5th Anti-Money Laundering Directive (AMLD5)
Implemented an appropriate risk-based approach with required beneficial ownership verification and politically exposed person screening.
Payment Services Directive 2 (PSD2)
Ensured proper strong customer authentication and compliance with payment institution requirements for merchant verification.
General Data Protection Regulation (GDPR)
Satisfied Spanish insurance regulator expectations regarding customer communications, complaint handling, and record-keeping.
BaFin Requirements
Satisfied specific German regulatory expectations for payment institutions regarding documentation, risk assessment, and ongoing monitoring.
eIDAS Regulation
Ensured proper handling of electronic communications and appropriate consent for channel usage.
Results
The implementation delivered substantial improvements across operational efficiency, compliance effectiveness, and business capabilities:
01
Merchant Onboarding Efficiency:
- Reduced average onboarding time from 3-5 days to 25 minutes for standard cases
- Achieved 85% straight-through processing for low/medium-risk merchants
- Decreased document processing time by a factor of 20
- Enabled 24/7 onboarding capability versus business-hours-only processing
02
Compliance Enhancement:
- Improved document verification accuracy from 92% to 99.2%
- Reduced false positive rates on compliance alerts by 65%
- Decreased manual review requirements by 78%
- Achieved 100% coverage of regulatory requirements across all operating jurisdictions
03
Resource Optimization:
- Eliminated the need for projected compliance team growth despite volume increases
- Reduced per-merchant onboarding cost by 76%
- Increased compliance team capacity by 350% without additional headcount
- Enabled redeployment of 40% of verification staff to higher-value activities
Client Impact
