Thirty-eight per cent of UK businesses have deliberately abandoned an application for banking services in the last year due to ‘slow due diligence processes,’ according to new research from Encompass Corporation.

The study also found that businesses are planning to prioritise spending on cybersecurity over anti-financial crime compliance in 2020, with 44% putting plans in place. However, 81% of organisations agreed they were confident in their understanding of exposure to financial crime, and that they already had the processes in place to address it.

Encompass, the Know Your Customer (KYC) and regulatory technology (RegTech) specialist, carried out a survey which polled 200 business decision-makers in large and medium sized businesses in March – just after the Chancellor had announced a £330bn rescue package due to support UK companies through the Covid-19 crisis.

Encompass’ research asked businesses about the challenges they are facing in getting access to financial support, as well as attitudes towards cybersecurity and regulation.

The results also showed that 44% of companies said they did not regularly put customers and suppliers through formal KYC processes, while 60% admitted there had been no training for staff about how to be compliant with the Fifth Money Laundering Directive (5MLD). 

Furthermore, 29% of the businesses surveyed said they now trusted challenger brands and fintech providers more than traditional banks. 

Encompass CEO and co-founder, Wayne Johnson, commented: “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 also worrying that so many companies admit to minimal KYC onboarding processes, as well as offering zero training on important directives such as 5MLD. 
 
“It’s time that banks and financial services 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.”

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