In 2025, Know Your Customer (KYC) solutions will become essential for financial institutions looking to enhance their anti-money laundering (AML) frameworks. With increasing regulatory scrutiny, sophisticated financial crimes, and growing customer expectations for seamless onboarding, the sector is witnessing a shift towards decentralised identity (DCI) and perpetual KYC (pKYC).
These innovations are redefining compliance and risk management strategies in the banking industry.
RelyComply, an AI-driven KYC/AML platform, recently explored the compliance and risk management trends in 2025.
Key components of KYC: improving compliance and trust
The modern banking landscape demands more than traditional identity verification processes. Effective KYC solutions must integrate seamless and secure onboarding mechanisms. Platforms like RelyComply enhance Customer Identification Programmes (CIP) by implementing real-time verification checks, reducing friction and improving the overall customer experience. By leveraging advanced tools, financial institutions can streamline onboarding while ensuring regulatory compliance.
Customer due diligence (CDD) and enhanced due diligence (EDD) are now critical components of effective compliance strategies. Banks must proactively assess customer risk through sanctions screening, politically exposed persons (PEP) checks, and dynamic risk assessments. RelyComply’s solutions help financial institutions navigate these complexities, enabling a more proactive stance against financial crime.
Perpetual KYC (pKYC) is another key development, shifting compliance from periodic assessments to continuous monitoring. AI-driven tools such as those offered by RelyComply allow banks to analyse transactions, detect suspicious behaviour, and respond to risks in real time. This approach enhances security while fostering trust between institutions and their customers.
Choosing the right KYC platform: one-stop shop vs. best-of-breed
As financial institutions modernise their compliance infrastructure, a key decision arises: should they adopt an all-in-one KYC platform or a best-of-breed approach that integrates specialised solutions?
A one-stop-shop KYC platform simplifies vendor management and ensures streamlined workflows, making it an attractive option for larger banks. On the other hand, best-of-breed solutions offer flexibility by allowing financial institutions to address specific high-risk areas with specialised tools.
RelyComply’s platform provides a hybrid approach, integrating comprehensive compliance features with the adaptability of bespoke solutions. This model enables banks to manage risk effectively without the burden of multiple vendor integrations.
The role of decentralised identity in KYC compliance
Decentralised identity (DCI) is reshaping KYC compliance by prioritising security, privacy, and efficiency. Unlike traditional models that rely on centralised databases, DCI empowers individuals by allowing them to share only essential information. This enhances privacy, aligns with regulations like GDPR, and reduces operational costs by eliminating reliance on centralised storage.
RelyComply believes that ‘forward-thinking’ financial institutions are already exploring DCI integrations through initiatives such as the EU’s digital wallet and India’s Aadhaar system.
James Saunders, CTO at RelyComply, highlighted the impact of DCI on financial institutions: “Decentralised identity (DCI) isn’t just an innovation; it’s a necessary evolution in KYC that fundamentally redefines how financial institutions manage identity verification. Traditional approaches, reliant on centralised databases and fragmented data points, are becoming increasingly unsustainable in the face of rising regulatory scrutiny and evolving customer expectations. DCI presents a scalable, privacy-first alternative that delivers unparalleled efficiency without compromising compliance.
“From a technical standpoint, the shift to DCI eliminates the inherent vulnerabilities of centralised storage, offering cryptographic assurances and verifiable credentials that are tamper-resistant and interoperable across ecosystems. Its reusable verifications are a game-changer, slashing onboarding times and operational overhead while ensuring seamless alignment with stringent frameworks like GDPR.”
AI-driven risk assessment: the future of compliance
Artificial intelligence (AI) is transforming compliance and risk management in financial services. With emerging threats such as deepfakes and synthetic identities, banks must leverage AI-driven detection mechanisms to prevent fraud effectively. Moreover, evolving regulations like the EU AI Act are pushing institutions to adopt sophisticated AI-driven compliance solutions.
AI-powered tools support pKYC by automating updates, analysing vast data sets, and detecting anomalies in real time. This reduces manual workloads, minimises errors, and strengthens compliance frameworks. The adoption of AI also enables financial institutions to shift from periodic KYC checks to a continuous risk monitoring model, improving overall security and regulatory adherence.
The future of KYC: embracing innovation
With advancements in AI, pKYC, and DCI, the KYC landscape is undergoing a fundamental shift. Financial institutions must modernise their compliance frameworks to stay competitive and avoid regulatory penalties.
RelyComply stated that a Tier 1 bank leveraging RelyComply’s platform has already reported a 30% reduction in onboarding times, demonstrating the tangible benefits of adopting innovative compliance solutions.