Financial institutions face huge hurdles when trying to access and confirm business data. The difficulty extends far beyond basic information provided by Secretaries of State. It impacts Know-Your-Business (KYB) procedures and leads to time-consuming manual validation. This increases costs, and potential inaccuracies in risk assessments.
The current state of business registration data
The data collected by Secretaries of State varies across jurisdictions. Most offices handle domestic and foreign registrations, but the specific data points differ. Here’s a few examples:
- New York provides unique ID numbers, filing dates, and entity names
- California offers entity numbers, formation dates, and officer names
- Connecticut includes business type and principal information
- Delaware provides registered agent phone numbers and residency details
This inconsistency creates challenges for financial institutions. Getting a unified view of business entities nationwide is difficult. The lack of standardization extends to data formats, specific fields, and access methods.
Key challenges in business data management
Data fragmentation and inconsistency
Business registration data is often scattered across platforms, making aggregation and reconciliation difficult. Understanding complex ownership and management structures is particularly challenging. Companies change their structure, leading to conflicting information across sources.
The burden of manual processes
Many financial institutions still perform monthly manual checks on vendor data. This consumes time and resources that could be better spent on strategy. Manual processes are vulnerable to human errors. This leads to data entry mistakes, calculation errors, and inconsistencies in execution.
Limited data depth
The desire for more detailed business information highlights the need for better data. This level of detail would enable a more nuanced understanding of the business landscape. Improved segmentation and more precise risk assessment would follow.
The path forward: Automation and technology solutions
Leveraging specialized business data providers
If you’re facing challenges with business registration data, specialized data providers can help. OpenCorporates aggregates business information from all government sources into standardized formats. This solves the fragmentation and inconsistency issues right out of the box.
It gives you:
- Unified access to business registration data across every jurisdiction
- Standardized data formats that makes integration with existing systems easier
- Regular updates as business information changes
- APIs that allow for automated data retrieval
- Enhanced data points beyond basic registration information
When considering a data provider solution, you should assess:
- the provider’s data sources
- update frequency
- coverage of relevant jurisdictions
- available data points
- integration capabilities with existing KYB systems
KYB automation platforms
Specialized KYB automation solutions can streamline the verification of business identities. These platforms automate the collection, verification, and storage of business information.
Key capabilities include:
- Access to global databases of business information
- Mapping of complex corporate structures
- Identification of ultimate beneficial owners (UBOs)
- Automated document processing
- Sophisticated risk assessment
- Continuous monitoring capabilities
But using third-party solutions also comes with considerations:
- Data coverage may still have gaps, particularly for smaller businesses or certain jurisdictions
- The accuracy of the data depends on the update frequency and source reliability
- Integration costs and ongoing subscription fees might not justify the benefits
- Extra validation may still be necessary for high-risk transactions or entities
Benefits of improved data management
Addressing business registration data challenges delivers many benefits:
- Streamlined KYB compliance with reduced regulatory risk
- Enhanced operational efficiency through automation
- Improved data accuracy and consistency
- Better risk assessment capabilities
- Reduced manual workload
- Cost savings through process optimization
Next steps
A phased approach to improving business registration data management includes:
- Assess current data access and validation processes
- Define clear and measurable goals
- Test potential automation solutions and vendors
- Put in place chosen technologies step by step
- Track and optimize processes as you go
Efficient business data management is not an operational improvement but a strategic necessity. It enhances KYB compliance, strengthens risk management, and drives operational efficiency. As the financial landscape grows in complexity, your business data grows in importance.
For more information
Learn more about how OpenCorporates’ data can help you understand corporate structures and manage risk. Reach out for a demo or explore our services.
