Manual KYC Myths That Are Slowing You Down (And Why Your Fund Needs Automated KYC)
Last Revised: July 31, 2025At a Glance
KYC should be the beginning of a great investor relationship—not a bureaucratic test of patience comprising endless PDFs, email ping-pongs, and weeks of waiting. Yet many firms still cling to outdated, manual processes. In this post, we debunk some persistent KYC myths (with a wink), and offer a better path forward.
🤝 Myth #1: “Manual KYC Builds Stronger Investor Bonds”
“There’s a certain romance in the delay—a drawn-out period of anticipation that builds suspense and cements trust.”
Reality:
Delays kill deals. Today’s investors expect speed, transparency, and seamless onboarding. Manual forms and endless email threads don’t build trust—they erode it. Every extra step is another chance for confusion, frustration, or even dropout. In a competitive fundraising environment, slow onboarding doesn’t signal care—it signals risk: a Fenergo report found that 74% asset managers experience investor abandonment tied to delayed, manual data collection processes.
How does Manual KYC really impact investor relationships?
📎 Myth #2: “More Paper, More Control”
“Each signature, each stamp, is a badge of honor. It’s not just compliance—it’s a treasure hunt!”
Reality:
Fragmented workflows and scattered documents don’t offer more control—they create chaos. PDFs, spreadsheets, and siloed systems lead to mismatches, audit headaches, and critical information getting lost, with compliance teams reporting increased audit risk. Centralized, automated KYC platforms allow teams to track progress, ensure data integrity, and respond to investor questions in real time. It’s not just about convenience—it’s about visibility, governance, and operational sanity.
Paper Doesn’t Equal Control
👷🏼 Myth #3: “Friction Proves Diligence”
“Friction forges the strongest bonds! Manual verification is the true test of human perseverance.”
Reality:
Friction doesn’t prove diligence—it proves inefficiency. Lengthy, back-and-forth document requests and clunky processes wear down investor patience and delay capital deployment. In fact, Ekata reported that 68% of financial services applicants completely abandoned their financial services application due to friction. Modern compliance isn’t about how much friction you can survive—it’s about how confidently and quickly you can move. Automation ensures your team meets compliance standards without sacrificing user experience.
Friction – Out; Automation – in.
🕵️♀️ Myth #4: “Manual Verification Prevents Errors”
“The best way to catch sneaky errors is by having your dedicated compliance team hunt for them.”
Reality:
It sounds noble—but in reality, manual reviews are a major source of errors. Fatigue, context-switching, and human oversight often lead to inconsistencies that slip through the cracks. Automation doesn’t eliminate diligence—it enhances it. Smart systems flag missing data, mismatched records, and regulatory red flags in real time. That means fewer mistakes, faster resolutions, and more time for your team to focus on complex edge cases where human judgment is actually needed.
Manual Verification Doesn’t Prevent Errors. Automation does
🔒 Myth #5: “Analog Systems Are More Secure”
“Hackers can’t find what’s buried in lengthy email chains and filing cabinets.”
Reality:
If your data isn’t encrypted, auditable, or access-controlled—then it’s not secure, just hidden. Analog and semi-digital workflows expose firms to internal leaks, lost files, and untraceable errors. Modern KYC systems are built with security as a foundation: end-to-end encryption, real-time audit trails, multi-factor access controls, and compliance with the latest regulations (like GDPR, CCPA, and evolving AML directives). True security isn’t about locking documents in drawers—it’s about proving you’re always one step ahead.
💡 The Bottom Line: Smarter KYC That Moves at the Speed of Your Fund
Intelligent, automated KYC cuts through red tape and replaces delays with clarity, compliance, and confidence.
✅ Automated checks
✅ Real-time tracking
✅ Secure, audit-ready infrastructure
✅ Minimal investor friction
Why let outdated processes slow you down? Scale faster and smarter with a KYC flow that works like you do.
If you haven’t jumped into the KYC automation pool yet, now’s the time to at least dip your toes.
Why Blackbird?
Blackbird delivers an AI-first KYC solution built for private market firms that are done with delays. Our platform streamlines KYC, AML, and Due Diligence into one automated flow—cutting out the friction while strengthening compliance.
Faster onboarding, fewer errors, and no extra headcount required.
👀 Want to see how smooth KYC can be? Book a demo with our team.
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About the Author
Linoy Doron is a Content Strategist at Blackbird, where she translates complex fintech and compliance topics into clear, actionable insights. With a strong background in technology, SaaS, and UX, she crafts narratives that connect product value to the real needs of asset managers in the private markets.
