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Digital Customer Onboarding in Banking: The Roadmap to KYC

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Digital customer onboarding in banking provides a roadmap to KYC by integrating seamless processes from the start. A successful digital onboarding process combines CRM and API integrations with a secure portal to automate data collection and perform integrated financial crime risk assessments. This approach streamlines the process, reduces manual effort, and ensures compliance while providing a frictionless client experience that prevents application abandonment.

Why Digital Onboarding is Essential 

Starting client relationships on the right foot is essential for building trust, the cornerstone of any successful banking partnership. Ensuring the implementation of Know Your Customer (KYC) and Anti-Money Laundering (AML) best practices from the outset is not just a step towards regulatory compliance; it's a critical step in safeguarding this trust and demonstrating a commitment to security and compliance.

However, navigating the complexities of KYC and AML can pose significant challenges, potentially impacting the client onboarding experience and, by extension, the long-term relationship. One in five client onboarding applications are abandoned due to KYC and AML challenges, which impact client experience and cost banks an estimated $3.3 billion annually in lost business.  

Recognizing the delicate balance between compliance and customer experience, Tracy Moore, Director of Strategy for the Americas at Fenergo, offers an insightful perspective on redefining client onboarding.

Barriers to Successful Onboarding

Client Onboarding Survey Results

Infographic: poll results from "The Digital Revolution: retain customers, tackle regulations & transform CX" webinar

An American Banker poll highlighted that 49% of banks view customer experience as their top KPI, yet a majority struggle to deliver. This is often due to common barriers to successful onboarding, as 41% are hindered by operational inefficiencies. Despite digital advances, many banks' siloed, manual processes extend onboarding times to 120 days for 70% of banks, leading to client frustration and abandonment, while sacrificing the competitive edge that 98% believe frictionless onboarding offers.

5 Steps to a Frictionless Digital Client Onboarding Process

The best client onboarding experiences are fast, smooth and digital. It should not feel like work for either the customer or the bank to onboard clients. 

Every client onboarding journey starts and ends with data. Client onboarding delays can normally be traced back to performing know your customer compliance. However, it is the data and documentation required to support KYC that takes the longest time. Digitalizing how that data is acquired, processed and risk-assessed is the key to a seamless client onboarding process in financial services. 

There are five key ingredients you need to consider in your client onboarding checklist: 

1. Integration with CRM

Integrating an API with a CRM solution enables the new client journey to progress digitally and seamlessly from prospecting through to client onboarding, thereby reducing the amount of rekeying and swivel chair activity required to complete this process.  

2. API Integrations with Data Stores & Providers 

Before asking the client for information, banks should be able to look internally to see if that information already exists in data repositories or can be acquired through third-party data providers. Having advanced API integration capability for internal and external data stores and providers is key to this. 

3. Digital Portal 

If all other avenues of data acquisition have been exhausted and you need the prospective client to provide information, then having a digital channel where they can securely upload this information is essential. Integrating this with the KYC and Client Onboarding solution will allow information to be appended to the client profile. 

4. Know Your Customer & Financial Crime Risk Assessment 

Once all the information is collated, the commercial bank can determine how safe it is to do business with that entity/client. An integrated financial crime risk assessment can help to determine how much due diligence should be applied to the client based on their risk profile – with straight-through processing being applied to lower-risk clients and enhanced due diligence applied to higher-risk clients.  

5. Client Onboarding 

Once all checks have been conducted in line with powerful rules-based controls and final approval has been provided, the client can be successfully onboarded and start to transact immediately.  

How to Get Started With Digital Onboarding Software for Banks

Fenergo offers streamlined and enhanced processes for financial institutions focusing on simplifying the client lifecycle management process, ensuring compliance, all while improving the client experience.

If you're interested in seeing how Fenergo can benefit your business and streamline your onboarding processes, request a demo.

Digital Customer Onboarding Best Practices for Banks 

  1. Prioritize the Client Experience: Build a frictionless, user-friendly journey that minimizes manual data entry and provides real-time progress updates. A seamless process significantly reduces application abandonment and builds trust from the start.
  2. Automate KYC and AML Processes: Integrate KYC and AML checks directly into the digital flow. Use powerful rules-based controls to automate risk assessments, allowing low-risk clients to be onboarded instantly with straight-through processing.
  3. Leverage Data Automation and KYC APIs: Connect your onboarding platform with internal data repositories and third-party data providers via APIs. This allows you to pre-fill client information, reducing the burden on the customer and ensuring data accuracy.
  4. Offer a Secure Multi-Channel Experience: Provide clients with a secure digital portal where they can upload necessary documents and information from any device. This flexibility accommodates modern client behavior and improves convenience.
  5. Create a Single Source of Truth: Unify all client data into a central, golden-source repository. This eliminates data duplication, streamlines workflows, and ensures all teams are working from the same accurate information, leading to more efficient processes and a better client experience.

Digital Customer Onboarding FAQs 

What is digital onboarding in financial services?

Digital onboarding in financial services is the process of using technology to enable new clients to become customers completely online, without the need for in-person visits or physical paperwork.

How is digital onboarding used in fintech? 

Digital onboarding in fintech is a core process that allows these technology-driven companies to acquire and verify new customers quickly and efficiently, often using mobile apps and streamlined digital workflows.

How can digital banking improve customer onboarding speed?

Digital banking improves customer onboarding speed by automating data collection, identity verification, and compliance checks, which eliminates time-consuming manual processes and reduces application abandonment.

What is the role of identity verification for digital onboarding?

Identity verification for digital onboarding is the crucial step of confirming a prospective customer's identity remotely using digital tools, ensuring security and compliance with KYC and AML regulations.

How does the retail banking customer onboarding process differ from the corporate process?

The retail banking customer onboarding process is generally simpler and faster, focusing on individual identity checks, whereas the corporate banking onboarding process is more complex, requiring extensive due diligence on multiple entities, beneficial owners, and legal structures.