The Secret to Successful Banking Customer Onboarding

March 23, 2023

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.

In this blog, Tracy Moore, Fenergo’s Director of Strategy for the Americas, explores how commercial banks can radically transform the client experience with multi-channel onboarding, automate client data acquisition with key integrations and unlock new revenue potential by re-allocating employee resources.

Client Experience is the No. 1 KP1

Ask any commercial banking client what they want from a financial provider, and they will tell you they want a service that is fast, efficient, and frictionless, that provides them with the service they need, when they need it without jumping through hoops to get it.

This is supported from the findings of a recent American Banker poll on commercial banking, which showed that 48% of commercial banks measure customer experience as their number one KPI. However, the reality is very different.

Another poll conducted during the American Banker webinar revealed that while 97% of attendees consider frictionless client onboarding a competitive advantage, over 40% stated that operational efficiencies were the biggest impediment to a smooth onboarding experience.

Now, there’s no denying that commercial banks have made tremendous progress over the past few years in terms of adopting new digital capabilities. However, many still operate with very siloed and manual processes, resulting in it taking up to 120 days, on average, to onboard a single client for 70% of banks. Fast it is not.

Clients inevitably become frustrated with the amount of time and duplicated effort required to complete the onboarding process, leading to the abandonment of the entire process as they take their business elsewhere. Therefore, ultimately, the biggest loser of a long, drawn-out and manual onboarding process is customer experience.

But they are not the only loser.

Banks are losing millions each year due to inefficient client onboarding processes. Research conducted by Fenergo a few years ago clearly shows that one-in-five client onboarding applications are abandoned due to inefficient KYC onboarding and AML processes, costing banks an estimated $3.3 billion each year.

What’s causing the inefficiencies? Legacy systems and manual processes of course. During our recent webinar, 54% of attendees polled claimed that legacy systems and poor flexibility were the biggest challenges facing their banks, who have to add more people to the process to leverage any respectable client onboarding times. But this is not the answer. Automation is key and digital transformation is changing the way we open accounts.

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

5 Ingredients for a Successful Digital KYC & 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:

Integration to CRM – having an API integration into 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.
API Integrations to Data Stores & Providers – Before going out to the client to ask 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 to internal and external data stores and providers is key to this.
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.
Know Your Customer & Financial Crime Risk Assessment – Once all the information is collated, the commercial bank can now 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.
Client Onboarding – Once all checks have been conducted in line with powerful rules-based controls and final approval provided, the client can be successfully onboarded and start to transact immediately.

4 Benefits of Automated KYC & Client Onboarding

Automation should be at the forefront of the onboarding process to eliminate redundant steps and create a frictionless experience for clients and employees.

After all, the benefits speak for themselves.

By adopting a centralized and automated solution to manage client onboarding and know our customer, banks can:

Unify client data into a central repository to offer a single source of truth
Unlock revenue potential by freeing up resources to focus on turning low-value clients today into high-value clients in the future
Reduce system hand-offs and duplication of data, making teams are more organized around completing high value work tailored to the client’s needs
Eliminate abandonment of the client onboarding process.