Global Financial Institutions Struggle with Rising Client Losses and Compliance Costs as AI Adoption Increases – Fenergo

Fenergo's 2025 Financial Crime Industry Trends Report shows 70% of firms lost clients to ineffecient onboarding even as AI adoption doubles year-on-year 

London/Dublin / New York / Singapore, October 7, 2025 – Seventy percent of financial institutions worldwide lost clients in the past year due to slow onboarding - the highest rate recorded to date, according to new research from Fenergo, the leading provider of client lifecycle management (CLM) and financial crime compliance solutions. 

A global survey of 600 senior decision-makers across banks, asset managers and fund administrators found that 70% of firms lost clients in the past year due to inefficient onboarding, up from 67% in 2024 and 48% in 2023. Client onboarding abandonment rates now average around 10%. 

Regulatory pressure worldwide has intensified. Fenergo’s 2024 AML fines analysis records US$4.6bn in global penalties in 2024, down from a record US$6.6bn in 2023 but with North America accounting for 94% of 2024’s total. In the first half of 2025, fines totaled US$1.23bn, a 417% increase on H1 2024 (US$238.6m), driven primarily by actions in North America and a marked uplift in sanctions-related penalties.  

Internally, firms remain cost-burdened and operationally uneven. Average annual spend on AML/KYC operations now stands at US$72.9m per firm, with UK institutions reporting the highest average at US$78.4m, followed by the US at US$72.2m and Singapore at US$68.2m. 

Technology adoption is rising but uneven. Reported use of advanced AI tools in KYC/AML has surged from 42% in 2024 to 82% in 2025, with Singaporean firms leading (92%), followed by the US (79%) and the UK (77%). Even so, significant manual work remains, with automation of periodic KYC reviews averaging roughly a third across respondents. 

On client onboarding performance, UK corporate banks report the slowest times, averaging more than six weeks, while Singaporean institutions are fastest but, paradoxically, are more likely to lose a client due to slow and inefficient onboarding (76% said yes when asked). This has reduced significantly from 87% in 2024 however. US firms, meanwhile, prioritize financial crime as the top AI investment area (65%) but continue to grapple with high costs and complex in-house technology stacks. 

Across sectors, commercial and corporate banking continues to bear the heaviest onboarding burden. Asset managers report improved automation in periodic reviews although investor drop-off remains substantial. Asset servicers face the longest onboarding cycles and the highest abandonment rates. 

“Financial institutions are in an arms race to modernize compliance. The sheer cost of operations, averaging nearly USD 73 million per firm, coupled with record client abandonment rates shows that old approaches are no longer sustainable. To keep pace, firms need to embed intelligence into every layer of their client lifecycle: streamlining onboarding, scaling periodic reviews, and ensuring data is regulatory-ready at all times. To that end, AI has become the critical lever for resilience, efficiency and competitiveness,”

Said Tracy Moore, Director of Strategic Thought Leadership and Regulatory Affairs, Fenergo 

Fenergo’s report, Financial Crime Industry Trends 2025, analyses how financial institutions across the UK, US and Singapore are investing in AI, managing compliance costs, and addressing client lifecycle inefficiencies. The survey was conducted in August 2025. The full study is available here.