In the minds of Corporate Treasurers and CFOs, onboarding serves as a formative indicator of how successful and longstanding their banking relationship is set to become. On the one hand, financial institutions must conduct due diligence and efficient Know Your Customer (KYC) assessments before onboarding a new client. 

These processes can often be cumbersome and slow, despite advances in financial technology (Fintech). On the other hand, corporates have been overwhelmed by the demands of consumers and need quick access to banking services at all times. This misalignment of interests has been the root cause for corporates’ onboarding dissatisfaction.

Onboarding Experience - United Kingdom
Average Rating (1 = Positive, 5 = Negative

Source: East & Partners Global Insight Report: Getting it Right – The Future of Client Onboarding in Financial Services

First Impressions Count

According to research conducted by East & Partners (East), 94 of the top 100 revenue ranked corporates in the United Kingdom (UK) rated their onboarding experience below average across a range of banking products.

Even for market leading banks, most are still insensitive to the emerging needs of their clients because of the limitations present in manual document heavy processing. Deutsche Bank, Barclays, Citi, and Lloyds all featured the highest levels of client frustration.

If banks are to take relationship banking to the next level, the issue of onboarding must be addressed. East’s research confirms that 40.8 percent of corporates globally would “definitely” reduce business with their existing provider, and 38.0 percent would “likely” do the same in the event of a poor onboarding experience.

Inconsistent and Longwinded

For multinational corporates, delivering a consistent onboarding experience across multiple markets and product lines are critically important.  Currently, there are large discrepancies in the onboarding process for multinational banks operating in multiple jurisdictions according to research conducted by East. In the UK, 85.1 percent of the corporates who operate outside of the UK agreed that these discrepancies exist. 

Although these relative performance disparities are inevitable, given the differences in regulatory requirements across multiple markets, banks and financial providers must close the gaps. 

The average time for a top 100 revenue ranked corporate to be onboarded for new or extended services is four months. Four months’ worth of lost production, inefficiency and potentially lost revenue can be severely detrimental for today’s highly competitive businesses. In most cases, banks are spending most of their time matching client documents with KYC requirements.

Over recent years major banks operating in global markets were handed hefty penalty fines in excess of US$15 billion after being found guilty of violations to KYC and Anti-Money Laundering (AML) laws. With figures on that large scale, it is no wonder that banks and other financial institutions have become more interested in how they are onboarding clients rather than how many. 
 

"Our banks all seem to be behind the curve and playing catch up with AML and KYC
regulatory processing – kind of end up making it all our problem with crazy amounts of
documentation and due diligence demands"
(Group Treasurer, US$ 10bn USA Light Manufacturer)

Today’s sophisticated, interconnected, and empowered corporates will not hesitate to defect to the competition if their incumbent provider’s processes are too manual, slow, and painful. This is where digital functionalities can provide great value in smoothing this process. 

Digital Transformation

Digital solutions to onboarding pain points can certainty do the job in creating ‘frictionless’ alliances however the investment and standardisation required can in itself pose real challenges.  

The introduction of digital functionalities such as application programming interfaces (APIs), cloud technology, fraud detection and other innovations have enabled the possibility for a completely digital onboarding experience.  Back-end processes that financial institutions depend on such as administration and regulatory compliance can all be automated through implementation of digital technology.

Similarly, front-end client experiences can become seamless and consistent through the use of digital platform and cloud technology. However, banks and traditional institutions have been lagging in this digital development mainly because of the level of financial commitment and system integration required.

According to research conducted by East, up to 15 percent of the largest corporates in the UK stated that the lack of digital capabilities was the most serious challenge in their onboarding experience. In Canada, China, and Singapore this figure increases to over 30 percent.

The transition from legacy systems to digital dominance is not an overnight process and will take significant time and investment for banks to safely transition without severe disruption to existing banking operations. Financial technology companies (Fintech’s) can certainty speed up this transition period through developments and partnerships. In all, allowing traditional institutions to digitally transform in the most efficient way and with customers’ interests front of mind, will most certainly lead to greater wallet share extraction.

Biggest Onboarding Pain Point – Technological Capabilities
% of Total


Source: East & Partners Global Insight Report: Getting it Right – The Future of Client Onboarding in Financial Services

Where to From Here?

According to research by East, Lloyds, Barclays, JPMorgan, CBA, and Deutsche Bank’s most valued clients considered onboarding a very significant part of their banking relationship. Société Générale, BNP Paribas and HSBC’s most valued clients considered it less significant, yet onboarding is still critically important for all banks to simply ‘get it right’ or risk sub optimal new customer acquisition.

That being said, banks are already spending an average of US$40 million per year to streamline onboarding processes for new clients, according to the software company Fenergo.

More development and implementation of digital functionalities and tools will empower banks to deliver compelling onboarding experiences. But can banks really afford to increase investment towards digital onboarding given the current economic uncertainties and budget limitations?

East & Partners upcoming global insight report will provide in-depth analysis and insights into customer relationship management post-COVID and the role of digital technology. Some of the questions that the report seeks to answers are: