Why first impressions count when redefining client onboarding for banks

Learn how banks can make onboarding both efficient for customers and effective in safeguarding against financial crime and other risks.

In brief

• Streamlined onboarding is key to compliance and client loyalty.
  
• Banks must balance risk management with efficient client experiences.
  
• Tailored onboarding strategies can set banks apart from FinTech’s.
  

A bank’s first interaction with corporate or SME- Small and medium-sized enterprise clients is critical to a lasting relationship.

Yet for too long, the industry’s cumbersome, manual and lengthy onboarding processes have left clients mired in paperwork, delaying their access to banking services and adversely affecting their business operations and planning.

While heightened regulatory oversight is essential to thwart financial crime and other risks, the resulting controls and solutions have too often created disjointed journeys that leave customers dissatisfied and frustrated – with many choosing to abandon the process and go elsewhere rather than wait for an outcome.

For banks, the fundamental question they need to ask themselves about their clients is, “Do I want to provide you with banking services?” If yes, then they have to understand the risks of doing business with that client and satisfy the associated regulatory requirements. But that frequently causes many banks to lose sight of the fact that their clients start their journeys with a different mindset: “I want to do business with you.” That disconnect has resulted in banks failing to demonstrate any value, understand a client’s needs and establish a foundation of trust.

Additionally, commercial and SME banking clients are looking for more than just a financial services provider; they want a partner who can offer valuable advice and support their business. Their perception of a bank’s ability to meet these needs hinges on a transparent onboarding process that clearly communicates required information, minimizes time to value, and is transparent about next steps (if required) and the benefits they will gain.

Next steps

Banks can begin transforming client onboarding by taking these steps:

1. Profile for success: Align the onboarding channel and eligibility criteria with the bank’s risk and commercial appetite, routing clients to the channel most suited to their needs or risks.
   
   
2. Prioritize time to value: Ensure each step of the onboarding journey contributes to delivering value to a client. From reducing time to decision (even if contingent) to providing immediate access to account, clients should see the benefit of sharing their information.
   
   
3. Leverage data intelligently: Use external data sources such as public records to pre-fill information, simplifying the process and focusing on collecting only what is necessary.
   
   
4. Enhance transparency and convenience: Develop a clear, transparent and accessible journey with appropriate and convenient support options, keeping clients informed of their onboarding status.
   
   
5. Commit to continuous engagement: Onboarding does not end with account activation. Use collected data to proactively offer insights, create specific nudges to drive early engagement, and provide services that support a client’s business and deepen banking relationships.
   
   

In conclusion, banks that successfully navigate the onboarding challenge will not only meet the regulatory demands but also win the loyalty of their clients. By transforming onboarding into a strategic advantage, banks can set the stage for long-term partnerships that drive mutual success.

Kazalay Kimmins, Manager, Technology Consulting, Ernst and Young LLP, have also contributed to this article.