Advanced onboarding – Why banking and financial services must change its approach

June 17th 2021: The events of 2020, and the far-reaching plethora of pandemic pressures exerted on banks and financial service providers brought into start relief the importance of getting the basics right:

  • Improving client experience
  • Strengthening controls
  • Reducing cost and complexity
  • Earning client trust every day

Few activities combine all of these transformational and reputational challenges like onboarding a new client and completing a Know Your Customer (KYC) or credit decision process. For onboarding and operations leaders, they pose unique, sometimes highly emotive, and highly complex challenges.

The friction of traditional onboarding

As the world resets after a turbulent 12 months, banks and financial service organisations have a unique opportunity to engage with their anxious customers and establish long-lasting relationships.

However, sales and relationship management teams face significant pressures to bring on new customers, only to find their efforts frustrated by the sheer length of time taken to decide whether the client meets the bank’s credit and risk appetite.

As a result, it takes an average of 32 days to onboard a new customer, and thanks to the departmental nature of banking operations, each customer goes through around 8 different interactions during the customer onboarding process.

It’s evident just how difficult the customer onboarding process is for banks:

  • 90-120 days to onboard corporate banking customers (Oliver Wyman)
  • 307 employees to work on KYC adherence (Thomson Reuters)
  • $40m average spend to onboard new clients (Thomson Reuters)

…and for business customers:

  • 85% of corporates have not had a good KYC experience (Thomson Reuters)
  • 12% changed banks as a result (Thomson Reuters)

Why a siloed approach no longer works

Within banks and financial services organisations, selling to companies involves a period of prospecting and engagement before any formal customer onboarding process can commence.

More experienced individuals within these teams tend to be quite adept at recognising typical risk issues at this stage if they are evident.

For the most part, this sales process is worked upon in good faith by both parties, and aspects of a deal (such as products and limits) are decided upon ready for the onboarding phase.

Identity documents are taken and checked, and depending upon the process of the bank involved, the credit risk process is started and aspects of the KYC process may begin.

It is at this point that the bank is assessing various risks as required by their policies, designed to meet regulatory requirements.

The outcome of these checks is often to complete the onboarding process and to welcome the new customer.

However, in many instances, bank policies dictate that the nature of the deal needs to change in one or more aspects – and in more extreme cases, the bank is unable to complete the deal entirely.

So how to move forward?

Built on a plethora of legacy systems and data silos, banks must set aside traditional ways of working and focus on building great customer visibility and control end-to-end (through front, middle and back-office) in order to make the customer onboarding experience as frictionless as possible.

When relationship managers have the right level of risk savvy and insight, and their colleagues in operational and risk roles have the right level of commercial awareness, everyone benefits. A real game-changer in onboarding best practices. By integrating these activities and fostering end-to-end collaboration, banks can eliminate bottlenecks, meet customer expectations and work within risk and cost constraints.

More than data – The Know-How Equation

According to the Digital Banking Report, 75% of financial institutions consider themselves ‘not adept’ at using data and analytics to determine the next best action. This is particularly true of the onboarding process.

It is commonplace to talk of meeting the KYC and AML needs of a bank by accessing more complete data sources, more accurately and more quickly. On the surface, this may appear a good idea, but looking holistically at the goals of the bank, it is instead contributing to the problem of an unmanageable workload in KYC and AML, and therefore contributing to longer queues, longer onboarding windows, lower customer satisfaction and ultimately, greater dissonance between the twin drivers of meeting regulatory compliance and delivering commercial growth

Data alone is not the answer.

Artesian has coined the term Distributed Compliance – bringing together data, collaboration and automation to improve an organisation’s ability to meet its regulatory KYC requirements whilst at the same time delivering advanced onboarding.

Distributed compliance involves giving the Compliance team control of a sophisticated decision engine to enable data coming in to have rules applied and tasks created.

Further, it means distributing these tasks to appropriate staff, monitoring the completion of the tasks and evidencing the whole process. The automation aspect of this is fundamental because it brings efficiency, consistency and control to the areas it transforms.

Combine this automation with improved collaboration and it gets really interesting. Distributed compliance gives a KYC view to Relationship Managers on the front line of new relationship building, and also involves them in the first stages of the KYC journey. It puts risk at the front line of the business and at the same time distributing the KYC queue to allow compliance analysts to focus on work that requires their skills and experience.

Artesian Connect™ – harnessing the Know-How Equation™

Here at Artesian, we believe the foundation of any onboarding transformation journey is data, analytics and technology, but the human element can’t be ignored. The entire financial institution must become comfortable with using insights and intelligence in collaboration with each other and with machines. For this reason, we developed Artesian Connect™.

Artesian Connect™ combines everything a bank or financial service provider knows about its customers, business and market, and leverages an advanced rules engine that ingests millions of structured and unstructured data points to layer on top of that know-how, quickly delivering impactful insights and risk intelligence needed for next-generation smarter decision-making and frictionless onboarding.

The Know-How Equation in action for Metro Bank – 94% faster onboarding, whilst still delivering superior levels of personal service.

Metro Bank has reported that using the Artesian Connect™ platform it has been able to automate many aspects of its operational process for onboarding new customers or screening the back-book in a fraction of the time – at scale.

Speaking about the experience Ronan Heeran, Financial Crime Risk & Control Manager at Metro Bank says: “We started working with Artesian to explore ways we could introduce greater efficiency to the customer onboarding journey. We loved the idea of being able to aggregate data from a number of different sources and map our risk appetite to Artesian’s rules framework to flag issues immediately. The result meant we could deliver a process which in some cases was 94% quicker than our existing process.”

Put Artesian to the test 

We love a challenge. Put Artesian Connect™ to the test and find out how we can put the Know-How Equation to work to solve your onboarding challenges.

Using what we call the 3D’s of the Know-How Equation – Discover. Design. Demonstrate – we’ll work closely with you to identify and understand your onboarding process, the bottlenecks and the issues you need to solve. We’ll take your expertise and programme that into our Insight Engine, so you’ll have a platform that’s as unique as your business.

Get in touch with one of our experts today.