Client onboarding: How can banks turn clients’ pain points into opportunities?

Published: May 29, 2019

Client onboarding is unarguably one of the most crucial functions for banks as it sets the tone for future client experience, service, and relationship-all of which influence bottom line in a big way. According to a McKinsey report, for every one-point increase in customer onboarding satisfaction on a Net Promoter Score (NPS) scale of 10, there was a 3 percent increase in customer revenue.

To tap into the power of customer onboarding, banks must strategically reimagine the entire process with customer as the focal point. At present, customer onboarding is a paper-based, manual, error-prone, inaccurate, inefficient, and expensive process. It demands a complete overhaul that must begin with streamlining operations, opening transparent channels of communication, and enhancing the quality of customer data.

Operational Efficiency

A Fenergo report reveals that on an average, customers are contacted about ten times during an onboarding process, and are requested to submit approximately ten to hundreds of documents during the process. It clearly highlights inefficient onboarding that in turn leads to poor customer experience.

Complex processes slow down the entire onboarding journey. In addition, the lack of a client facing portal leads to a higher turnaround time from customers. Also, due to varied operational processes across geographies, the inter-region account setup and maintenance processes get further delayed. Such factors together make reporting and service level agreement (SLA) management challenging. Also, more than 25 percent of onboarding efforts are spent on the manual update of various project management tools.

With technologies like Digital Process Automation (DPA), banks can easily optimize customer onboarding. It can help banks achieve operational efficiency through process orchestration and integration of siloed departments. It offers banks the flexibility to redefine processes in sync with the ever-changing regulatory landscape. Banks can also define SLAs for each activity such as scrutiny of documents, KYC and more, the status of which can then be tracked for identifying roadblocks and improving turnaround time. DPA also facilitates compliance with evolving global and regional regulations, as part of customer due-diligence.

Transparency & Effective Communication

Keeping pace with evolving regulations such as MiFID II (Markets in Financial Instruments Directive)-2018, CRS (Common Reporting Standards)-2016, and Margin Requirements-2016 is tough. However, banks must do their best to frequently assess the impact of these regulations on customer onboarding and learn to adapt quickly. To help improve compliance and transparency, banks can keep their customers updated using a simplified view of regulatory requirements.

Besides, banks can also design real-time client facing portals to reduce client communication cycle times and improve transparency. This will not only lead to enhanced adherence to stringent SLAs, but also increase customer onboarding satisfaction. Consistent communication during the onboarding journey, therefore, has the potential to make or break the relationship with the customer.

Data Quality

Poor data quality can be attributed to extensive manual inputs, outdated tracking methods, and disjointed banking processes. As a result, banks often end up with skewed metrics and insights that impact decision making and lead to lower profits and lost opportunities.

For improved quality of data, banks must link their disjointed processes and customer records across departments, improve their data collection processes across channels, and validate information from third-party sources before acting on it.

These three key components of client onboarding can not only help banks create a stunning first impression on their customers but also, outpace competitors to the finish line. As they say, first impression matters and you never get a second chance to make a great first impression.

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