In the last 24 months there have been at least 112 new entrants into the UK banking sector, including giants like Revolut and Tide. All banks, and especially Challenger Banks, are under scrutiny when it comes to managing compliance checks on new customers to prevent money laundering and other types of fraud. It's an issue taken very seriously, and one that can incur large fines for an institution found wanting.
The same institutions are also trying to change the experience of banking for their customers – disrupting the status quo. They are widening consumer choice, making banking digital and keeping service low-touch.
This means there is a careful balancing act to perform. Attracting applicants to a financial product in a competitive market, while completing robust KYC compliance checks on these customers and trying to create a great experience of choosing their brand.
Pulling off the balance act is no mean feat. It requires the institution to think about and optimise all areas of its approach to customer onboarding.
Balance compliance and customer experience
A digital case management platform has the potential to accelerate thousands of compliance checks and save hundreds of onboarding hours over the course of a year. This means many new customers applying for a product can get to account quickly and seamlessly, while still ensuring AML and compliance checks are satisfied.
Automation can ensure that a business that is scaling up doesn't need to scale up KYC and compliance costs by adding more people to the operation in order to manage an increased number of applications.
KYC, compliance/onboarding teams can be resourced and managed more efficiently by automating due diligence checks. The technology can also help create the much sought-after digital customer experience, that is low-touch and compliant.
A mini case study
Challenger Bank X “We currently onboard 5 customers a day and have plans for rapid growth. The expectation is we will expand into at two new jurisdictions and launch one new product in the next 12 months. We project we will need to onboard at least 30 new customers a day. The process needs to be fast and efficient to ensure we convert them. There is one compliance person and one KYC analyst in the business right now, we don’t want to employ 6 times as many people to deal with our expansion and onboarding targets.”
PassFort “We can help you automate compliance checks that would have been done manually or through individual callouts to data providers. Digitising your compliance processes and the necessary checks for different jurisdictions, we can get more than 80% of applications to first decision using Straight Through Processing. With STP, no manual intervention is needed, which means you won't have to recruit more KYC analysts to cope with the increase in applications. Your people can prioritise talking to customers and managing cases of enhanced due diligence and risk management.”
4 ways to more efficient onboarding:
- Efficient implementation - A digital onboarding solution that automates KYC, AML and other compliance checks is the first place to start when it comes to creating an efficient onboarding experience. However, if you have growth plans, it’s also important to choose a solution that can be implemented quickly. It’s no good waiting for 6 months to implement an onboarding solution. Resources would need to cover the intervening period and large-scale growth would leave you playing compliance catch up.
PassFort fact: It took PassFort 2 weeks to turn around implementation for a large wealth management firm with complex onboarding and compliance requirements.
- Cost efficiency – It’s more cost efficient to choose a solution with an annual licence fee rather than one that charges per API callout. If the solution charges for each API call you make to a data provider to run a compliance check on a new customer it means the solution becomes more expensive the more you use it. The more customers you put through an onboarding process, the more API calls are made and the more the technology costs.
PassFort fact: On behalf of our clients, we made 34 million API calls to different data providers last year...but PassFort doesn't charge its clients per callout.
- Dynamic risk scoring – Find a solution that has a dynamic, central risk engine. This enables onboarding teams to maintain a risk score that lives throughout the lifecycle of the customer. A risk score shouldn’t simply be set at onboarding and remain the same. It should always be live and reflect each customer's circumstances.
Running a dynamic risk model means that if anything in the engine needs to be changed – for example, a single check in an overall workflow - it doesn’t break any other element of the compliance process. Altering processes should be simple, so it can accommodate new regulation and any changes you want to make.
PassFort fact: Risk scores in PassFort are set across any number of fields, and risk categorisation is managed across the platform. Risk models aren’t separate, but connected with structured and non-structured fields. All risk elements are interconnected to generate overall risk scores. Our dynamic risk scoring can then feed into limitless smart policies for different customer types.
- Efficient onboarding experiences – There is added value in reducing the time it takes to make a decision on a customer’s application. Fast, automated, digital onboarding creates a frictionless customer experience, so that your customers won’t even realise they are going through a compliance process. Choosing your product will just feel good.
It also means KYC/Onboarding teams are more efficient, as they prioritise case management and focus time on enhanced due diligence or risk management. Higher conversion rates are achieved because of faster processing times, and there are fewer drop-offs along the way.
PassFort fact: As well as maximising STP and integrating with leading data providers to automate compliance checks, PassFort can collect documentation and information in customer-facing forms, directly from within the PassFort platform.
Regulated businesses, whether they are new entrants or high street names, need to deal with onboarding processes and associated compliance checks. These can be slow to execute and create poor customer experiences.
It’s a competitive market, so customers can’t feel the effects of an inefficient onboarding process. For the customer, the onboarding experience should match the expectations set when they were being courted to choose a product. If a firm can’t operate an efficient, modern onboarding flow, the customer might just take their business elsewhere.
Saying that, the financial institution can’t afford to compromise on compliance either. Choosing the right digital onboarding solution will drive efficiency into all areas of customer due diligence and risk management.
Everyone can get onboard with that.
Get in touch
If you would like to talk about driving efficiency into your customer onboarding journeys we would love to hear from you. Please get in touch any time to arrange to see the platform or for a review of your current compliance processes.