Digital innovations have transformed nearly every industry, and online tools and apps have made conducting business and life easier and more efficient. Before the COVID-19 pandemic, it was already apparent businesses not looking at advancing their technology would be left behind. The pandemic further forced businesses to rethink how they approach customers in new, socially-distanced ways. In other words, businesses have been forced to digitally upgrade and innovate.
While many banks have implemented and evolved digital methods of serving their customers, many haven’t. At this point, going digital is no longer an option, but a necessity in order to survive.
Our recent report on The State of Corporate Banking Customer Onboarding 2020 details the experience of corporate customers who recently opened new bank accounts, and provides insights into the ways banks can improve their customer onboarding processes. The biggest concern for a bank is a balance between a quick and painless customer onboarding process and remaining compliant with regulations when performing the necessary verifications and risk assessments of customers. The report points out a few major areas of friction that corporate customers encountered as they set up their bank accounts, which can be solved through digital fixes.
Speed, convenience, and efficiency were the big issues customers faced that hindered the process of opening their accounts, which included the following concerns.
Customers wanted a speedier process. In a world where most tasks can be done at the tap of a button on an app or a website, it’s a misalignment of priorities for banks to expect customers to wait. The report stated that most customers were able to open their accounts within one week, but in a digital world where opening a credit card or paying taxes can be done online in a few hours, even a week seems like a long time. The report also reveals that customers who thought the process was taking too long actually halted the account creation process with the bank. This simply comes back to reevaluating the process:
- Are the right digital tools in place to speed up customer onboarding in order to better serve our customers?
- Are we still leaving much of the process to manual efforts?
Customers were also frustrated banks still required them to appear in person at a physical location, as nearly half of those surveyed in the report said they were required to do so in order to open their account. Given the other half of customers could open their accounts entirely online — at both digital banks, global banks, and local banks — the tools clearly exist for eliminating this time-consuming requirement from customer onboarding. COVID restrictions are also putting the pressure on businesses to offer non-location-based options like video conferencing. So if visiting a branch is creating friction for customer onboarding, banks should embrace digital tools to eliminate it.
Similarly, customers found another bottleneck in having to print and sign physical documents for their account creation, with nearly half of customers being required by the bank to do so. This means the other half of banking customers were able to submit documents online through secure transfer or by providing their digital signatures. It seems with those options being available already, banks need to embrace them in order to better serve their customers.
The biggest customer complaint was they had to keep responding to additional requests from the bank for more information. Half of the customers surveyed in the report needed to provide additional information to the bank when requested, upwards of five separate times for some customers. This kind of back-and-forth could be mitigated through digital checklists or other digital trackers. But it may be due to the kinds of sources banks are using to verify customer information. If those databases are providing unstructured data or stored data, then outdated information would prompt banks to have to ping customers again. This isn’t just a matter of implementing digital tools, but reassessing which digital tools the bank is using.
Digitizing the Onboarding Process
Interestingly, customers who did their business with digital banks saw their accounts opened faster, with virtually no need to visit a location or print out documents, and significantly reduced requests for follow-up information. While online and digital tools are indeed being offered through more traditional banks, digital banks might be seeing more success in streamlining customer onboarding simply because their business model is based on using digital tools to disrupt the outdated practices of traditional banking. Again, if traditional banks want to stay competitive, utilization of digital tools needs to become a priority going forward.
Corporate banking customers want an easy, streamlined experience when opening an account, while banks want to carry out their due diligence without compromising on compliance. Both objectives can be achieved by using digital tools to make the process more speedy, convenient, and efficient. But that depends on whether banks are willing to make the effort to assess their weaknesses, and adopt new practices and processes for the future.
Author’s bio: Mr Henderson was most recently the CEO of a leading UK-based private and commercial bank, and during his two-year tenure he drove the successful and profitable diversification of the banking business. He also covered the role of CEO at Shawbrook Bank, one of the first UK challenger banks, where he delivered the bank’s first ever profit. Mr Henderson previously held the roles of chief operating officer of Barclays Wealth Private Banking where he was responsible for risk management and control of Barclays’ core private banking business in the UK and parts of EMEA and Asia. He was CEO of RBS International from 2005 to 2010 and during his tenure, profitability doubled, and the division was named the best performing general banking division in the RBS Group. Mr Henderson spent a total of 17 years at Royal Bank of Scotland where he was responsible for business and marketing strategy for the Royal Bank of Scotland and NatWest brands, comprising 2,400 branches and 13 million customers.