Customer Onboarding in Banks: Current Challenges & Future Trends

Posted by Harshita Kapoor on / January 20, 2021
Customer Onboarding in Banks: Current Challenges & Future Trends

With numerous tools and sources available for communication, the importance of every interaction, an organization has with its clients, is mounting tremendously. Bearing in mind the intense competition in the markets, organizations must assure that they leave an everlasting impression in minds of their clients after every interaction.

In the financial services industry, customers now expect premium digital experiences in critical services. It is especially vital during client onboarding- the entire process through which an individual starts his journey as a customer or a client of a bank/financial institution. It includes various activities like the evaluation of customer’s requirement, followed by due-diligence, fulfilment of legal aspects, opening the account, and making it operational.

Top Challenges in Enrolment Processes of Banks

The process of client onboarding in financial institutions and banks requires proactive communication and involvement of multiple departments within the bank like credit, operations, compliance, legal, front office, risk, and tax. As per the research by Forrester Consulting, it takes two to twelve weeks for institutions to onboard new clients that had implemented partial onboarding solutions with basic workflow capabilities, making it  an arduous process. Let us understand the challenges in the current client onboarding processes of banks.

Frequent Changes in Regulations

Banks witness changes in regulations on a monthly or even on a weekly basis. Therefore, banks must continually adapt their systems in accordance with the regulations to assure compliance. It can be challenging for the banks as they have to explain the changes to the client as well as ensure that they are amended in the onboarding process. Such changes in the regulations also require banks to revisit their current processes/operations.

Demand to Access Banking Services via Smartphones

As banks and financial institutions are employing modern technology, bank customers are insistently demanding every service on a real-time basis. Especially as an aftermath of the COVID-19 pandemic, an average customer expects to access all the banking services on their smartphone and does not visit bank branches at all. Yet, there are many banks that continue to operate on the traditional systems, and therefore providing end-to-end digital experiences is a great challenge for such banks.

Manual and Time-Consuming Processes

The process of client onboarding is arduous and time-consuming as an array of documents are to be acquired from the clients and the process as numerous touchpoints. After acquiring, the bigger challenge for banks is to manage these documents manually without any errors. For instance, bear in mind a bank with three different entities viz. retail, insurance, and the corporate which serves different types of customers and businesses and an individual/business decides to become a client in all three entities. The client would have to go through the entire time-consuming processes of onboarding three times.

Future of Client Onboarding by Banks

The above-listed challenges demand a change in the traditional processes of customer onboarding for financial institutions and banks. Thus, banks have started adopting cutting-edge technologies to improve their efficiencies and are striving to deliver a seamless experience during the process. Following are the models that banks might adopt in the coming years to simplify their processes.

Artificial Intelligence and Machine Learning

Artificial intelligence allows computer software to make decisions like humans. AI allows the businesses to deliver optimum customer experience, devise strategies for effective user onboarding, and find loopholes in the customer onboarding processes. By employing Artificial Intelligence in this process, banks can further encompass machine learning and process documents faster with cognitive document automation.

Blockchain Technology

Banks and financial institutions can employ Distributed Ledger Technology (DLT) like Blockchain for the KYC process that would enable users to manage their digital identity with high-grade security. The technology will further aid financial institutions and businesses to manage data with reliability, proficiency, and ease.

Biometrics Systems

Biometric software is popular amongst top banks to ease the client onboarding process, but it is not as widespread. Biometric solution employs the inherent unique characteristics of an individual for recognition purposes. It is based on behavioral or physical traits like face identification, fingerprint and voice recognition, and iris recognition solutions. Smart Biometric solution with e-KYC by Panamax alleviates any identification issues where the resources can be taken, stolen, borrowed, or even forgotten.

Digital Identities

Due to the COVID-19 pandemic, the banks have started realizing the potential of digitization in the onboarding process. Digital identity solutions enable customers to safely access banking services. It can help banks in offering customer-driven, mobile, and secured services and as a result, retain the existing customers and onboard new ones too.

Revamping the Onboarding Process in Banks

When it comes to delivering banking services, the better the customer service the more clients will be inclined towards the financial institution in initiating the relationship. Emerging technologies that are being tested for customer onboarding have a great potential in shortening the time of completion, lessen redundant data entry and provide high accuracy in risk and compliance scoring. This will further enable banks in delivering state-of-the art technological experiences through their services.

Panamax’s e-KYC with Smart Biometrics is one of the most versatile KYC solutions for banks. It comes with a set of distinct features to deliver an intuitive and user-friendly way for managing field activities such as KYC, customer acquisition, fulfilment, and pick-up activities as well as provide the exceptional security of biometric identification.

Harshita Kapoor

Harshita Kapoor

Harshita is a Content Writer at Panamax. Inc. MBA in HR & Marketing, she found her calling in Content Writing. In a short span of 2 years, she has explored writing in different styles of content like Coffee table books, website content and for media. In her time of leisure, she finds happiness in binge watching classics & practicing yoga.