Customer-led onboarding is the new normal for business banking
In 2017, Monzo changed everything. By creating a new bank account that was ready to go minutes after downloading an app to your phone, they showed retail customers (who were used to waiting days or even weeks to open their bank accounts), that there was a new way to get things done, and re-set expectations for the rest of the market, too.
In the years since, we’ve seen our key banking experiences transformed. This includes everything from day-to-day matters like how we send and receive payments and speak to our banks, to more complex matters like borrowing money and even how we buy a house: all of these journeys have been re-imagined with customer experience at the heart. The “ready-to-go” experience pioneered by the new digital banks is now the benchmark, and the high street banks have invested heavily in building similar experiences.
As so, often in banking, it’s innovation in the retail banking segment that drives customer expectations in adjacent sectors. Business banking or SME customers used to straightforward user experiences and friction-free services in their personal bank dealings now expect those same experiences from their banks in their business dealings, particularly when it comes to opening an account.
This is where things get tricky. Getting business customer onboarding right is a tough balance for the banks to strike. There are steep penalties for banks who provide banking facilities to customers who use them improperly and the industry has invested billions of dollars in ensuring that applicants are properly scrutinised and the financial crime risk that they present is fully measured and mitigated.
The onboarding journey is so important in creating a great first customer experience, setting the tone for the ongoing relationship and acting as a key control point. How do we make sure that we get it right? There’s no single answer but blending leading-edge technology with efficient business operations is crucial to getting it right.
Use technology to automate or eliminate low-value tasks but let humans make decisions that really matter
State of the art software applications, a modern scalable technology architecture and skilled people are the foundation for all digital banking propositions.
Banks are now able to build and run responsive services that are continuously updated, incrementally adding new services and constantly improving user experience. Open data standards and APIs allow solutions to collect customer data efficiently – no more copying data from lengthy paper-forms into systems, or even extracting data from trusted third party databases instead of having customers provide it in the first place. Not only does this make onboarding more secure and reliable, it also speeds up the process significantly: a win-win for all concerned.
So why doesn’t automated data collection mean STP onboarding? Because although collecting the right data traditionally made onboarding a lengthy process, the most important job is making sense of the information. Is the business a legitimate business and, if so, what is the risk it introduced to the bank? Businesses, be it SMEs or large corporates, are complex entities and technology isn’t mature enough yet to make this judgement. A human will assess customer applications and decide whether to open an account or to reject the application.
This may seem old school but doesn’t mean that onboarding processes have to take days or weeks to be completed. In addition to eliminating static tasks, creating outcome-led onboarding teams eliminates hand-offs between teams, shortening process time significantly.
Taking a closer look at what some onboarding controls actually entail helps us to understand this better. A good example for the critical role of operations in onboarding is the assessment of business financials. A bank needs to assess deposits, initial investments and turnover of a business and determine if they make sense in context of the nature of the business and its operations (i.e. its customers and suppliers). This in turn always depends on several factors that are specific to each business, such as the date of incorporation, the type of industry the business operates in, the number of employees, the directors’ age and others. For example, a high cash turnover is often a signal for high financial crime risk, but depending on the circumstances of the business, it may make sense – a takeaway business catering for music festivals for example. This is a very difficult judgement for Artificial Intelligence solutions to make, and the tolerance for making wrong decisions is very low. Digital onboarding solutions will continue to require expert operations teams focussed on such higher value tasks.
Bringing it all together
Re-designing and digitising the onboarding journey with the customer at the centre has revolutionised the way business banking customers interact with their banks. This forms the foundation for a trusted long-term relationship and results in a better, cheaper and faster onboarding experience – for both customers and banks. Customers are quickly set up with a ready-to-use bank account with access to banking services (without having to visit a branch), and banks are able to onboard customers more securely and at reduced operational cost.
To achieve this, digital onboarding requires a well-orchestrated integration and a symbiosis of technology and digital-first operations. It is therefore critical to include operations in the proposition design from the very start of any transformation programme that sets out to re-design and digitise onboarding.
When done right, digital operations takes advantage of (partly) automated onboarding solutions that remove static and lower-value tasks and add unique value by providing human judgement and decision-making.
As the SME onboarding landscape becomes more digitally and operationally mature, we are already observing a trend to re-design and digitise onboarding for larger, even more complex companies – which means that the role of digital operations will become even more critical.