A unique combination of factors is making remote corporate onboarding a priority for financial institutions worldwide.
In financial services, the onboarding process of corporate clients has long been one of the laggards in the digitisation revolution. While retail banking clients usually have access to a new account in around 2 days, the average time it takes for corporate clients to complete the onboarding process is still between 26 and 32 days.
This is due to the complexity of the required information and verification process when compared to a standard individual onboarding journey. Corporate entities can be extremely complex organisms made of multiple parts, controlling entities and individuals, all of which need to be identified and verified during the process.
However, things are beginning to change. Unsurprisingly, the COVID-19 pandemic played a big role in catalysing the current shift.
New limitations to customer acquisition channels
When the pandemic first hit and in-person meetings became a memory of the past, digital transformation projects that had been put off for a long time suddenly became a priority. As branches closed and teams started working from home, the attention towards digital channels increased. For financial services providers, the challenge became not only how to find new potential clients online, but how to make sure these prospects could be safely onboarded remotely once they decided to proceed and sign up for a product. While some organisations were able to find long-term solutions to this challenge, many are still struggling to effectively and efficiently digitise and automate long-established manual processes still relying on heavily paper-based procedures.
Paying attention to client expectations
The last couple of years have also raised the stakes when it comes to clients’ expectations towards businesses. According to research by McKinsey, we have covered a ‘decade in days’ when it comes to the adoption of digital since the beginning of the pandemic. At the same time, the latest CMO Survey reveals that 84% of marketers report customers now place more value on digital experiences than before the pandemic.
As purchasing and consumer activities have moved online also for previously untouched segments of the population, the type of digital experience that financial services providers are able to offer to their new corporate clients has become an important differentiator in a suddenly much busier digital market.
Encouragement from financial regulators
Finally, the regulators’ shift from diffidence to encouragement regarding remote corporate onboarding has been one of the most important drivers of the current change.
A key milestone was the release of official recommendations by the Financial Action Task Force (FATF) in April 2020, promoting the adoption of digital onboarding solutions during the pandemic. The document recognised that the “Use of digital/contactless payments and digital onboarding reduce the risk of spreading the virus”.
Following in the FATF’s steps, some local regulators provided further guidance. For instance, the Hong Kong Monetary Authority issued an official letter in September 2020, clearly stating that financial institutions have the flexibility to onboard corporate customers remotely under AML legislation in Hong Kong, without the need for face-to-face interactions. The HKMA followed up in June 2021 with the launch of a Regtech Adoption Practice Guide series. These reports – written in partnership with KPMG – provide financial institutions with detailed practical guidance on how to successfully implement RegTech solutions, including for the digitisation of corporate onboarding.
All of the above factors have contributed to a favourable environment for the implementation of digital corporate onboarding in financial services. The industry standard for business customers will soon be a seamless digital journey to be performed via each client’s preferred device, including elements of automation and AI-driven authentication to improve efficiency and strengthen the overall process compliance.
While building digital solutions in-house may seem like the appropriate option in certain cases, partnering with specialised third-party providers enables financial institutions to drastically accelerate the digital transformation of their corporate onboarding process and avoid being left behind during the current sector shift.
If you are looking to equip your business against the challenges of today and tomorrow, we’d love to help.
At Know Your Customer, we specialise in providing scalable, flexible and dynamic corporate onboarding solutions to financial institutions around the world.
To discover how our technology reduces onboarding times for corporate clients from 26 days to a few hours, request a demo here.