Onboarding at scale without derailing – the customer acquisition challenge

Corporate treasurers have had to fund and run their businesses while operating against the backdrop of a challenging few years. But the biggest challenge they face when opening financial facilities or entering new markets is the pain faced from the onboarding process with their banks. Clunky and manual onboarding processes still often derail operations despite the rapid change in customer expectations, following the acceleration of digital banking. The question is, how do financial institutions (finally) fix onboarding so that the experience matches corporates’ expectations?

The follow up question is, how do you scale onboarding without derailing? This is a key piece of the puzzle for driving acquisition growth for banks in the future.

Why is onboarding such a pain point for corporates and why does it cause such a disconnect for traditional banks with their clients?

Challenger banks seem to have far slicker onboarding experiences than the traditional players, but the question is whether fast, digital-first, efficient onboarding can become the norm for corporate and commercial banking.

Özkan Erener, CEO & Co-Founder of VeriPark, discusses the complex nature of onboarding larger businesses. Afterall, it’s not only the commercial client that needs to be onboarded as a party, but it’s the directors, shareholders, significant signature holders and more. Very quickly, banks end up with over 10 parties that must be onboarded. Should one party be restricted, high-risk, or should there be a large multi-national corporate structure to deal with, regulations and complexities will stretch the timeframe for onboarding to over a month (possibly even more than two months).

This complexity is exacerbated by the extremely manual processes that make up onboarding: picking up the phone to confirm residencies, SSI payment instruction call backs, and more. Regulation and the aftermath of the pandemic has forced the hand of banks to digitize parts of the process to a greater extent, but digitization is made harder by legacy infrastructure. This is one of the reasons why we see a difference in speed of onboarding between new banks vs more traditional players.

The truth is that solutions already exist which can digitize onboarding steps in incredibly modern, flexible and powerful ways. These solutions represent the technological capabilities that exist today in corporate lending, but the uptake of these solutions for some banks is slow. All of this means that those institutions are continually falling behind the competition.

What’s stopping the change?

Change is happening in pockets and, unsurprisingly, some of the newer challenger banks are offering onboarding as a major selling point to their customers. But so far this has yet to scale as the norm for commercial banking and for more complex large corporate banking relationships.

There are a few reasons for teething issues with digital onboarding. There are specific geographical regulations that must be met for digital onboarding, for example; in Asia. While the technology to onboard digitally is already out there (for example leveraging DocuSign), implementing these solutions is a large-scale project for banks and this could be seen as disruptive to operations – as well as being costly.

Banks need to find the right partners to help them navigate this tricky landscape. The payoff will be a smoother implementation and quicker innovation for the future, as well as the obvious efficiency and cost benefits.  

In a complex and fractured world for lending, how to you bring the data together cleanly?

The use of a Customer Relationship Management System (CRM) comes into play when you want to scale onboarding in large numbers. For example, when a bank is looking to break into a new market in a different country and they have targets to acquire many thousands of new loans.

Even with a sales team working on this, the process would be manual and arduous – in fact, even using a CRM to collect and onboard isn’t a simple operation. For example, the bank would need to enter many leads into their CRM, qualify and assign the leads to a sales manager, have the manager contact or visit the client, collect the onboarding documents, complete the eligibility checks, issue the limits and more. All of this delivered, hundreds (maybe thousands) of times, successfully.

The advance of using the CRM, though, is that it enables the bank to use an SLA-driven onboarding structure with reminders and deadlines for the sales teams.

Not only this, but creating a lending ecosystem where client data is pulled into the onboarding processes straight from the application creates a reduce space for manual re-keying of data. This reduces operation risk as well as increasing operational efficiency.

Clean data and using the CRM is one thing, but does it scale?

Add complexity of the corporate applicants to the volume and scale discussed above, and you have an incredibly complex origination workflow to deal with before you can even generate revenue. This is limiting banks today from growing, because throwing headcount at the problem simply compounds the manual processes that cause the inefficiencies – never mind the fact that this increases the cost for banks to serve their clients.

Erener discusses how VeriPark are working with clients to speed up and automate parts of the onboarding process to reduce the number of manual steps there are. Using algorithms to aid credit approval and machine learning to predict defaults, for example, simplifies the decisioning process and speeds up that part of the customers’ onboarding journey.

All of these processes can run to completion autonomously, 24 hours a day, 7 days a week. Some banks are actually integrating their lending products with e-commerce which increases their power to acquire new customers to a much higher level.

This approach scales far better than using headcount to solve the issue because it doesn’t increase cost to serve.