How Covid-19 changed banks’ onboarding processes

From: RegTech Analyst

Many banks had already started to introduce digital onboarding solutions before the coronavirus swept over the world. Following the pandemic, these efforts have gone into overdrive.

Digital onboarding is nothing new. Banks, financial institutions and other regulated companies have increasingly used different forms of off-site onboarding of new clients in tandem with the rising popularity of smartphones, tablets and connected devices. It’s easy to see why.

Firstly, customers are expecting a smooth, speedy signup process that can ideally be done with a few swipes, a selfie and some quick taps on a their devices. Secondly, these processes have empowered banks to cut costs and time spent on manually onboarding clients. So it’s a no-brainer why more firms invested in these solutions long before the world came under siege from Covid-19.

“This topic has been on the minds of all the banks for quite a long time,” says Kristoff Zammit Ciantar, CEO and founder of KYC Portal, the RegTech company specialising in know your customer solutions. “And we’ve been operating since 2017 in this market and all the conferences [have always been] very well attended [by] banks [being] dedicated [to] digital transformation.” However, the coronavirus crisis has accelerated the process. “We saw a drastic change,” says  Zammit Ciantar.

When the pandemic hit, the company suddenly saw a massive spike in demand for its services. It’s hardly a secret as to why that was. “Covid imposed restrictions [and] lockdowns [that forced] branches to close,” Zammit Ciantar says. The physical branches closing meant fewer walk-ins to sign up for accounts or face-to-face meetings to complete due diligence processed for prospective clients. Being unable to meet people also resulted in higher costs as it forced banks to conduct increasingly extraneous due diligence simply because they couldn’t tick the box of having met people in person.

While one would be tempted to think this situation may pass once the pandemic is over, the KYC Portal founder believes it’s too late to put the genie back in the bottle. “In fact, one of the recent news that we had from one of our clients that we’ve onboarded [during] Covid is that, in the past three weeks, the bank decided that by 2023, the full bank has to become fully digital,” he says. “[In other words, they are] not relying on physical branches on physical assets anymore. So you can see that the banks are started putting this in, even though Covid might be in something that will [pass] eventually.”

The Tier 1 banks KYC Portal works with also noticed that customers remained hesitant to venture into a physical meeting once social distancing restrictions eased. In short, solutions empowering banks to do their due diligence remotely have gone from being a nice-to-have to becoming a must-have. “Accelerated is quite [the right] word [when talking about] how banks are reacting because it’s [been] put on full speed [and on] top [of the] agenda,” says Zammit Ciantar.

If his prediction proves to be correct, Zammit Ciantar warns banks against just thinking of their digital onboarding processes as something to just tack on the rest of the service. “One major mistake that banks tend to do is they stay with their internal systems as they are [and] purchase an onboarding solution, which gets clients on board faster,” he explains, warning that many forget to ensure that the new solution will work dynamically with the back office too. In other words, it’s not just about what the client sees at the front that matters. “[If] your back office is still clunky or  reliant on too many processes or reliant on teams, then all you’re doing is a major bottleneck in your back office,” he adds.

Zammit Ciantar states that not only will a fully automated solution cut down on costs and speed up due diligence when people sign up to use a bank’s services, it will also slash the risks involved with manual processes. “So I believe [bank that] have already started the process and seeing the the benefits will obviously keep this going forward Covid or not Covid,” he says.

Copyright © 2020 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.