How digital onboarding is crucial for customer-centricity

Companies are facing increasing pressures to streamline customer-facing processes. The digital ecosystem emphasizes a world where people want things completed instantly and poor experiences mean switching to other providers. Chor Teh – financial crime compliance industry practice lead at Moody’s Analytics – has explored why customers should be at the front of onboarding processes.

Onboarding is one of the most important parts of the customer journey as this is where first impressions are made. More than half (68%) of consumers abandoned a financial application during the onboarding process in 2021, which was up from 63% in 2020, according to a recent report from Signicat.

Firms should not see improved digital onboarding processes as a way to simply stop people abandoning applications though. There are other benefits to a positive, customer-centric onboarding process. For example, a study from PassFort, a Moody’s Analytics company, found customers with positive compliance experiences were 77% more likely to recommend the provider and 60% more likely to buy more products. Additionally, they were 50% less likely to complain and 49% less likely to switch providers.

The importance of meeting customer demands has also been noted by Wolfsberg Group, a non-governmental association of 13 global banks that help build frameworks to manage financial crime risks. The summarized some of the key points it made about onboarding. The first is that customers now expect to manage their finances through digital means. Secondly, people are more likely to become a client through a digital channel, as it is convenient and matches their schedules.

Putting the customer at the center of the process benefits them and it can also improve how a company manages their entire customer lifecycle. Teh said, “KYC and onboarding isn’t just about data capturing at the initial stages. It is intrinsically linked to the rest of the client journey, from the KYC onboarding reviews, peer checking, and then offboarding and transaction monitoring.” Firms don’t want a client to think there will be a simple onboarding process, but poor servicing for the rest of the customer journey. “Firms need to build a concept of business retention from the beginning. Wherever there is pre or post onboarding, the concept needs to be present.” He added, “If you have an efficient, digital boarding process, you should only be asking the client for additional documents that you can’t find from public sources, so it is more unobtrusive.” Most firms will ask for all the information upfront, which slows the process down and has the potential to make customers less happy.

Common mistakes

While firms might be eager to implement a streamlined, customer-centric onboarding process, there are plenty of simple mistakes they can make when implementing technology to support efficiency.

One of the most common Teh has noticed is firms not thinking far enough into the future. “They only consider the initial onboarding,” he said, “which is only a small part of the compliance process. Firms will need to do reviews, whether they are the traditional periodic processes or the increasingly popular perpetual KYC which involves continuous risk reviews.” If this part is not considered in the digital compliance journey, the customer might have a great first interaction, but will have follow-up reviews where they answer the same old questions. Firms need an efficient way of using technology to ask necessary questions, without missing key data.

The next major mistake Teh has seen is implementing a solution that is siloed to a segment –  either a product, business line, or jurisdiction. “Scalability should be at the forefront of solution design. When you build a process, it should be scalable – like adding lego blocks – instead of redesigning an entire workflow, rebuilding the rule engines, or redoing the risk assessment process for a second and third product.” he added.

Having a system that is too siloed also means firms cannot quickly upsell customers to other products. If a client wants to get a new product, it should be an add-on, not one that makes them sit through another full screening process. “If you get sufficient data from the beginning, you will use that to build your client profile and that is usually sufficient when you need to add new products to it.”

Finally, Teh believes firms should bring greater efficiency to the compliance operating model by creating transparency across teams, and removing unnecessary levels. For example, a salesperson or relationship manager will interact with a client and pass some of this information to an assistant, and then the KYC team takes over. Instead, the sales manager could be brought into the process to make things more streamlined.

It’s not just the customer experience

When thinking about improving onboarding experiences, it is easy to assume it is about making the customer’s side of the process as simple as possible. However, firms also need to improve the experience for their employees.

As mentioned, some companies rely on a salesperson to handle part of the KYC process to get information. As firms go deeper through digital transformation, KYC teams will be the ones to interact with clients as they know the specific information required. This is something they will not be used to and will need to be taught, and they will need to learn how to use the technology that supports the process.

Teh said upskilling employees to work better with a digital platform is necessary. “We often hear ‘I don’t know where to start’ or ‘I prefer the way I used to do it before.’ This is usually linked to the nature of human beings, where you tend to reject things you’re not familiar with.” If a company brings the employee through the journey and coaches them along the way on how to use a system, they will become advocates of the technology, rather than complain about it. They will also be able to pass on their skillset to new joiners.

There are other benefits from getting employees engaged with the development of a solution. “If you involve employees who will be using the technology at the beginning of the development process, they have a chance to voice their opinion, and you will capture it at an early stage. Then it can be built into the improvement requirements. When people are aware their voice is being heard, they tend to be a bit more participative. They want to get on the journey with you.” On the reverse side, if people are not involved, they can be more defensive of their role and more adverse to change, potentially leading to unhappy employees or turnover of staff.

By taking note of employee experiences, as well as customers, Teh believes firms can implement a more successful KYC system.

Balancing KYC for all parties

Streamlining digital onboarding processes can be a tough battle for both consumers and internal teams, with everyone needing something different.

Customer-facing teams will want a KYC process to be as simple as possible so customers are happy and don’t drop out of the process. However, compliance teams need certain data and information to be collected, often creating more steps in the process. The trick is balancing this to keep both sides happy.

One of the best ways to do this is by inviting the financial crime team into the early stages of design. This lets them chip in and offer ideas about how the system should work and what information it needs. Teh said, “The key thing is to let them test the system because they have to test the system anyway.” This will help them build confidence.

Teh explained that sufficient testing helps ensure the process is quick enough but is capturing all of the required information. Similarly, firms need to maintain a strong quality assurance process, which essentially allows a company to audit themselves.

Advice to firms

Teh concluded with a bit of advice for firms looking to implement a new digital onboarding process. He said, “Speak to the people that have experience, such as myself and my peers in Moody’s. Having a few more conversations will greatly reduce the time people spend brainstorming because it helps to build a good horizon on how financial compliance processes can be planned, mapped and digitized.”

The next piece of advice was to research by reading papers on the topic, such as Wolfsberg Guidance on Digital Customer Lifecycle Management. There are also good papers by FATF and the big management consultants, as they have written reports about digital experiences, digital onboarding, and bringing people in technology closer to AML.

Finally, Teh suggests listening to some podcasts, including Moody’s KYC decoded podcast as a great place to start.

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