What are the best customer onboarding practices for financial institutions?


The process of customer onboarding at its core is about understanding who you are doing business with and the risks associated. What are the best practices in this for FIs?

In a recent post by Moody’s Analytics, the company detailed the best practices that financial institutions could employ during the customer onboarding process.

The company said, “To meet compliance obligations and prevent fraud and other financial crime, companies conduct customer onboarding processes. These KYC processes involve different data checks to verify someone is who they say they are, and to create transparency around ownership structures in corporate entities.

“KYC processes are designed to meet compliance standards and help firms mitigate the risk of doing business with criminals such as money launderers.”

With the climb in the sophistication of criminal behaviour and the complexity of global regulatory requirements, precision in KYC and KYB processes has become crucial.

According to Moody’s, B2C onboarding is – or should be – swift and efficient with minimal friction. The KYC process involves multiple data checks such as verifying name and address details, sometimes through checks with agencies who can verify an individual is who they say they are using ID documents, such as a passport or driving license.

This process often aims for full automation to deliver compliance with better, digital-first customer experiences.

Meanwhile, the B2B onboarding process can be much more complex and involve uncovering corporate ownership structures and ultimate business owners across a broad and varied global network.

The KYB process aims to create transparency around ownership structures through checks against corporate registries, sanctions, PEPs, and other watchlists to create a picture of risk.

KYB is often about collecting information that will then be reviewed by a compliance professional during enhanced due diligence. They will make the final onboarding decision based on automatic data checks, rather than relying on automated workflows alone.

Moody’s said, “With B2B or KYB onboarding, the aim isn’t to do straight-through processing, or make the whole thing as fast as possible, it’s about creating a true and accurate picture of risk so better decisions can be made about whom to work with.”

Another key part of the onboarding process is a risk assessment, and data is crucial to this.

Moody’s stated, “With KYC and onboarding individuals, access to real-time data is important to the customer experience.

“According to estimates by Forrester Consulting, a customer is contacted an average of ten times throughout the onboarding process. They are also asked to submit a series of documents.

“Rather than going to the customer multiple times and asking them to provide documentation, KYC solutions, like Moody’s, can provide automatic access to different data sources that will deliver results in moments. This also results in a better customer experience and faster onboarding times.”

Read the full post here.

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