Client onboarding in the banking sector can be dauntingly slow and resource-intensive, often stretching beyond 90 days to incorporate a single corporate client.
According to Encompass, this duration is punctuated by bottlenecks exacerbated by recruitment, retention, and training challenges. Yet, the integration of automated Corporate Digital Identity (CDI) systems promises substantial alleviation of these issues, particularly during the identity verification stage, driving notable operational efficiencies and cost reductions.
Chartis’ research lays bare the financial strains of current practices. Typically, Tier 1 banks incur costs that are 4.5 times higher on manual processes and personnel than on technology when onboarding corporates. Similar inefficiencies plague mid-tier banks, where combined expenditures on customer due diligence and subsequent investigations soar to approximately $12.7 billion, not accounting for the concealed costs of managing these processes.
The typical onboarding timeline spans 90 to 120 days, consuming about 51 hours of manual labor. Significant time is lost during crucial stages such as identity verification, triage, screening, profile completion, and quality control.
Corporate onboarding is riddled with challenges including the absence of standardised client identities, disparate global regulations, complex ownership structures, dependence on manual interventions, and outdated, fragmented data systems.
These hurdles severely impede customer due diligence (CDD) and Know Your Customer (KYC) processes. However, CDI’s implementation streamlines these processes by eliminating manual data collection and minimising the need for further research and investigations.
Encompass’ application of CDI in collaboration with clients has yielded a significant reduction in both time and effort, automating the KYC process to accelerate onboarding. Effective CDI application has resulted in an average 32% reduction in onboarding processing time. Notably, the most substantial time savings—about 65%—are achieved during the early stages such as identity verification, triage, and risk assessment, fostering efficiencies that cascade through the subsequent stages.
Further improvements are evident in areas like triage and risk assessment where upfront data collection provides analysts a complete risk overview, enhancing decision-making speed and accuracy. Similarly, outreach and profile completion benefit from CDI, realising an average 14% time saving, as most data is accessible upfront, thus reducing the need for repeated client interactions and enhancing both the client experience and internal efficiency.
CDI is transformative, offering a comprehensive, real-time consolidation of private and public data which facilitates swift and precise validation of corporate entities. It mirrors the individual identity verification approach by providing a “360-degree view” of corporate entities, thereby minimising manual errors and enhancing KYC processes to ensure compliance while streamlining workflows.
Who Benefits from CDI? CDI extends significant benefits across the banking sector, particularly:
Commercial and corporate banks, especially Tier 1 institutions struggling with inefficient onboarding processes, can achieve 32% end-to-end processing time savings.
Banks prioritising client experience, especially in markets with high client drop-off rates, may find CDI a competitive differentiator.
Institutions grappling with recruitment or retention challenges might find that freeing up analysts for higher-value tasks can enhance job satisfaction and retention rates.
CDI represents a pivotal shift beyond mere technological enhancement; it’s a strategic evolution poised to streamline banking operations, bolster compliance, and uphold competitiveness in an intricately regulated financial landscape.
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