Having strong Know Your Customer (KYC) onboarding measures are compulsory for regulated companies. But regulation shouldn’t have to get in the way of giving customers a seamless and speedy customer onboarding process.
Delivering effective KYC along with a positive user experience is not only possible but a necessity for any business that wants to thrive in this digital-first economy.
On the surface, it does seem like the two are in contrast with each other. On one side KYC is all about being thorough and robust enough to get all of the information required to make a due diligence decision and, on the other side, customer onboarding is about quickly and easily getting information from a customer so you can begin serving them.
So how can you get the perfect balance between informational depth and speedy simplicity?
What is Onboarding?
The “threat” of KYC can seem daunting as the penalties for non-compliance can be severe but the KYC and customer due diligence (CDD) procedures, as well as the regulatory requirements, are easy enough to understand and incorporate into an onboarding process.
Simply put, onboarding is a process which is applied to bringing new clients or new personnel into your business. It occurs during the initial stages of the KYC process and is a crucial beginning stage of the relationship between businesses or between a business and a client or employees.
How the Onboarding Process Works
The client onboarding process can be divided into several different stages:
Stage 1
Every client onboarding process begins with the gathering of relevant data and identification documents
Stage 2
Once the relevant information has been collected, identity verification and data authentication can begin. This includes background checks relating to financial history, previous employment and other activities.
Stage 3
A deeper investigation into client history often occurs during this stage and is designed to identify any previous history of suspicious or fraudulent activities. This could involve looking into anything that falls within the scope of anti-money laundering or counter-financing terrorism investigations.
Stage 4
The resulting information is analysed and then, based on the outcome of that analysis, it will be used to classify the client’s risk into low, medium or high.
The Importance of Effective Onboarding
The nature of the digital marketplace means that it is extremely competitive across virtually all sectors. If you do not have an effective and efficient onboarding process that’s easy to go through, you will lose your customers to competitors.
An effective onboarding process should:
- a) Ensure speed and efficiency to allow onboarding faster and at higher volumes.
- b) Ensure that it meets all compliance obligations
- c) Result in a positive user experience with fewer dropouts during the application process.
The Need for Speed
A consumer account opening report revealed that 73% of people consider the account opening process a make or break factor in regards to their future relationship with a brand. In banking alone, 63% of customers say they have abandoned an account opening process because it was taking too long or they felt it was too intrusive in the information it asked for.
People have become used to quickly opening up accounts and conducting their business online, and success depends on you fulfilling this expectation.
Although business customers may not have the same expectations as consumers when opening business accounts, the process is subject to much more pronounced delays and needs to be addressed also. A study showed that it takes around 3-4 months to onboard a corporate banking customer. Lengthy delays lead to application abandonment and it was estimated that banks lost $3.3 trillion in commercial and business banking.
In either onboarding situation, speeding up the process as much as possible results in more customers because the abandonment rate decreases, which leads to more business. A quick onboarding process also contributes to higher customer satisfaction, which creates a positive impression of the brand and furthers its reputation in the market.
The previously mentioned Consumer Account Opening Report found that fast and secure account creation built around real-time identity verification resulted in significant improvements in brand and business outcomes.
How Automation Can Improve Onboarding
Traditionally, the verification and onboarding of customers were performed manually by the company’s employees. While manual onboarding is still in operation, many businesses have switched to AI-based machine learning systems that can accurately check ID documents and run customer profiles against various AML data sources.
Automation is helpful and can improve the process exponentially, here are some of the benefits it provides:
Less Labour and Costs
Automation decreases the number of manual workers who are needed to perform particular processes. This allows employees to put their focus and creativity into other areas of the business. Automation also helps companies to reduce HR and KYC training costs, without a decrease in standards or results.
Less Chance of Human Error
No matter how good an individual is, we are all human and mistakes can happen. A lapse in concentration, fatigue or just not being at your best can lead to errors and they can never be fully eradicated. This doesn’t happen with automated systems. Automated systems never get tired, they can pick up things human eyes can miss and can perform the necessary tasks in a fraction of the time it would take using a manual process.
Increased Pass Rates
Efficient onboarding creates a great customer experience, and this results in a higher conversion rate. Automated KYC allows a business to check high volumes of customers, without having to invest money into a larger workforce or more training for faster results.
Finding the Right Solution
Even if an automated system can offer many benefits, automation that is complicated, unreliable or improperly embedded into your system could cause more problems than it solves.
Sekuritance can provide an all-encompassing compliance-as-a-service solution where, with a single integration, you can handle all regulatory and monitoring tools to identify, verify and secure companies and individuals alike.
We have created go-to solutions where everyone, from the smallest startup to the biggest multinational conglomerate can integrate and join the dots for all their RegTech and RiskTech needs.
Visit www.sekuritance.com today, and find out how we can help you implement a fast and effective onboarding system that gets results.
About Sekuritance
The Sekuritance RegTech platform provides a single platform for every eGRC need, including end-to-end AML/CTF, CECL, FCPA, vendor management, beneficiary onboarding, investor check, card processing MFA checks, blockchain wallet checks, cyber-risk assessments, and other RegTech or Business Process Management requirements.
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