Lengthy approvals for a new account. Providing the same information three times. Getting emails for documents you’ve already submitted. No visibility about the status of an application or where you are in the process.
Corporate clients often encounter these and other pain points when trying to access banking services as a new customer or when trying to add more services as an existing customer. Much like consumers in the retail banking space, corporate clients want easy, intuitive, user-friendly digital access to banking services. Yet too often, they don’t get what they’re looking for.
Instead, banks lead companies through an onboarding process that’s slow, duplicative, and overly complex, often causing potential customers to drop off or creating significant dissatisfaction among existing clients. The average onboarding process for a new corporate client can take up to 100 days and varies significantly depending on the banking products and geographies involved.
This challenge has significant financial implications for banks. Time-to-revenue has become an increasingly key metric for banks, so the longer onboarding takes, the slower the process of booking revenue. In addition, the onboarding of new corporate clients represents a sizeable growth opportunity. According to McKinsey Panorama, global banking revenues are expected to rise by 9 percent a year through 2025, with corporate clients at the heart of this growth. Much of the industry’s growth will come from fee-based services, such as digital, real-time domestic payments and beyond-banking features like spend analytics and cash forecasting. Although less visible than other areas of wholesale banking, these global transaction banking (GTB) services already represent about $1.2 trillion—almost half of total global wholesale banking revenues (Exhibit 1).
Participating in this growth opportunity will depend upon banks optimizing their end-to-end onboarding experience for transaction banking customers. Doing so can create real value—we have seen banks taking this approach boost EBITDA, increase the proportion of new clients receiving approval, raise customer satisfaction scores, and reduce onboarding operating costs.
Although historically overlooked and underfunded, onboarding is an area of increased focus and investment for global banks. With the acceleration of digital behaviors among all customer segments and the continued strength of fintechs, banks are feeling pressure to differentiate themselves from their peers. Based on detailed quantitative surveys and one-on-one qualitative interviews with two dozen global banks, this article delves into the state of the industry’s efforts and the specific opportunities banks have to improve their onboarding experience. It also offers a road map for what the optimization of onboarding looks like.
Key findings from our most recent survey include:
- Know-your-customer (KYC) due diligence and account opening are significant bottlenecks. Banks report that more than 40 percent of the time a customer spends onboarding is consumed by these two processes (Exhibit 2). As such, they are key targets for efforts to streamline and improve onboarding. Lengthy account openings are caused primarily by the manual input of client data and a lack of internal system connectivity. KYC due diligence is a highly important process that banks must get right. But it can be complex, because banks write many client contracts individually to comply with variations in local regulations. This complexity can be reduced, however, by automating the aggregation of public data through utilities, leveraging data that banks already have on customers, and eliminating duplicative data elements on forms. In addition, banks can rigorously reevaluate the often-excessive levels of documents they believe are necessary to satisfy local and global requirements.
- Automation and technology present the biggest onboarding challenges for banks. Many banks simply do not have the technology infrastructure to make onboarding the seamless, transparent digital experience it needs to be. In our research, we found that half of all banks have no tech solutions for many onboarding processes. Many of the solutions that do exist have been developed by banks to reflect a need for heavy customization and are not integrated with other solutions. Under the pretext of offering white-glove service to clients, processes are often extremely manual, which can lead to errors and confidence gaps. Often, no single digital repository exists for customer data such as contracts, documents, and transaction information. In addition, internal case management systems are outdated and require manual customizations for any changes or updates, and the testing of client payment files is unnecessarily labor-intensive. Banks that invest in flexible API technology for file testing enable a much quicker, more seamless process.
- Many banks are in the process of adding key digital functionality. The most common digital feature banks offer is the electronic signing of documents (80 percent say they have this) (Exhibit 3). Half say they allow clients to apply for multiple products at the same time, with another 25 percent saying this capability will be implemented within the next 12 months. Some 40 percent enable customers to instantly open accounts, with an account number issued and KYC process pending. Many banks are also working on adding features that are currently not widespread, such as analytical capabilities that provide clients with insights about their customers or competitors, the option to submit KYC documents electronically, and the ability for customers to check the status of their applications in real time.
- In-house tech solutions predominate. Due to the complexity of onboarding and a lack of solutions from vendors, leading banks use in-house technology over that of vendors or hybrid approaches (Exhibit 4). All the institutions in our survey say they primarily rely on in-house technology for client portals and client communication tools. When banks do opt to work with vendors, they often choose a complete solution that’s standardized and can be easily integrated with their enterprise resource planning systems, rather than a hybrid approach.
- Banks are implementing some features more quickly than others. Technologies that help address obvious pain points—such as a self-service client portal, document management automation, and end-to-end workflow software—are planned for the near term. Portals provide clients a unified place to submit information and documents and to do real-time tracking of account openings and applications. Document automation helps client paperwork move through the system more quickly and without errors, and workflow solutions give relationship managers an integrated view of where a customer is in the application process. While portals need to be built and customized by banks, document management automation and workflow solutions can be supplied by vendors and then integrated with a bank’s internal processes. Capabilities that involve more complex implementation are slated for medium- to long-term efforts (Exhibit 5).
A road map for onboarding transformation
Leading banks are starting to shift their approach to onboarding. They are moving away from fragmented data architectures and in-house technology and redesigning an end-to-end onboarding experience from the customer perspective. Here, fintechs, which have promoted smooth onboarding as part of their value proposition, are a source of inspiration. Without any legacy systems, they have been free to build a flexible tech architecture that lets them use APIs to leverage or build new and advanced solutions. Many fintechs have also benefited from a culture of customer-centricity, with teams laser focused on how the customer experiences onboarding. This, coupled with a flexible architecture, has allowed fintechs to offer customers what they want—speed, transparency, and fewer documents to handle.
Our work with banks across the industry shows that corporate clients care most about having access to fast, streamlined digital processes (one with minimal handoffs, no duplicate information, and a user-friendly portal) and an expert team of knowledgeable support staff offering services tailored to their needs. Based on our evaluation of offerings from front-runner banks and fintechs, we have identified a variety of best practices across five key dimensions.
- A connected client experience. Our recent research shows that most corporate clients like having a self-service portal that functions as a single point of engagement with the bank. For this to be effective, the portal should feature a smart, personalized client intake interface that only asks for information relevant to that client. It should also be tailored to a client’s previous answers to questions and subject to continuous improvements based on client feedback. We have seen banks that equip their client portals with several essential features—status tracking, automated document upload, multifactor biometric authentication, electronic signatures, and an AI-enabled chatbot—experience significant boosts in adoption of these portals. Other digital capabilities that drive smoother onboarding include prepopulated data from public sources and prefilled documents that only ask clients for approval instead of asking them to fill out yet another form. Given that many corporate clients work with multiple banks, they also want the ability to access banking services directly and seamlessly from their own financial infrastructure or ecosystem via APIs.
- A commitment to speed and transparency about timing. To ensure that onboarding is truly meeting client expectations, leading banks are communicating clear goals to their clients about how long it will take to onboard for different products—whether through service-level agreements or less formal checklists. Since the time it takes to generate revenue from a client is a key metric (this can run from 30 to 100 days), leading banks are tracking this business performance driver and addressing any delays.
- A tech-enabled process. Currently, case managers and the (often large) onboarding teams that work with them have limited transparency into the effectiveness and efficiency of the process. As noted earlier, banks are now actively investing in intelligent workflow solutions to address this problem, especially given the recent availability of software that requires no or low additional code writing while still allowing a level of customization. These solutions perform automated case assignment based on the experience of the case manager and the client business and risk profile. Supported by real-time (or near-real-time) API-enabled data feeds, they also give case managers alerts on onboarding progress and next steps, as well as notifications for when clients haven’t complied with document requests. Fintechs and leading banks are going a step further to empower these workflows by using AI to resolve duplicate documents, detect data anomalies, identify inconsistencies across sources, automate the enforcement of business rules, and digitize documents.
- Data-powered onboarding. In a typical client onboarding, a case manager will collect up to 100 client documents and information for 150 data fields. To streamline this effort, leading banks are using centralized databases to automatically upload existing documentation and prepopulate templates for additional accounts the client seeks to open. They are also doing real-time credit scoring based on transaction data, as well as using smart analytics solutions to optimize their pricing for treasury management products, deliver next-best action recommendations to case managers, and offer clients forecasts about their liquidity and foreign-exchange exposures.
Beyond using data to improve client onboarding, we believe banks have a significant opportunity to use the vast amount of data they collect from clients to both benefit customers and generate new business. Upon a customer’s consent, banks can use data from client transactions, profiles, and KYC sources to create an intelligent, 360-degree view of customers, which can then inform new, customized product offerings. Leading banks are leveraging embedded “wizard” tools to estimate their share of the customer’s wallet in an effort to make their product offerings more targeted and personalized.
- Investment in new skills. The management of fast, tech-enabled, and more efficient corporate client onboarding requires new employee skills. Case managers will want to have a holistic understanding of the end-to-end workflow, as well as of various analytics components of the process. This training and upskilling of employees will require significant investment from banks but will also result in the creation of higher-knowledge career paths for many. As technology becomes effective in addressing data-quality issues and other pain points, it’s possible that fewer overall personnel will be needed for onboarding.
Prioritizing the onboarding of corporate clients is quickly becoming a top agenda item for many banks. Investing in this overlooked aspect of customer experience represents not only an opportunity for competitive differentiation and greater process efficiency but also future revenue growth. If anything, the current global environment of rising interest rates and appeal of providing clients with fee-based transactions (which don’t require a risk to capital) could further accelerate the value of onboarding in GTB and promote additional investment by leading banks and fintechs. Even though this kind of transformation is a complex, multiyear journey, many banks are seeing quick wins by starting with a self-service portal and setting a clear road map for what success will look like.
