Future of customer onboarding in banks
                     Future of customer 
onboarding in 
banks
oIn today’s world of cut-throat competition, 
every interaction with the customer matters 
as it provides you with an opportunity to leave 
an everlasting impression on them. 
oAlmost all the major companies in the world 
believe and implement this philosophy.
oThere are many companies that have extensively 
focused on customer satisfaction by offering 
innovative products and services.
o  For example, alibaba and amazon have changed the 
way people shop. 
oSimilarly, whatsapp and facebook have changed the 
way we connect with people across the world.
oNowadays, customers put banks and financial 
institutions at a very high standard and expect 
premium digital experiences in return.
o  Customers want an omnichannel presence. 
Moreover, they also want everything in real-time.
 What is client onboarding?
o Client onboarding can be simply defined as the entire process through 
which a user starts his journey as a customer or a client of a bank/ 
financial institution.
o  Similarly, the onboarding experience can be defined as the 
relationship between the customer and the organization.
oCustomer onboarding is crucial as many key 
variables such as experience, referrals, client loyalty, 
and profitability directly depend on it. 
o In the current process, there are multiple parties or 
departments involved which are within the 
organization like credit, operations, compliance, 
legal, front office, risk, tax, and other important 
functions.
 What are the challenges associated 
with the current client onboarding 
process?
o According to the forrester consulting survey estimates, a 
client is contacted ten times on an average during the entire 
onboarding process. 
o Furthermore, they are also asked to submit their 
documents which range from five to hundred.
o  Let’s have a look at challenges associated with the current 
client onboarding process.
 Absence of a structured 
process
o Client onboarding follows various processes within the 
departments like legal, credit, and operational. 
o One important thing to note here is that each compliance officer 
of these departments has its own interpretations pertaining to 
the regulations.
o Such different interpretations can get customers confused as to 
why they should provide the same information at various points 
of the process.
 Changing regulations
oRegulations keep on changing on a monthly or even 
on a weekly basis. 
oThis is why banks must adapt their systems in 
accordance with the regulations. 
oThis poses a great challenge for the banks as they 
don’t only have to explain the changes to the client 
but also have to ensure that they are amended in 
the onboarding process.
 Culture
o Financial institutions and banks all across the globe want to 
get close with their customers. 
o However, the lack of drive to understand the changing 
needs of customers along with dynamics and 
underinvestment in strategic opportunities have proved to 
be a great barrier.
o As per the mckinsey’s recent survey, for top global 
executives around the world, culture accounts 
approximately 33% among the other major barriers to 
digital effectiveness.
 Access
oAs the usage of modern technology increases in the 
banks and financial institutions, there’s a pressure 
on banks to provide every service on a real-time 
basis. 
oNowadays, an average customer expects to access 
all the banking services on their smartphone so that 
they can avoid visiting the bank branches.
 Time-consuming processes
oThe client onboarding is a time-consuming 
process as there is a multitude of 
documents required. 
oAlso, there are multiple touchpoints 
involved in the process which contributes to 
the overall time consumption.
 Quality
oAccording to pwc, the whole remediation 
exercise of customer shows that the due 
diligence process varies for each entity from 
country to country. 
oThus, this can cause a huge variation in the 
quality of experience within a single financial 
service entity.
 Future of client onboarding
o To overcome all the above challenges, financial 
institutions and banks are now moving towards 
cutting-edge technologies to improve their 
efficiencies.
o  It helps them to kill two birds with a stone as they 
can satisfy regulatory standards and offer a 
seamless experience to their end customers at the 
same time. 
o We are gradually progressing towards open 
banking, we might see client onboarding utilizing 
the following means in their future model.
 Artificial intelligence (AI)
o Artificial intelligence is the technology with the help of 
which the computer software can make human-like 
decisions. 
oMany companies are using this technology for their benefit 
like paypal which has reduced its false fraud alerts by 
almost in half with the help of an ai monitoring system that 
identifies benign reasons for bad behaviour. 
o , Hsbc has also decided to pledge $2.3 billion in AI 
technology.
 Blockchain
oBanks and financial institutions can use distributed 
ledger technology (DLT) like blockchain for the KYC 
process that would enable users to manage their 
digital identity with high-grade security. 
oMoreover, it can also help financial institutions and 
businesses to efficiently manage data with reliability 
and ease.
 Digital identities
o An electronic identifies that can verify if you’re the one who 
you claim to be. This technology is already underpinned by 
singapore’ 
o Electronic identification and trust services for electronic 
transactions regulations 2016.
o  It’s meant to encourage transparency and interoperability 
across various entities in the country.
 Biometrics
o These are inherent characteristics of an individual which are used for 
recognition purposes. These are based on his/her behavioural or 
physical traits (face ID, fingerprint, voice recognition, iris scanning).
o Biometric technology is already being used by some big banks like 
bbva, maybank, ocbc, etc; however, it’s yet to gain across the board 
acceptance.
o  Iphone x has come up with its face id and is making a huge claim that 
only one out of a million can be duplicated. One must not be 
surprised if this becomes an industry-standard in the near future.
 Data collaboration
o AS per the chartis risktech100 research 2015, around 71% 
of the respondents accepted the fact that there was a need 
of integrating some of the anti-money laundering (AML) and 
anti-fraud systems into a single technology environment.
o This will help financial institutions to mix their external and 
internal client data and thus gain useful insights into their 
clients. 
 Conclusion
o It’s important to understand that focusing on the 
customer experience will be the key for banks and 
financial institutions as it will compel them to change how 
they engage with their customer base.
o  In order to keep attracting and retaining their customers, 
they must keep reinventing themselves, innovate, create 
excitement, and most importantly focus on the 
improvement of customer service.
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