Why Siloed Onboarding Operations are Killing Customer Experience

In today’s digital-first financial services landscape, many firms are struggling to onboard their customers in a fast, frictionless manner due to compliance roadblocks and a lack of transparency across the organization.
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The onboarding process is the critical first step in every new customer relationship. However, many firms are failing to make a favorable first impression with disconnected systems and limited visibility leading to a friction-filled customer experience.

In a recent Fenergo survey, we found that 84% of financial services firms believe customer experience during the onboarding process impacts overall lifetime value.

Here’s why we agree that the customer onboarding experience is fundamentally broken.

1. Disconnected Financial Services

Most financial services firms are split across customer-facing teams and internal functions.

Customer-facing teams use customer relationship management (CRM) systems to segment their customers, communicate with them through their preferred channels and align products to their financial goals.

Meanwhile, internal functions utilize customer lifecycle management (CLM) systems to onboard and screen prospective customers compliantly in-line with multi-jurisdictional rules and to ensure compliance throughout the customer lifecycle.

But what happens to your end-customer experience?

In short, it falls between the two stools of CRM and CLM, offering a disjointed and disconnected approach to the end-to-end customer journey, with each system holding its own processes and data in place.

2. The Data Challenge

Customer data is a mess in most financial firms, with information replicated and locked away in many different legacy systems, requiring manual input and a huge amount of swivel chair activity. This creates a monumental challenge for many organizations to keep data up-to-date and in sync.

In a recent survey, we found that more than a third of financial institutions (37%) say that they store a single customer’s KYC or AML data and documentation across four different systems. One in ten (11%) hold them on five or more systems.

When information lives in several systems across the organization, it can only ever deliver a partial view of your customer, leading to significant operational inefficiencies and reducing the time front-line staff can devote to serving and nurturing your customers.

According to the Global Legal Entity Identifier Foundation (GLEIF), more than half of all banking Relationship Managers spend an average of 1.5 days (27% of their working week) onboarding new customer organizations.

This is madness. In other words, in one year, one relationship manager will spend 72 days or 2.4 months (taking a 48-week annual year) just on onboarding alone!

It also critically affects customers, who are asked repeatedly and inconveniently to submit information. In this day and age, customers expect their financial services provider to collect information about them – not from them.

3. KYC Compliance Burden

Compliance is the leading culprit behind lengthy onboarding times due to the voluminous amount of information required to support compliance decisions and approvals.

In fact, the collection, processing, validation and storage of customer data and documentation required to comply with AML and KYC regulations has become a major operational headache for many global financial institutions.

According to estimates by Citigroup, the biggest global financial services firms have doubled the number of people they employ to handle compliance and regulation in recent years. This now costs the industry an average of $270bn annually and accounts for 10 per cent of operating costs.

If we look at onboarding as the critical first step in a new relationship, then first impressions count. Making customers work to submit information is not the way to start this new relationship.

Front-line personnel are often stuck between a rock and a hard place; between the customer looking for an easier and better experience and their compliance colleagues looking for more information.

It’s little wonder then that financial institutions lose customers during the process. In a recent Fenergo survey, 36% of firms surveyed claim to have lost prospective customers due to inefficient onboarding and KYC procedures.

Transforming Customer Relationships

In today’s digital-first financial services landscape, many firms are struggling to onboard their customers in a fast, frictionless manner due to compliance roadblocks and a lack of transparency across the organization.

To transform this process, organizations need to re-examine their operating model and re-imagine how they deliver customer journeys.

They need to find a way to acquire customer information digitally and let this clean, accurate and remediated customer information flow throughout the financial organization unimpeded.

They must examine ways in which risk management can be streamlined across functions with a managed-by-exception approach, greater system integration and centralized customer data.

In our next blog, we will put forward a target centralized operating model and examine how financial institutions can implement a stronger, more cohesive, and connected customer relationship management strategy.

Download the full report to find out more!