Improving Services Through Customer Onboarding Automation

4 min read
Improving Services Through Customer Onboarding Automation

Customer satisfaction is a key differentiator for many companies today. It is especially important for banks and other financial institutions, as customer relations is a major pillar of their business. With stiff competition in the industry, customer expectations are higher than ever: They expect superb service, and if they don’t get it fast, they turn to another bank. So it is not surprising that a seamless customer onboarding experience is an essential area of investment for many companies.

An average-sized financial institution can allocate as much as $50 million to onboarding, and large banks spend more than $500 million. However, customer onboarding times are increasing despite banks’ best efforts. A solution to these problems may lie in intelligent customer onboarding automation. But first, let’s see why customer onboarding is so important and hard to disrupt.

Customer onboarding challenges

The traditional onboarding process is lengthy and can involve multiple departments within the bank: front office, risk management, compliance, legal, credit, and others. As a result, the onboarding process can take up to several weeks and lead to the customer’s frustration and dissatisfaction. It can be very detrimental as the customer onboarding process influences such vital metrics as client loyalty, referrals, and profitability.

The information above may seem illogical, given the amount of effort and finance invested in this process, including automation efforts. However, several challenges often make customer onboarding automation initiatives ineffective.

A highly unstructured and lengthy process

Customer onboarding usually involves several departments in the organization, each having its own rules and procedures. This slows down the process and can be confusing to customers who might be required to provide the same information to different people several times. Digital or mobile onboarding can decrease the number of process steps but depends on back-end processes that remain manual and time-intensive.

Long onboarding timelines not only lead to high rates of account opening abandonment but also force financial institutions to forego some onboarding opportunities due to an inability to handle them effectively.

Regulations change frequently

In the banking industry, regulations are changing at light speed, and banks often need to review and amend existing processes on a monthly or even weekly basis. Reviews may result in not only adapting internal systems to the new rules, but also communicating them to customers promptly. Since 2018, more than 70% of the world’s $5.3 billion spent in financial crime enforcement actions were related to onboarding compliance lapses.

Large volume of documents to process

The onboarding process usually involves the management of 5 to 10 documents, but the number reach several dozen. The same documents can be processed several times by different departments at various stages of the process, creating confusion and leading to errors.

Many legacy systems are involved

Most banks still use old legacy systems, which makes it hard to provide customers with a smooth end-to-end experience and also creates problems for maintaining and updating the data across all systems. This problem can be partially solved by robotic process automation (RPA), but it is not a scalable solution — automation should involve not only the applications used but also document processing, regulations checks/updates and other challenges mentioned above. RPA cannot be effectively implemented to solve this; the process needs artificial intelligence.

New drivers for customer service automation

The reasons why more banks are considering Intelligent Automation are not limited to the challenges mentioned above. Changing revenue and cost implications of client services create new drivers for speeding up customer service automation in general and customer onboarding automation in particular. They include:

  • Increasing competition from emerging fintech companies. Many digital-native financial firms have experienced impressive customer growth lately. According to a recent Accenture survey on the future of global payments, traditional banks anticipate a 15% erosion of payments revenue to digital competitors.
  • Changing customer expectations. Customers expect fast onboarding and subsequent service, which also needs to be highly personalized.

All these create a new feeling of urgency to develop intelligent automated customer service systems that are easy to deploy, scale and update. While RPA-focused solutions can effectively automate task-level rule-based operations, this level of transformation requires extensive use of artificial intelligence.

Benefits of intelligent customer onboarding automation

We estimate that more than 60% of manual work in the customer onboarding process in a bank can be partially or fully automated, and about half of the work reduction requires using  machine learning, digitization, and analytics on top of RPA.

benefits of intelligent customer onboarding automation

As a result of customer onboarding automation, the whole process can take minutes rather than days, which means the banks can successfully onboard more clients faster and don’t need to forgo new opportunities.

However, increased speed is not the only benefit of intelligent process automation that you can expect. Other benefits include:

  • Improved regulatory compliance resulting in a significantly lower risk of fines.
  • Enhanced customer experiences and higher customer satisfaction and retention rates.
  • Increased accuracy of data processing removes need to repeat the same steps during a process.
  • Better analysis of the onboarding process helps to identify and get rid of bottlenecks that were unnoticed before.

In a time of slowing banking growth and emerging challenges, automating various operations in customer onboarding can help banks focus on other questions and stay competitive and profitable.

To learn more about customer onboarding automation, read our new whitepaper, “Cut the Cost, Save the Relationship: A practical guide to solving customer onboarding challenges.”

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