Top 7 Ways to Harness Business Process Automation in Bank Onboarding
By Leor Melamedov
The banking industry is highly regulated and beholden to strict KYC requirements. Given the increased awareness of money laundering and terrorist financing in recent years, banks have significantly increased their new customer onboarding requirements. This often translates into cumbersome paperwork, manual processes, and excessive turnaround times.
As the world shifts to more digital banking, eKYC promises to reduce the paperwork burden. But even in this environment, banks need automated processes that eliminate ambiguity, streamline onboarding, and satisfy compliance requirements.
Due to detailed application forms and variable requirements, bank representatives may spend excess time trying to figure out which documents are needed from which types of customers, and which fields within forms are relevant to particular customers. This is especially true for business clients or customers who raise flags.
Complicated and unclear onboarding isn’t just a headache; it also means banks are losing customers before they’ve even been onboarding. Research shows that 40% of customers have abandoned a bank onboarding process, most often due to burdensome KYC demands.
That’s where automated digital workflows come in. A type of business process management (BPM) solution, workflows use conditional logic to ensure the highest levels of accuracy and efficiency both within steps and between steps in the onboarding process. Automated workflows allow representatives to onboard more customers, faster, and with greater adherence to compliance requirements.
Why Should Banks Automate Workflows For Onboarding?
The Challenge: Keeping Up With KYC
KYC requirements are frequently updated, which means that banks need to keep their processes up-to-date. Failure to do so can leave banks vulnerable to new identity theft schemes, money laundering, terrorist financing, and more. Furthermore, the penalties for compliances lapses are great: In 2019 alone, banks worldwide were fined $10 billion for non-compliance with AML, KYC, and sanctions regulations. And these penalties are growing by the year, despite banks scrambling to keep up.
In fact, regulatory change was reported as the top regulatory challenge of the year, according to a 2020 report by Thomson Reuters. Survey respondents also anticipated more information to be published by regulators within the next 12 months.
Yet even as banks are bracing for tougher regulatory demands, they are not planning on hiring more compliance staff in response. Only 34% of banks in the recent survey expect to grow their compliance teams in the coming year, compared to 43% who expected their compliance teams to expand in 2018.
The takeaway is clear: today’s bank executives expect to be able to do more with less. Banking technology allows banks to stay compliant with less employee overhead. It can also allow banks to easily adapt to changing regulations — addressing the number one challenge of today’s banks.
But not any banking technology will do. For example, traditional business process management (BPM) tools require development and IT involvement every time a process needs to be tweaked. This prevents banks from quickly updating processes to reflect new regulations and business demands. And while banks can benefit from robotic process automation (RPA) for individual tasks, these solutions generally fail to streamline full end-to-end processes.
The Solution: No-Code Business Process Automation Software
Unlike older types of software, no-code business process automation requires zero IT effort. It allows banks to adjust the onboarding workflow on the fly in response to changing business and regulatory needs. This makes it a good choice for banks that prioritize staying agile. And given an unpredictable regulatory environment and growing customer demands for a streamlined onboarding process, agility is a priority for most banks.
Workflows make the following compliance requirements easy for customers to complete and submit digitally:
Here are some of the biggest benefits of automating the full customer onboarding process:
Simplified processes: A single system controls the entire onboarding process with a simple drag-and-drop interface.
Streamlined processes: Easy and intuitive conditional rules can be set to ensure business logic at every stage of the onboarding process.
Digital tools in one digital suite: At various stages of the workflow, rules trigger the sending of requests for documents, eSignatures, and photo ID, as well as sharing disclosures such as T&Cs for customer approval.
Optimized: Each interaction can be optimized across touchpoints and existing systems.
More visibility: Digital workflows come with dashboards that allow bank leaders to gain visibility into the KPIs that matter most, such as average time to open an account and onboarding completion rate.
Zero coding required: Project managers can adjust their business rules according to their needs without requiring IT support or coding.
7 Essential Use Cases For Automating Bank Customer Onboarding
Automated workflows trigger requests for new customer information or action based on the requirements of their state, risk profile, and account type.
Bank employees can instantly request the relevant documents and ID, generate pertinent forms, and send T&Cs. In addition, there are options for self-service. Admins can quickly make modifications to any of these steps without the need for coding.
Furthermore, these workflows can all be carried out digitally through collaboration between the bank employee’s console and the customer’s mobile phone.
Here are the workflow functionalities that correspond with seven key bank onboarding use cases:
1. ID Verification
A critical part of onboarding bank customers is verifying government-issued ID. This is easy to do as part of a digital workflow.
The next generation of ID verification uses facial recognition technology to confirm a person really is who they claim to be. To determine the authenticity of a person’s claimed identity, the customer must provide two images: a snapshot of their photo ID, and a selfie taken in live mode. The customer can also be asked to hold the ID in their hand as they take the selfie for added authenticity.
Here are the step involved in ID verification during an onboarding workflow:
The customer takes a picture of their photo ID, and then a selfie using live mode.
The customer uploads both images — the selfie and photo ID — to the interactive digital session.
An AI algorithm scans the two photos, and a match is confirmed or denied.
Additional security measures such as one-time passwords and knowledge-based authentication (KBA) can also be used to augment the ID verification process.
2. KYC Document Collection
Automated digital workflows make it easy to collect customerdocuments easily.
Business rules are built around the premise that not all borrowers need to produce the exact same documents. For example, compliance requirements demand that banks collect more supporting documents from potentially high-risk clients or business clients.
KYC questionnaires can make it easier for banks to understand the customer’s risk profile, assets, and history. Based on the information gathered, the banker can request the exact documents needed during the phone call.
All of this can be set up in the admin’s console and instantly deployed to bank representatives, ensuring an efficient and personalized onboarding process.
A typical document collection procedure works as follows:
Formulas built into the workflow allow the admin to determine which document requests are sent to which customers.
The appropriate documents are requested from the customer.
The customer snaps smartphone pictures of their documents, which are automatically sent to the banker for review.
3. Smart Client Onboarding Forms
Smart forms based on conditional logic allow bankers to generate dynamic, highly relevant onboarding forms for their retail and commercial banks. Fields only appear when a customer ticks a checkbox or selects a particular option from a dropdown, indicating that a specified condition is met.
Here is a typical process for setting up smart forms based on conditional logic:
Create a rule for the trigger field. (E.g., If the customer selects “Joint Account” then another field will appear asking for the other account holder’s name).
Select which additional fields to show if the customer’s response in the trigger field complies with the rule (the fields can be of any type: checkboxes, radio buttons, dropdowns, or text responses can all trigger a conditional workflow).
Create additional rules for a trigger field based on the customer’s response. (E.g., If an additional account holder’s name is listed, then additional fields will be shown asking for that customer’s personal details).
If needed, a request for an eSignature is also triggered once the form is completed.
By showing and hiding fields depending on the customer’s responses, completion time is reduced, and customers are less likely to make errors or leave fields blanks.
In addition to streamlining the in-form process, logic can be applied between different forms (if relevant) to determine if a form needs to be presented based on the customer inputs on previous forms or in API.
4. Single-Page Terms and Conditions (T&Cs)
Terms and conditions (T&Cs) may vary based on the account type (e.g., single or multiple account holders, retail or commercial customer). depending on the parameters of the agreement with the onboarded customer. T&C paragraphs correspond with the account type. While it’s possible to save every T&C document in a separate PDF template, this needlessly slows down the onboarding process.
With automated digital workflows, there is no need for bankers to manually search for the right T&C template.
Using dynamic documents, it is possible to create multiple sections on the same HTML document, add a section for each T&C paragraph, mark those paragraphs as objects, and apply conditions on them.
This allows bankers to send a single dynamic document that includes all the T&Cs straight to the customer’s cell phone for approval.
Here is how the disclosure procedure works:
The workflow automatically generates a T&C based on the account terms, such as allowed and prohibited account activities.
The T&C PDF or web form appears on the customer’s cell phone, where they can read it and check the approval checkbox.
The banker is instantly notified of the customer’s approval.
5. Digital Self-Onboarding
In contrast to business clients that generally have greater compliance requirements, opening a standard retail bank account is usually straightforward. In these cases, banks can offer customers a self-onboarding option that can be fully completed from within an email body or website.
This can significantly boost onboarding completion rates, as it eliminates practically all friction in the onboarding process. And by allowing customers to apply online without speaking to a banker on the phone, banks can save on manpower and processing costs.
Self-onboarding workflows also allow existing bank customers, whose information is already in the system, to apply for additional accounts in a low-touch, convenient fashion.
A typical self-onboarding experience can look like this:
Customer goes the bank’s webpage or calls into an IVR, and an account opening application appears.
If the customer already exists in the system, the digital form is pre-populated with their existing details, so they only have to fill out certain new fields.
If the customer is new, they can fill out bank application forms, upload supporting documents, read and consent to T&Cs, and apply for credit cards.
6. Customizable User Interface
No matter where customers onboard from, whether it’s the bank’s mobile app, website, or simply text message, the look and feel of the portal should reflect the bank’s brand.
Here are a few things banks can do to easily customize their user interface and functionalities:
Add images sized to HTML templates and font colors.
Change the color of the templates.
Push data to the workflow via URL or API.
Build and manage hundreds of workflow URLs.
Redirect to a page when the workflow is completed, or notify the parent window that the workflow is complete.
7. Dynamic Product Selection
Once the customer’s account has been opened, it’s not the end! Banks have a valuable opportunity to take the treasure trove of information gathered during onboarding (e.g., risk profile, assets, history, account type), and use it to automatically generate recommendations for other products and services like savings, investments and loan products.
For example, if a customer has children under the age of 18, then the bank can automatically generate a recommendation for a separate children’s account. Or if the customer is currently unemployed, then the bank automatically recommends taking out a small personal loan. The possibilities are endless.
Seamless Client Onboarding Starts With Business Process Automation
Automated digital workflows help banks dynamically build and adjust processes to meet constantly changing business and regulatory demands. Conditional workflows allow bankers to breeze through the onboarding process with low-risk customers and collect more KYC and AML collateral from high-risk or commercial clients.
The capacity to tailor workflows to different account types ensures that banks find the optimal balance between compliance and speedy onboarding. Automated workflows are built on the premise that each banking customer fits a unique profile, and the onboarding process should reflect that.
Lightico offers such a business process automation solution that uses conditional logic to streamline the end-to-end bank onboarding process. The platform includes eSignatures, smart eForms, digital T&Cs, self-service, and many more capabilities. Learn more at Lightico.com.
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