Traditional banks risk extinction as slow onboarding and manual processes drive customers away
24 October - Today, leading provider of digital Client Lifecycle Management (CLM) solutions Fenergo, has announced the results of new research which reveals that slow and manual onboarding processes could lead to commercial and business banks individually losing $4.5bn in revenue if they don’t bring their technology and systems up to date. With onboarding times rising by an average of three weeks in the last 12 months, if this trend continues, customers could be facing a six week wait to be onboarded by 2020.
With the threat of challenger banks including Revolut, Simple, Tide, Monzo, Apple Pay and new entrants including Alibaba and Amazon, commercial and business banks that rely on traditional processes to onboard new clients are in danger of becoming obsolete. In the last year alone, the global commercial and business banking market has lost $3.3 trillion because of abandoned applications during onboarding.
Despite the shift to digital banking, a surprising 18 percent of banks still rely on manual processes for Know your Customer compliance (KYC) - including telephone, email, letter or in-person meetings. 14 percent also say that 20 or more people are involved in the onboarding process for just one complex client and 15 percent say that they had to get in touch ten or more times for data or documents to onboard new clients.
“With more and more digital-first challenger banks entering the business banking market, customers now have the ability to sign up to a new bank within minutes. Business and commercial customers are naturally going to gravitate to banks that provide the same low-touch experience as the consumer digital services they are familiar with,” says James Follette, Global Head of Commercial, Business and Retail Banking, Fenergo. “Whilst banks such as Revolut and Simple have the benefit of being digital-first, it’s not too late for more traditional commercial and business banks to bring their processes up to date and adequately compete. If they don’t make these changes, money and customer losses will be such that they’re unlikely to survive a downturn.”
“It’s essential for banks to keep pace with market-moving technologies and regulations, and support new business models, including digital client onboarding to meet the expectations of customers,” says Sidhartha Dash, Research Director, Chartis Research. “Clients are demanding a frictionless, transparent and rapid onboarding experience, which they can easily find at challenger banks. It’s time for traditional banks to up their game or risk losing out.”
In fact, 78 percent of the banks surveyed said that they have lost customers to digital-first, disruptive competitors. There is recognition amongst the market that changes need to be made with 92 percent of CEOs agreeing that they need to transform radically to compete with digital-first neo banks. This will be particularly important as they compete in a constantly shifting regulatory landscape.
Banks are almost unanimous (96 percent) in saying that increasing and fast-evolving regulation is the reason behind longer client onboarding times. The majority (93%) of those surveyed say increasing regulatory focus as a result of rising financial crime is a challenge and keeping up with evolving regulation is a top concern for 40% of banks. This suggests that almost all banks are at risk of incurring major fines, along with all the reputational repercussions that holds.
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About the survey
Fenergo sought the viewpoints of more than 500 senior decision makers at commercial and business banks across EMEA, North America and APAC from August–September 2019.
Fenergo is the digital enabler of client and regulatory technology for financial services. It provides digital Client Lifecycle Management (CLM) software solutions for Financial Institutions including; Corporate & Institutional Banking, Commercial & Retail Banking, Asset Management & Asset Servicing, Private Banking & Wealth Management. Counting 70+ global Financial Institutions as clients, its award-winning CLM suite digitally transforms how Financial Institutions manage clients; from initial onboarding to KYC/AML and regulatory compliance, to data management and ongoing lifecycle KYC reviews and refreshes. Fenergo CLM empowers financial institutions to deliver a faster, compliant and digital customer experience while achieving a single client view across channels, products, business lines and jurisdictions. Fenergo is quickly becoming the KYC backbone for banks, where a common set of Fenergo KYC services are being leveraged across the bank agnostic of business vertical, product, jurisdiction or client type. This backbone trades increasing complexity for well-designed simplicity.
Fenergo’s community-based approach to product development allows clients to collaborate on solution design on a global scale. Its rules-driven solution ensures compliance with multiple global and local regulatory frameworks including AML, KYC, SFTR, Tax (CRS, FATCA, 871M), OTC Derivatives (EMIR, Dodd-Frank, MiFID II, Margin Requirements) and data privacy rules (GDPR). It supports the collection, centralization and sharing of client and counterparty data and documentation across the institution and deploys an API-first approach to advanced integration with a host of external KYC, AML and entity data providers, KYC and industry utilities. The solution is underpinned by next generation Artificial Intelligence, Robotics Process Automation and Machine Learning technologies, using advanced OCR and NLP capabilities to extract information, expedite compliance and improve operational efficiencies.
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For further information please contact:
UK: Holly Rees: 44 (0)7821797275
US: Danielle Simko: +1 646 661 4223
Email: [email protected]
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