Download: The Definitive Guide to Digital Onboarding

Published on Dec 21, 2023

An opportunity to transform customer onboarding

In this guide we explain the process and components of digital onboarding. We look at what onboarding involves, the technologies used to do it, and which common pitfalls you should be aware of.

Many organisations face an uphill struggle getting individuals and companies onboarded in a timely and efficient manner. For some, the process is littered with friction points and bottlenecks, leaving both prospects and staff frustrated. Others have digitised some processes but are now looking to consolidate and reduce the number of tools and touchpoints involved in order to better manage integration risk.

Whatever the current state of your new customer acquisition process, you may be considering the digitalisation of onboarding activities and ways to drive new revenue or improve customer experience.

In this definitive guide to digital onboarding, we will first look at onboarding holistically, before explaining how one of the most problematic processes can be turned into a golden opportunity to impress prospects and customers alike and accelerate your time to revenue.

Objectives

What are the problems that you’re trying to solve – and the objectives that you’re aiming looking to achieve?

Typically, it could include any of the following:

/ Accelerate time to revenue. Perhaps the most pertinent and obvious objective for any organisation, getting prospects onboarded faster so they become paying customers that drive revenue for your business.	/ Improve management information. Because onboarding can often involve multiple digital tools and departments, you may wish to consolidate reporting and enable a ‘single customer view’, together with analytics on where your process is going well, and where it’s not.
/ Improve the customer experience. Your current onboarding process could be literally losing you business if it is clunky, slow or involves too many touchpoints. At best it can be a frustrating first experience for prospects in interacting with your firm	/ Adhere to new regulation. Your organisation may be subject to new regulation, perhaps from an anti-money laundering (AML) perspective and needs to rapidly roll out and conform to new standards.
/ Improve the staff experience. The customer comes first, but if your onboarding process is outdated and littered with laborious, manual work, you may be looking to improve that experience for your staff to boost retention and job satisfaction.	/ Keep up with your competitors. You may have performed some competitor analysis and discovered that your competition has employed sophisticated digital onboarding techniques. Your organisation needs to keep up or risk losing out to businesses that can drive higher customer satisfaction.
/ Consolidate existing processes. You may currently be using several tools and systems to onboard customers, and wish to consolidate into one seamless, end-to-end process in order to reduce costs, maintenance, and vendor/integration risk.	/ Deliver a tailored onboarding journey. You want to get it right and ‘ask once’ so that each prospect only needs one interaction with you to provide all the detail you require to commence a client relationship.
/ Tighten KYC protocols. Your current Know Your Customer (KYC) processes may be inconsistent between teams, offices or business lines. Tighter, scalable, digital customer risk rating, verification and screening will ensure that there is a good fit between prospects and your organisation’s risk appetite, every time.

Onboarding types

Onboarding individuals

Onboarding complex client structures

Onboarding suppliers

While not as challenging as onboarding complex client structures or suppliers, there are multiple obstacles to be navigated when onboarding individuals that can lead to slow time-to-revenue and a poor customer experience.

An example of a challenging use case is the onboarding of high-net-worth individuals (HNWIs). To do so successfully, a wealth management firm would need to configure an onboarding solution to gather large volumes of data and cover a broad range of potential risks such as business ownership, assets, source of funds, and adverse media screening.

Onboarding complex client entities is challenging because of the intricate and interconnected nature of underlying business structures. As a result, the process is often slow, linear and frustrating for all parties.

We’ve reimagined the complex client onboarding process by applying cutting edge technology to simplify the task of onboarding trust, fund, corporate and other complex entity types. Available out of the box as a white-label platform with full no code configuration the KYC360 onboarding solution ensures the most relevant factors are surfaced from within the most complex structures.

Onboarding a new supplier will typically be risk-based, so not all suppliers will need to follow a strict process. But for higher risk suppliers, onboarding could involve the following key elements:

Where required, researching and identifying the company directors, senior executives and UBOs.

Screening individuals/suppliers to check they are not politically exposed persons (PEPs) or on any known sanctions or watch lists.

Screening the supplier against unstructured adverse media sources in order to check for and avoid potential reputational damage to the organisation.

Understanding the onboarding process

Data collection

The data collection phase of onboarding is often characterised by laborious, one size fits all manual processes, making it the most obvious starting point for digitalisation.

When collecting data, prospects should always be given a clear and easy-to-follow digital journey, delivered in a secure environment with a familiar and reassuring appearance, and this starts with the first communication inviting them to begin the onboarding process.

When a large amount of information is required, prospects should ideally be able to save their progress as they proceed, so that they can complete the application over a period of time.

Risk rating

Risk-rating should commence as soon as data collection begins. Risk scores can then serve to guide the rest of the application and approval process and ensure that the data collection form is tailored ‘live’ so that the appropriate data is captured to match the prospect’s risk characteristics.

Risk-rating usually takes into consideration a range of factors before applying a low, medium, or high rating to each and every prospect. The factors that influence the rating include areas will be industry-specific, but typically include geographic location, the industry they operate in, source of funds, the products or services they seek and their anticipated activity levels.

A flexible, risk-based approach is the preferred path for organisations seeking a way to adapt the onboarding experience according to the different risk types.

Identity verification

In recent years there has been an explosion in the use of electronic identification and verification (eIDV) solutions aimed at making the verification process faster, easier, and more secure. In the onboarding realm, eIDV needs to be fast, yet highly efficient; prospects should have the ability to capture images of ID documents such as passports or driving licences for ease of submission.

Ideally, electronic proof of address will also be offered, so that you do not eliminate one manual process (photo ID certification) only to be left with another (proof of address certification) still to complete.

More importantly, by seamlessly integrating eIDV into the onboarding journey, eIDV solutions greatly reduce friction and accelerate what has traditionally been a slow and time-consuming process for everyone involved.

Screening

The data you need to screen against will depend on your industry vertical, but may include both structured data (sanctions, PEPs, and watch lists) and unstructured data (in the form of adverse media reports).

The principal objective of screening is to identify elevated risk markers associated with prospects or customers that are sanctioned, on watch-lists, or PEPs, so that appropriate risk-based decisions can be taken about whether and how to do business with the individual or entity concerned. By quickly identifying prospective customers who pose an elevated risk of potential criminal activity, appropriate action can then be taken to manage risk through the application of enhanced due diligence (EDD).

In recent years, there’s been an increased focus on the benefits of reputational risk management through adverse media screening, which compares prospects against less formal data sources for early indications of any potential risk. These indicators might include information about an individual prior to the commencement of criminal proceedings or becoming subject to sanctions.

Around the globe

Whether onboarding customers, suppliers, or complex client structures, it is essential that you fully identify and understand the regulations that apply to your organisation in both the sector and the jurisdictions in which it operates.

Below are some sources of information that may help you to identify the KYC and AML regulations that apply to your region.

Global
The Financial Action Task Force

Europe
European Banking Authority

UK
Financial Conduct Authority

Switzerland
Financial Market Supervisory Authority

USA
Office of the Comptroller of the Currency

Australia
Australian Transaction Reports and Analysis Centre

Singapore
Monetary Authority of Singapore

Dubai
Dubai Financial Services Authority

Automating the onboarding process

Consolidate the entire process into a single end-to-end solution By integrating all the stages of onboarding into a single end-to-end process, you can alleviate many of the friction points traditionally encountered on the onboarding journey. From a management information perspective, a single consolidated system is the most efficient way to track and manage onboarding applications. Used correctly, it will provide you with a critical oversight of where applicants are in their onboarding journey and enable you to assist if they are having issues at any stage.
	Automate risk-ratings An automated risk-rating approach can hugely increase the efficiency of your onboarding process by ensuring that valuable staff time is spent on the applications which need it most, provided the solution you implement is flexible and configurable to your organisation’s particular risk appetite. For complex client structures and supplier onboarding, where multiple individuals need to be risk-rated, screened and verified, there is the added opportunity to apply automation that will risk-rate multiple parties simultaneously, saving both time and resources.
Automate KYB screening and UBO shareholder mapping While there are various sources of structured data to supply some of this information, unstructured data sources such as adverse media may also need to be considered to get a fuller risk picture. Mapping shareholders and UBOs is an onerous task and one where technology can step in to automate and improve efficiency. Ideally, you will want to enable your team to be able to quickly navigate complex, cross-border client structures with network visualisations directly within the onboarding solution.
	Audit trails and reporting An audit trail and the ability to produce reports, is not only best practice but also a regulatory requirement in many sectors. It serves two major purposes, the first to prove to regulators that you are implementing the correct processes to mitigate potential risk, and secondly to provide evidence and information for regulators in the case of suspected illegal financial activity. This can be a complex and labour-intensive task. A fully automated digital solution that records all the actions performed by your team during the onboarding journey of every customer or entity will save time and improve accuracy and resilience.
Low-code vs no-code Full service digital onboarding platforms are large and complex products, with many interlocking modules required to deliver an end-to-end experience. When you invite vendors to demo their solutions to you, be sure to ask whether what you’re seeing is ‘out of the box’ - meaning available now, off the shelf, or whether it has been custom built for demonstrations. Finally, you should ask to see ‘behind the screens’ - can important features be configured via the user interface (‘no-code’) or is developer input required to change things (known as ‘low-code’ if only modest developer assistance is required or ‘custom-build’ if heavy input is needed).

Managing the change

The digitalisation of a customer onboarding process is not just about new technology. With any digital transformation project, if the right change culture and mindset is not present among the teams involved, then technology alone will not deliver a solution. In fact, it’s best practice for organisations to focus on placing the right people in key positions before commencing transformation projects to ensure that the change management aspects are assessed and prioritised right from the start.

It’s critical that your people are aligned to the objectives of a digital onboarding project, are able to deal with roadblocks and adapt to change in an agile fashion and not lose sight of the primary goals. Critically staff should view new onboarding technology not as a threat but as an enabler of faster time to revenue and elevated customer satisfaction.

Follow these tips for successfully managing change:

Demonstrate a long-term commitment to fostering an openness to change by encouraging learning in a response to past experience. Consider projects that were received well by the people involved, those that didn’t and learn why.
Get buy-in from key stakeholders and the wider change team. Consider appointing “change champions” in key areas who can be the conduit between staff and the digital onboarding project.
Business process and procedure needs to be rehearsed to ensure that the people involved in a new digital onboarding process are prepared operationally and personally, to accept the introduction of new methods.
Implement a transition phase. Make small incremental changes to adapt to feedback. The teams involved will start to see the benefits of moving away from previous time laden manual processes and take ownership of the new operation.

Reasons to digitise onboarding


Total onboarding time takes too long. The most common enemy faced by organisations when onboarding new business is time. The underlying causes of lengthy onboarding times are many, but often include the following key reasons: Poor and outdated systems and processes Too many steps to be covered (both internal and external) A lack of oversight between departments (front and back office) The prevalence of data silos preventing the sharing of information A lack of automation for laborious manual tasks Asking for the same information multiple times from ‘frequent fliers’’ All of these can be addressed by the smart implementation of an effective digital onboarding platform, matched by appropriate process change.	Lack of staff knowledge An effective onboarding process covers far more than simply verifying that a prospect doesn’t have a criminal record, or they don’t appear on any sanctions, PEPs, and watch lists. It should be a comprehensive process, with all members of the onboarding team having a clear understanding of how and why it works. Only this way will they have oversight of a customer’s onboarding progress and be able to deal with issues at any stage. It’s not uncommon for those tasked with running the onboarding process to have inherited a legacy system that was implemented by people no longer in the organisation. As a result, they may have a poor understanding of a process which is itself likely to be outdated. The implementation of a market-leading fully automated digital process is the first step. The second is ensuring that the people tasked with operating it are fully trained and supported at all times.

Siloed data Fragmented and siloed data within an organisation can cause multiple issues with the onboarding process and can even stop the digital transformation programme in its tracks. The data being collected on customers should be stored securely in a central repository that is accessible by all the teams involved in the process. This is to avoid a situation such as front office staff storing data in one place and the compliance team saving it in a completely different location, this can lead to a multitude of problems. Collaboration through a central system should be the goal for every onboarding team. The objective should be to create a ‘single customer view’ which maintains a clear audit trail of all the stages through onboarding, from initial data collection and ID verification through to the screening results and applied risk-rating. The benefits of having one consolidated system will be seen across all future ongoing monitoring and the simplification of any remediation work that needs to be carried out.	Being unaware of customer problems If you are unable to track the progress of your prospects’ onboarding journey, how will you know if they are struggling with the process? The workflow of data collection must be moulded around the customer, in order to deliver the most efficient and user-friendly experience. In addition, there needs to be comprehensive help material for customers if they get stuck at any point, together with a fast, dedicated support mechanism for those who require more personal assistance – and alerts to your users if a customer application is stuck or not progressing as expected.

Buy or Build?

The harsh reality is that 70% of all digital transformation projects end in failure, a statistic that includes many projects that went down the path of ‘build’ instead of buy.

There are many reasons for this, but chief among them are:

Underestimation of the magnitude of the task of building a reliable, secure onboarding system
A failure to define accurately the requirements for what is a complex system build.
Attempts to build software by organisations whose core purpose and expertise is in a quite different area.
Difficulty in integrating specialist third party suppliers of data or technology, resulting in significant delays to planned build timelines.
The challenge of maintaining a large system once built and keeping it secure.
Lack of flexibility once built.
Key-person risk if the architects or engineers who built the system leave the business.

For all but the largest or most technically able organisations, buying an ‘off the shelf, no-code’ solution and customising it to the organisation’s requirements is likely to be a more cost-effective and durable approach than self-build.

What to do next?

If your organisation is ready to digitalise customer onboarding here are some simple steps to follow that will help improve the chances of a successful transformation project.

1	Consider the critical success factors – what are you looking to achieve through the digitalisation of customer on-boarding?
2	Identify key stakeholders including business units, risk functions and customers and consider what each group needs from the transformation project.
3	Consider what features an onboarding solution needs to have in order to deliver your critical success factors.
4	Using the answers to the exercise above, longlist vendors and discuss how their technology can provide solutions for your specific needs/use case. Ensure the vendor has a thorough understanding of your specific challenges.
5	Shortlist one or more vendors. Provide them with an insight into your current process and planned future process and ask them to show you how their technology could support it
6	When vendor technology is being demonstrated ensure that what you are being shown is in production and not a planned roadmap item. Beware vapourware!
7	Ask the vendors questions including: How quickly can the solution be deployed and when can we expect to see a return on our investment in the solution? What flexibility do we have? Is the solution configurable without the need to pay large sums of money in professional services fees? Does the solution come with the risk-based approach ‘baked-in’ which is adaptable to our organisation’s risk appetite? Does the solution allow for unlimited onboarding journeys/types? How many customers do you have actively using your technology in my sector? How will you support my implementation project? How will you support our use of the technology over time and what is your historical CSAT score for this solution and customer retention rate? Look for vendors that provide honest answers – not every answer will be ‘yes’, some may be ‘no’, ‘not yet’ or ‘no and this is why’.
8	Conduct a commercial and legal assessment and check on what service level the vendor will offer.
9	Is there scope to grow with the vendor/do they offer other platform services you might want to add over time?
10	Do they have a roadmap for product improvements – are they investing in their solution?
11	Finally, if all other questions have been answered to your satisfaction: ‘when can you implement this for me, how long will it take, and what do you need me to provide?’
12	Decide on a vendor and mobilise your project team!

Download a PDF copy of this guide to help you on your journey.

Onboarding from KYC360

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Create the right first impression with your clients and reduce time to revenue with our market leading, dynamic digital onboarding solution. Whether your challenge is retail onboarding at scale or navigating highly complex client relationships our flexible, award-winning solution will enable you to drive efficiencies and deliver superior customer experience from the very first interaction setting the tone for profitable, long term business relationships.

The end-to-end KYC360 platform enables screening and CLM functionality to be added seamlessly to your onboarding flows reducing data silos and operational inefficiencies.

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Part of the KYC360 Customer Lifecycle Management Platform

Onboarding is part of the end-to-end KYC360 modular CLM platform allowing you to seamlessly integrate customer onboarding flows with screening and pKYC. By adopting the platform, your business can consolidate its system stack and benefit from significant operational efficiency gains, improved decisioning and MI.

Comply and Outperform with KYC360.

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