Customer onboarding is a critical step in a customer’s journey with a bank as it leaves a long-lasting footprint in customers’ minds about how they perceive a bank.
The rise of the neobanks and challengers has had a profound impact on how the banks redesign the products and services to compete in the market and to retain customers. Customer-centricity is at the forefront and digital engagement across different channels and touchpoints is of the utmost importance. Nowadays, retail digital onboarding has been steadily adopted by banks across the world. Banks are now looking to offer the same digital experience to their corporate banking customers due to the increasing demand for conducting the business digitally. A recent article by Emirates NDB states that the bank has witnessed a 60% month-on-month increase in corporate digital onboarding.
This article throws a spotlight at some of the best practices adopted by banks to address the challenges in the corporate digital onboarding process. While the geography and demographics, corporate digital onboarding addresses is quite different from the retail digital onboarding, the challenges in onboarding a customer are somewhat similar. Though, digitally onboarding corporate clients is more complicated because of the diversification in many aspects.
Before we dwell deep into the differences between the two, the objectives are the same for both types of digital onboarding: provide a seamless and fully digital onboarding experience, reduce the customer efforts such as paperwork and manual entry of data in the application thereby reducing the frustration and abandonment, eKYC, and AML compliance and so on.
The complete digitalized corporate onboarding in bank includes the following elements in the process:
- Applicant Information and Verification
- Business Entity Information and Data Capture
- Business Entity Identity Information and Structure
- Business Entity Document Uploads
- Shareholders, Directors, Ultimate Beneficial Owner (UBO) Information
- Risk Assessment and Scoring
- Role of the Stakeholders in the Business Entity
- Individual e-KYC and Document Upload
- Individual AML Check
- Authorization, Confirmation, and Consents through e-Signing
Following are the key comparisons:
1. Data Capture
The required data for commercial customers is far more than the individual customers to open an account with the bank. It includes not only the applicant and related stakeholder data but also the business entity itself. If the onboarding is for loan origination, it may require more information than the account origination, e.g. the financial information.
2. Support Documents
The supporting documents required to complete the process is more as it involves both the individual and the business entity. Business registration, annual report, tax compliance, legal entity verification, and so on.
3. Involved Parties
The complexity and nature of the business entity will determine the involved parties in the client onboarding process. A multi-national corporation should involve more roles and parties than the small to medium business. A commercial entity should be different from the non-profit organization. For retail, it will involve an individual or the parent/guardian particulars at most unless it is a joint account.
e-KYC is the process of verifying the identity and the submitted documents and also provides the captured information as a common practice. In corporate digital onboarding, it is one of the challenging steps as it requires to carry out the e-KYC process for individuals (shareholders, directors, chairman, UBO) and the business entity. The business entity verification will be done through the retrieval of the records from the local statutory body. It depends on the availability of the APIs and hence the technical feasibility. It may also incur the fees at this stage.
5. Security and Regulatory Compliance
The process involves few more parties and the security requirements will be more stringent compared with the retail onboarding. For instance, the application may split into few steps and hence it allows users to resume the application. In other words, it should find a way to generate a secure code and ensure only authorized personnel can retrieve the partially filled records. Unlike retail banking, a multinational organization may have the subsidiaries across the globe and each subsidiary will follow the local regulations. In other words, it is hard to follow the international uniformity.
6. Risk Scoring and Assessment
Risk assessment and scoring is another area that corporate onboarding will cover. It should be a dynamic process and automation will be made based on the input of the applicants.
The increase in the demand for digital channels due to the current pandemic situation will accelerate the adoption of digital onboarding by banks to offer its corporate customers a safe and contactless process to onboard.