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A-Team Webinar Discusses the Imperative of Change in Client Onboarding

Improved customer service, faster time to revenue, reduced technology costs and the ability to comply with current and future regulations are just some of the benefits of new data management approaches to client onboarding and Know Your Customer (KYC), but they cannot be gained without achieving organisational change and senior management buy-in.

A recent A-Team Group webinar discussed the imperative for financial institutions to change their approach to client onboarding if they are to remain competitive and comply with onboarding and KYC regulations. A-Team Group editor Sarah Underwood moderated the webinar and was joined by Ben Marsh, CEO of iMeta Technologies; Joe Dunphy, vice president of product management at Fenergo; and Adam Devine, vice president of product marketing at WorkFusion.

If you missed the webinar, you can hear a full recording and download a Special Report on the topic here.

Underwood set the scene for the webinar, noting increasing regulatory scrutiny of KYC and client onboarding processes matched by increasing fines for non-compliance. From a bank and customer perspective, predominantly manual onboarding processes are frequently suboptimal, leading banks to consider the adoption of innovative solutions that will automate and improve their processes.

Outlining the problems of client onboarding, Marsh explained: “Many financial institutions have silos of data across their business lines. This means they request information from clients many times and use multiple data sources to support onboarding. The process can take a long time, leading to poor client experience and delays for financial institutions in achieving revenue.”

Dunphy added: “When business functions across a financial institution have independent onboarding processes, the processes are replicated, leading to an increase in technology costs, the inability to reuse data and documents, and a lack of capability to aggregate risk.” Devine said the use of brute force, headcount and point solutions only answers pieces of the problems of client onboarding, making it an expensive and cumbersome process.

If these are some of the problems of onboarding, solutions must be found as existing regulations are increasingly being enforced and forthcoming regulations extend the need for customer knowledge and compliance. Dunphy commented: “The need is for a single source of client data that encompasses all relationships a financial institution has with clients and counterparties. This can drive risk assessment and help a firm meet regulatory requirements.”

Looking at new approaches aimed at solving the problems, Marsh said: “The silo approach means firms can’t have a single view of client data. A singular approach that allows client data to be maintained in one place, new data sources to be leveraged and business rules to be run across the data can deliver a rapid client onboarding process.”

Dunphy concurred with the need for centralised data and noted that client onboarding should not be a one-off activity, but a client lifecycle management task. He said: “You can’t code your way out of this. The need is for a framework with advanced rules-based business logic that will meet multiple regulatory requirements.”

Taking a different tack, Devine suggested rules-based solutions don’t necessarily support exceptions management and argued the case for data collection supported by machine learning. He said: “Machine learning is at the core of our software-as-service platform and firms are already using it to handle chunks of KYC work on an incremental basis. It is the only way to move forward efficiently, while delivering data accuracy and cost reduction.”

While the panel members did not agree on the best approach to client onboarding, they did agree that the benefits of change include reduced time to revenue, improved customer service, transparent and auditable customer records, less remediation as changes in client risk status can be seen quickly, the ability to handle new regulations and, of course, cost reduction.

The barriers to adoption of new data management approaches to client onboarding were cited as the requirement for organisational change, the need for leadership buy-in throughout implementation and, in the case of machine learning, a lack of awareness of the technology beyond its previous use in large and long-term projects.

Offering advice to data practitioners addressing the issues of client onboarding and KYC, Marsh said: “If you are embarking on this challenge, focus on the end goals of getting compliance right and transitioning customer business. This is a great opportunity to assess customer risk, improve customer experience and realise revenue from customer relationships.”

Dunphy advised: “Building a solution for client onboarding in house is too difficult against compliance deadlines. Look to the market for standardised solutions from market leading vendors that are being adopted across multiple jurisdictions.” Devine concluded: “This is a great opportunity for banks, they can be bold and hold vendors accountable for proving their solutions.”

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