About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Operational Inefficiencies Costing Banks $3.3trn: Fenergo

Subscribe to our newsletter

New research from client lifecycle management provider Fenergo reveals that slow and manual onboarding processes could lead to commercial and business banks individually losing $4.5 billion 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 the trend continues, customers could be facing a six week wait to be onboarded by 2020.

In the last year alone, the global commercial and business banking market has lost $3.3 trillion because of abandoned applications during onboarding, says the research. And with new challenger banks such as Revolut, Monzo and Apple Pay disrupting the market, institutions that rely on traditional onboarding methods are in danger of becoming obsolete.

Despite the shift to digital banking, a surprising 18% of banks still rely on manual processes for Know Your Customer compliance (KYC) – including telephone, email, letter or in-person meetings. A further 14% say that 20 or more people are involved in the onboarding process for just one complex client, while 15% say that they had to get in touch 10 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,” warns James Follette, Global Head of Commercial, Business and Retail Banking at 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.”

So far, 78% of surveyed banks report that they have lost customers to digital-first, disruptive competitors. And they already know that things need to change – 92% of CEOs agreed that they need to transform radically in order to compete.

This becomes particularly important as institutions attempt to compete in a constantly shifting regulatory landscape. An overwhelming majority (96%) of banks confirmed 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.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Best practices for compliance with EU Market Abuse Regulation

EU Market Abuse Regulation (MAR) came into force in July 2016, rescinding the previous Market Abuse Directive and replacing it with a significantly extended scope of regulatory obligations. Eight years later, and amid constant change in capital markets regulation, technology and culture, financial institutions continue to struggle to stay on the right side of the...

BLOG

Asset Managers Can Learn Lessons from New Government’s Cost Pressures

By Thomas McHugh, CEO and Co-founder of FINBOURNE Technology. Any new government brings the inevitable “change” message, but one thing never changes regardless of who has the keys to the treasury – seeking out departmental cost savings wherever humanly possible. With unprotected departments facing cuts of up to 2.9% according to the Institute for Fiscal Studies,...

EVENT

RegTech Summit London

Now in its 8th year, the RegTech Summit in London will bring together the RegTech ecosystem to explore how the European capital markets financial industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

Regulatory Data Handbook 2024 – Twelfth Edition

Welcome to the twelfth edition of A-Team Group’s Regulatory Data Handbook, a unique and useful guide to capital markets regulation, regulatory change and the data and data management requirements of compliance. The handbook covers regulation in Europe, the UK, US and Asia-Pacific. This edition of the handbook includes a detailed review of acts, plans and...