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 practice approaches to trade surveillance for market abuse

Breaches of market abuse regulation can lead to reputational damage, eye-watering fines and, ultimately, custodial sentences of up to 10 years. Internally, market abuse triggers scrutiny of traders and trading behaviours; externally it can undermine confidence in markets and cause financial instability. This webinar will discuss market abuse of different types, such as insider trading...

BLOG

FinScan Combines Data Quality Experience with Technological Expertise to Deliver Agile AML Solution

FinScan has combined experience in data quality with technological expertise in screening to provide an Anti-Money Laundering (AML) solution designed to help financial institutions develop more efficient AML programmes that generate fewer false positives and support better detection of true alerts. The company is part of Pittsburgh-based Innovative Systems, which was founded in 1968 and...

EVENT

Data Management Summit New York City

Now in its 14th year the Data Management Summit NYC brings together the North American data management community to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

Regulatory Data Handbook 2023 – Eleventh Edition

Welcome to the eleventh edition of A-Team Group’s Regulatory Data Handbook, a popular publication that covers new regulations in capital markets, tracks regulatory change, and provides advice on the data, data management and implementation requirements of more than 30 regulations across UK, European, US and Asia-Pacific capital markets. This edition of the handbook includes new...