Over the last decade, vendors have solved the problem of consumer account opening. Many solutions out there will allow your company to open a consumer account in minutes. The Identity and Verification (ID&V) tools for individuals that power these consumer account opening tools are mature enough that they are becoming commoditized. On the other hand, opening accounts for businesses and other complex entities like trusts, not-for-profits, MSBs, or foreign individuals, still requires manual processes and lengthy account opening times.
Why is onboarding complex entities so painful?
Not all clients are alike – Each business can have a unique structure with different types of beneficial owners. The business can engage with a plethora of products and services each requiring its own disclosure, forms, and document set. Different corporate structures require different documentation and different compliance reviews. This complex set of paths makes automation more challenging, leaving banks stuck with legacy manual procedures and bank teams managing all the admin.
Multiple departments and contact points – These are typical when onboarding and serving business clients, and they add additional friction. In even a simple business account you might have a banker, deposit operations, and Bank Secrecy Act (BSA) team all collaborating over a multi-day process. Of course when you get into more sophisticated accounts with lending and treasury management then there can be upwards of five or more departments involved just to open the account.
Different departments usually mean different IT systems – To onboard an account might require entering the same information into many tools. For example: banking core, document management, Anti-Money Laundering (AML) tooling, online banking, treasury management and Customer Relationship Management (CRM). This soaks up days of a team’s time and creates opportunities for human error.
Finally, most legacy systems suck – They are inflexible, cost a lot of money, look terrible, and don’t play well with other providers. Often trying to connect and integrate your different software systems is so complex and expensive it’s cheaper to just hire more people and deal with the manual processes.
The business bank of the future isn’t faxing paper…
In order to keep up with the pack, banks need to ditch these legacy processes and paper based activities and go digital. Covid caused many consumers to realize that the traditional brick and mortar branch isn’t as important as they thought it was. Pre-pandemic, two important factors a business would consider when looking for a bank were: Services available in-branch and how many branches the bank had around the country. These swiftly became irrelevant as business clients were forced to bank remotely. This change, though painful and disruptive at the time, has created a once in a decade opportunity for smaller or medium sized banks and credit unions to win business away from the larger banks. After all, a big part of their selling point was their nationwide network of branches. But their other selling point was better technology, and that is a gap that smaller financial institutions still need to close before they can win.
So the objective is clear – banks need to:
- Offer an omni-channel account opening process which can start or end online.
- Allow ANY account to be opened online, not just basic consumer accounts. (This doesn’t mean a banker isn’t involved in the final approval.)
- Build out sufficient anti-fraud and AML tools to minimize the risk of remote onboarding.
- Ensure the user experience during onboarding is a delight.
The reality however is that accomplishing this requires seamless connectivity between many different systems in addition to a flexible onboarding tool. Once you have digitally collected all your client information and verified their identity, collected signed documentation, crossed all “t”s and dotted every “i”, you still need to open the account. This means at a minimum interfacing with the core and document storage. Optimally it would also include treasury management, the loan origination system, and online banking too. The prospect of integrating with all these providers is enough to send chills down the spine of the experienced banker. This is where the right architecture can change this reality.
The Enterprise Service Bus (ESB) is not new technology, but it is new to most community banks…
An ESB is an integration layer which sits on top of all the bank’s legacy systems and connects them to each other as well as new technologies.
However, it is not simply just connecting various systems. It actually contains in it the intelligence to build out workflows allowing true automation between systems. Here is the second secret to true automation of complex onboarding. This intelligent orchestration layer connects your best in class onboarding tool to your core, document storage, and any other systems used during the opening of an account. That allows for an onboarding experience that can truly delight new clients.