How far have private banks come with digital client-onboarding?

In an age of instant gratification and digital domination, client-onboarding still remains a time consuming and highly manual process

How far have private banks come with digital client-onboarding?

In an age of instant gratification and digital domination, client-onboarding still remains a time consuming and highly manual process for private banks.

Lengthy Know Your Customer (KYC) due diligence processes is a well acknowledged, industry-wide issue. It can still take up to three months to fully onboard one client for private banks. While customer centricity and user experience (UX) are being held to the highest of standards, getting the process right at the client-onboarding stage is extremely important in order to create a gratifying and long lasting relationship with wealthy clients.

The complexity of some of the regulatory requirements has increased the sheer volume of paper work that clients have to run through and the process is driven by compliance rather than business logic. The challenge of making this process easier and seamless is an imminent one and private banks need integrated client on-boarding framework to reduce the fragmentation that currently exists.

Private banks are increasingly using technology to simplify operational complexities and eliminate pain-points. In early March, for instance, Credit Suisse announced plans to launch a fully front-to-back automated Digital Client Onboarding application for RMs to onboard Singapore-domiciled clients looking to open accounts with the Singapore branch of Credit Suisse.

The app aims to enhance client-onboarding efficiency and facilitate digital onboarding through a specially configured iPad that can capture a client’s signature electronically and support optical character recognition for client identification documents.

This is an ambitious step forward for Credit Suisse and their clients in Singapore. Tier 1 banks such as Credit Suisse, in fact, have the capital to invest in stronger technology projects to strengthen their digital propositions.

However, imagine for a second this digital onboarding app rolled out in a higher-risk jurisdiction. This will be a near impossible task taking into account the regulatory reporting necessities and required regional KYC refreshes. In these cases, manual processes still dominate. For several banks that operate across multiple countries, the rising cost and pressures to remain compliant to local and global reporting standards have become too high to bear in any case.

From the perspective of the end-clients, onboarding, essentially, is an administrative activity that should be straightforward. It is easier said than done though. Wealth management firms have indeed been trying to digitise the client-onboarding process in several ways to make it uncomplicated – from simplifying how documentation is captured via i-pads to using embedded videos to walk customers through steps of the on-boarding process and educating them on key aspects such as investments-related risks.

This is useful and private banks should continually evaluate which parts of the onboarding process could truly benefit from going digital.

Credit Suisse’s recent announcement proves that a completely digital process is also plausible. However, the point remains that despite the headways being made, a fully digital onboarding system is a long way from fruition for the majority of regions and banks, particularly considering wealthy clients’ complex portfolios and profiles alongside the myriad regulatory barriers.

The even bigger underlining point remains that for every digital initiative to become a success, even more time and capital must be invested to rejuvenate the back-office space. That is another Pandora’s Box for private banks all together.