By W.B. King
Aite-Novarica Group's report, Bank Priorities for Treasury Onboarding (2022), found that onboarding remains a key pain point for financial institutions (FIs) and consumers. When 57 corporate banking executives were asked how they viewed the overall level of automation with respective onboarding processes, 38% said “not at all efficient.” Sixty percent found the length of time it takes to onboard a corporate consumer as “efficient but not where we need to be.”
As a follow-up to the report, Financial Back Office Automation (FINBOA) hosted a webinar, “Turning Necessity into Strategic Advantage,” in June 2023 featuring Paul Kizirian, a strategic advisor serving on Aite-Novarica Group’s Commercial Banking and Payments practice.
“One of the reasons this is a hot topic is because the market in changing,” said Kizirian. “There is a lot of dynamism going on between banks, the growth and technology appetites of companies as well as fintechs who are eager to take on all of this business and provide customer service that provides them cash flow.”
Billed as “enabling smarter decisions and a stronger performance,” the Boston -based Aite-Novarica Group serves the financial services and insurance industries by delivering intelligence and reliable insights based on data-driven research.
FINBOA’s Strategic Advisor Dave Hunkele joined Kizirian on the webinar, explaining that the company focuses on developing an “automation journey” for FIs that includes building digital back offices.
“If you think about the 20 years of investments you’ve made in online and mobile banking that was for the benefit of your customers…making it easier to do business with you — what’s missing now is how to make it easier for your staff to engage with your customers and give them the same kind of tools to have visibility and transparency and to automate as much as of the process that lends itself to automation,” Hunkele said.
With more than 130 bank and credit union clients, the Houston-based FINBOA provides banking-specific software as a solution (SaaS), featuring pre-built workflows, dashboards and end-to-end digital processes.
Missed Opportunities to Deepen Relationships
Kizirian pointed to Aite-Novarica Group research statistics that found between 5 and 10% of new online treasury product applications never get completed due to poor onboarding capabilities and experiences.
“The results are obvious: loss of revenue, missed opportunities to deepen relationships and underutilization of resources,” he said. “When onboarding is poor, you take a pause and say, “Maybe I made a mistake.’”
The most innovative FIs, Kizirian noted, know when they are falling short. “If you feel you meet expectations, you don’t feel the need or urgency to improve them, to deepen your technology stack or provide a better experience.”
Referencing the above report, he said that 31% of businesses said that onboarding process at their FI take more time than expected, while 42% view the onboarding experiences at fintechs to be more efficient than their FI.
What especially stood out to Kizirian was that a growing number of corporate FI treasurers know that a fintech is more efficient than their bank.
“There is revenue leakage happening in the relationship management of a financial institution,” he said. “That means your commercial, middle market or emerging customers or larger…they are actively building relationships with fintechs and guess what — they are having a good experience.” To illustrate his point, he noted that 61% of treasurers at FIs had to provide the same information repeatedly during their most recent onboarding experience.
While nearly half of those polled in the report said they plan to invest in onboarding technologies in the coming year, Kizirian said he was surprised that number isn’t higher.
“That’s not going to really help [those not investing], especially in a competitive environment amongst banks, much less with fintechs,” he said. “When we see innovative banks that definitely plan to invest, we can foretell that as they look at different technology solutions to improve their client experience that there is going to be a positive response.”
By investing in a “good onboarding experience,” Kizirian said the report found 39% of FIs experience revenue growth.
“The challenge with onboarding is that it’s just not another IT project. Onboarding is transformative in the way an institution responds and works with it clients,” he noted, adding that FIs that do invest realize increases in client retention, overall profitability, treasury sales and loan growth.
Onboarding: Think Uber
When FI executives polled were asked the most critical elements of a successful treasury onboarding experience, they responded: creation of smart forms that auto-populate previously gathered information (58%), electronic signatures (42%), a digital workflow tool that shows FI employees onboarding status, pending tasks and assigned allocation of tasks (36%), client facing dashboard to show onboarding status (36%) and integration of multiple internal banking systems, such as core and customer relationship management (36%).
Onboarding solutions, Kizirian shared, can be compared to the traditional taxi model that is competing with contemporary players in the space.
“Taxis shouldn’t be comparing themselves to themselves, and because they have for so long that is what gave room for an Uber and Lyft to come and look at their evaluations,” he said. “So when we think about onboarding, it’s really important to understand that if you don’t have an efficient process, you’re exposing yourself to someone else to come in and take your clients.”