Client onboarding: Is technology automation enough?

Most banks have a backlog of remediation to refresh and periodic review to implement. Shifting regulations have meant that Due Diligence standards have risen, so there is more demand for EDD during the onboarding processes. So, how do banks achieve better KYC processes whilst onboarding, and how can banks continuously monitor and refresh three main pillars of data whilst overcoming the backlog of remediation? Whist technology can help automate and fasten onboarding times, can firms rely on a technological solution alone to increase EDD during the onboarding process and mitigate risk?

We have highlighted some of the most significant issues affecting the onboarding processes in 2020 and asked if a technological solution alone can fix these challenges.

  1. Abandonment issues were at their highest for firms in 2020

According to Signicat, 63% of the European consumers surveyed have abandoned a digital bank app during onboarding in 2020, an increase never before seen [1]. KYC systems in the onboarding processes are challenging to fine-tune – keeping regulatory KYC and AML requirements and creating a streamlined process in which to onboard new customers effectively and efficiently is no easy task. In many cases, KYC checks were not designed with the digital customer at the forefront of the process. Add a global pandemic, and these processes now remote need to be aligned to purely digital settings whilst maintaining regulatory conduct and being compliant.

  1. COVID’s impact on onboarding processes

Many customers, pre-COVID complained about lengthy and rigorous onboarding processes that took too long. Moving onboarding processes to purely digital ones has placed significant pressure on firms, especially those who want to acquire new customers. The customer must first and foremost meet the bank’s requirements before deciding if the individual can be onboarded. This process can take longer than expected for many. It is estimated that it takes an average of 32 days to onboard a new customer. Due to the departmental nature of banking operations, each customer goes through around 8 different interactions during the customer onboarding process [2].

Fenergo recently released that according to their findings, one in three (36%) financial institutions have lost customers due to inefficient or slow onboarding and 81% believe poor data management lengthens onboarding and negatively affects the customer experience.

  1. Review Cycles

Whilst banks usually conduct 1-year review cycles on high-risk customers, the 3-5 year risk cycles of medium to low-risk customers has become an afterthought and are typically ignored. This results in significant pressures on banks to effectively and efficiently conduct these risk cycles to avoid hefty fines from the regulators.

Technology may be the answer to Banks’ prayers in solving the urgent call for KYC optimisation, but it most certainly won’t solve the issue alone. There is an array of software that could help firms conduct periodic reviews, but a human component would still be necessary for monitoring risk.

How a solution beyond just automation technology is needed

Yes, technology can streamline the changes you require – but to an extent. Look at data mining, for example, during your onboarding processing. The technology can mine and source data against the rules it has been programmed to work with. But this objectivity can only act as a warning. It will throw up areas that need human judgment calls. Integrating and combining skilled, knowledgeable, and experienced people resources into the process becomes a crucial part of the delivery mechanism.

Firms will need people who are familiar with systems and have a deep understanding of rules, guidelines, and issues and can also spot, either through training or experience, areas of risk. The ‘Triage’ stage is not merely an administrative activity – it is where a firm’s risk strategy meets the system output.

Now the system can be set up to ‘automatically’ resolve some risks or exceptions thrown up by the data. Still, it is through this human interrogation that risks can be escalated for investigation.

Over time, the system will evolve by re-modelling and re-programming against continually identified risks, feeding directly into the KYC agenda, and reducing the overall manual workload level.

So as risks are identified and categorised, the Triage team can direct the risk cases to the appropriately skilled resources to complete the investigation and reporting – this optimises the workflow and should drive efficiency into the process.

And lastly, there needs to be cohesion between the triage team and the investigation team – a feedback loop will help minimise the amount of investigation that will need to be completed in the future via the re-modelling I mentioned earlier.

The combination of people and technology has the power to shorten the timelines of managed services project requirements by up to 80%, allowing for faster delivery and cost efficiency whilst producing greater transparency and a more robust and higher quality output. A bank can make faster, more confident decisions about customer risk that are 100% auditable.

We recently surveyed 245 market participants during a webinar we ran on KYC. We asked the most important focus area in terms of attaining Perpetual KYC, using a combination of people, processes, and technology. The results revealed that:

  • 9% believed automation was part Automation part of all of their customer’s onboarding processes
  • 6% of participants wanted to shorten their client’s timelines of AML/KYC checks – remedial BAU
  • 2% wanted to deliver consistent, transparent, and robust output for record-keeping and audit trail purposes
  • 8% of participants wanted to enable faster, more confident decisions about customer risk

At Momenta, we understand the vast benefits that technology can have for AML/KYC projects. We combine our people’s detailed knowledge and expertise of the regulatory environment with leading technology designed to solve practical customer challenges to provide scalable, high quality, low risk, cost-effective services.

  • Extending or augmenting clients existing business as usual activities or creating and/or operating a new stand-alone project team.
  • Conduct client’s businesses new client onboarding – adopting your existing compliance policies and requirements.
  • Carry out your periodic reviews or AML refresh exercises.
  • Strip a significant proportion of your client’s costs out of their existing AML/KYC piece, whether it is BAU or remediation.
  • Tailored to the project requirements and circumstances, our people and technology solutions are ready to be deployed instantly. The agility of the solution allows for adaptations on-demand as required through the project.

Get in touch with us today to find out how our bespoke solutions could streamline your onboarding processes today.

List of citations:
[1] Phillips, Tom. “Six in Ten Europeans Abandon Digital Bank Applications during Onboarding • NFCW.” NFCW, 4 Nov. 2020, Accessed 6 Nov. 2020.
[2] “A New Approach to Customer Onboarding & Software.” Artesian, 14 Oct. 2020,