A new report from identity analyst Consult Hyperion has revealed the five biggest challenges currently facing financial institutions when onboarding business customers. The report, The five challenges of business onboarding and customer due diligence, was produced in collaboration with leading identity verification provider HooYu, and is based on insight gathered from leading fintechs and retail banks.
Business onboarding is predominantly a manual, paper-based process, which is costly for the bank and slow for the customer. New regulations, such as AMLD5, are only adding complexity. The average time to onboard a business banking customer has increased to 32 days, with the total cost of KYC processes forecasted to increase by nearly 20%.
The report breaks down the factors that drive up costs and reduces speed into five challenges that financial services businesses are facing:
- The onboarding process needs to fit businesses of very different sizes
- The ability to quickly and accurately identify and verify who is behind a business
- The limitations of third-party database checks
- The requirement for additional documentation
- The hidden costs of ongoing due-diligence
David Pope, Marketing Director at HooYu commented: “The processes employed by most financial firms to onboard business clients are time-consuming and complex, they often involve manual steps and protracted back and forth with the prospective customer.
“While larger businesses may have the time and resources to dedicate to these processes, for SMEs it is much more problematic. In the UK there are 5.7 million SMEs—over 99% of all businesses—so it is a huge problem if there are roadblocks in these businesses account opening journeys.”
Steve Pannifer, COO at Consult Hyperion added: “The rise of fintech has seen a revolution in consumer financial services. A digitised financial services industry is creating great customer experiences by focusing on the customer journey.
“But the digitisation of services for business users—in particular SMEs—lags behind. In this revolution, not all financial services firms have yet embraced new models and ways of thinking.”
The report can be downloaded here: https://hooyubusiness.com/business-account-opening-whitepaper/