Slow and manual onboarding processes could lead to commercial and business banks losing $4.5bn in revenue, according to a new study from client lifecycle management company Fenergo.
The survey stated that onboarding times have increased by an average of three weeks in the past 12 months. If the trend continues, customers could be seeing six-week onboarding applications in 2020.
Fenergo’s research received the thoughts from more than 500 senior decision makers at commercial and business banks across EMEA, North America and APAC.
With the increasing popularity of challenger banks like Revolut, Simple, Tide, and Monzo, commercial and business banks still relying on traditional onboarding processes are being heavily impacted. It claims that in the last year alone, the global commercial and business banking market has lost $3.3tn because of abandoned applications during onboarding.
One of the surprising findings from the report is that while digital banking is becoming more popular, 18% of these still rely on manual know your customer processes, including telephone, email, letter or in-person meetings.
Furthermore, 14% claim that 20 or more people are involved in the onboarding process for just a single client, and 15% state they get in tough ten or more times for data or documents to onboard new clients.
Its research also claims that 78% of the banks stated they had lost customers to digital-first competitors.
Traditional banks do understand the threats ahead of them, with 92% of CEOs agreeing radical transformation is needed to compete with digital-FIRST banks.
When stating why onboarding times have increased, 96% agreed that increasing and evolving regulation is the main reason.
Fenergo global head of commercial, business and retail banking James Follette said, “With more and more digital-first challenger banks entering the business banking market, customers now have the ability to sign up to a new bank within minutes. Business and commercial customers are naturally going to gravitate to banks that provide the same low-touch experience as the consumer digital services they are familiar with.
“Whilst banks such as Revolut and Simple have the benefit of being digital-first, it’s not too late for more traditional commercial and business banks to bring their processes up to date and adequately compete. If they don’t make these changes, money and customer losses will be such that they’re unlikely to survive a downturn.”
Copyright © 2019 FinTech Global
