how can financial 2 15 19 29 institutions streamline and ... · financial institutions are adapting...

2 15

Point of view A framework for responseCompetitive intelligence

How can financialinstitutions streamlineand enhance customeronboarding to promotelong-term, profitablerelationships?

Appendix

19 29

All aboard:Delivering the onboarding experiencecustomers demand

FS Viewpoint1

Executive summary

Financial institutions that getcustomer onboarding rightfocus on three overarchingobjectives: improving thecustomer experience, ensuringregulatory compliance, andenhancing operationalefficiency.

All aboard: Delivering the onboarding experience customers demand

Financial institution customers expectmore.

Based on interactions with companies across avariety of industries, customers today havehigh expectations. When joining a newfinancial institution, they expect a streamlined,efficient, and personalized onboardingexperience.

Love them or lose them

Financial institutions face challenges becauseof antiquated technology, lack of coordinationacross business units, and necessarycompliance with regulatory requirements.

Financial institutions that lack a thoughtfuland integrated onboarding process miss theopportunity to strengthen relationships withnew customers. And many customers leave asquickly as they joined, seeking a bettercustomer experience from competitors.

Some financial institutions get it right.

Financial institutions that get customeronboarding right focus on three overarchingobjectives: improving the customer experience,protecting their financial institution throughthoughtful compliance, and enhancingefficiency and profitability.

Our approach

We believe a financial institution can achieve asignificant competitive edge by assigning clearaccountability for and ownership of theonboarding process across eight fundamentalcomponents:

• Governance and organization

• Experience design

• Process

• Risk

• Compliance

• Digitization and automation

• Data integration

• Analytics

Financial institutions that are“onboard” see four main benefits.

Benefits of thoughtful customer onboardinginclude higher customer satisfaction and lowerchurn, better insights into customers’preferences and desires, lower costs due tostreamlined processes, and enhancedcompliance with regulatory requirements.

J.D. Power & Associates indicated in itsannual survey of retail-banking customersatisfaction that new customers are theleast satisfied and the most likely to leave.

In fact, the report revealed that

new customers are nearly

three times more likely

to show attrition during

the first 90 days of

opening a new account.

Source: Onovative, "Why your customer’s first 90 days arecritical to your bank’s growth," January 2014.

Point of view

FS Viewpoint | Point of view3

The customeronboarding experienceis harming the brand atmany financialinstitutions today.

A broken brand promise

Whether commercial, retail, or institutional,financial institutions invest heavily to attractpotential new customers. In doing so, theydesign their marketing materials, promotionaloffers, and other messages to highlight theirbrand and attract new customers.

However, this brand-defining experience oftenstops abruptly once the customer joins thefinancial institution. The onboarding processoften involves stacks of paperwork, overnightmailings, and redundant data requests. Andwhile some institutions have improved theexperience through the use of digitalapplications, the experience still falls short.

Customers wonder why theironboarding experience at financialinstitutions doesn’t match up.

Customer onboarding in other industries isoften as simple as downloading an app,inputting a name and email address, andclicking to accept terms and conditions.

Financial institutions often cite regulatoryrequirements as the main reason forcomplicated and cumbersome onboardingprocesses. Although these requirements posechallenges, we see many opportunities forimprovements.

First impressions matter

Customers want the ability to engage with theirnew financial institution whenever andwherever they want. As they interact withfinancial institution employees, they want to beinformed about products and services that arerelevant to them without being annoyed byirrelevant sales offers. Their initial experiencesalso create expectations of what the futureholds for them as established customers.

Why now?

Regulators expect financial institutions to havecustomer onboarding systems and processesthat meet or surpass regulatory requirements.Financial institutions know they need toimprove the onboarding experience, but manydon’t know where to start. In our view,regulatory mandates can provide the businesscase for improvements that will enhance thecustomer experience while also satisfyingregulatory compliance requirements.

In this paper, we discuss our observations ofonboarding processes across the industry,some of the common challenges that impedeprogress, and our approach to overcomingthese obstacles and achieving success.

63% of banking and capital

markets CEOs see the shift inconsumer spending and behavioras a threat to growth, a

significant jump from 51% last

year.

Source: PwC, “18th Annual Global CEO Survey,” BCM sectorresults 2015, http://www.pwc.com/gx/en/ceo-survey/2015/industry/banking-and-capital-markets.jhtml.



What is customeronboarding?

We believe a financial institution shouldbegin by defining onboarding broadly.

At the outset, as shown in Figure 1, awarenessstarts when a potential customer, known as a“prospect,” first develops an interest in aproduct or service. This stage includes therecognition of the need, consideration ofpotential providers, and research.

Onboarding itself starts when a prospectengages with your financial institution at abranch, through a call center, or online.

The onboarding process then extends throughboth the join phase and the opening of theaccount.

The initial relationship grows during the firstsix months after the account is opened. Duringthis time, financial institutions shouldproactively communicate with the customer,offer preferred customer and loyalty programs,and provide interactive tools to help thecustomer continue to engage. The customermay also develop interest in additionalfinancial products. The financial institutionshould proactively apply a needs-basedapproach to help identify which other productsor services will benefit the customer.

Onboarding is also not a one-time event; ithappens each time a customer gets anadditional product or service.


• Needsevaluation

• Productexploration

• Featureselection

• Simulation

• Trial period

• Informationcollection

• Customerdue diligence

• Accountcreation/enrollment

• Activationincentives

• Proactivecommunication

• Preferredcustomer andloyalty programs

• Evaluation ofcustomer needs

• Cross-sell/up-sellopportunities

Figure 1: Onboarding begins when a prospect first engages with your financial institution and extends past the opening of the account.

Awareness Onboarding

• Customer firstrealizes thathe/she isinterested in aproduct orservice

• Consideration ofpotentialproviders

• Researchproviders,products, andservices

Recognizeneed

Consider Research Engage Join Grow


We have observeddifferences in howfinancial institutions areadapting to changingcustomer interactionmodels and how they haveaddressed underlyingprocesses.

We have seen financial institutionsbegin to improve their onboardingprocesses—but we have also seen manyfail.

We have observed financial institutionsgrappling with the following areas related tocustomer onboarding:

• Customer interaction models

• Coordination

• Technology

• Analytics

• Underlying processes

Customer interaction models

We are seeing financial institutions experimentwith new business and customer interactionmodels, such as video and text messaging.They are using digital capabilities to changehow employees interact with customers. Here,digital technology is a tool for enhancinghuman interactions—not just an alternativechannel.

Some financial institutions try to provide thecustomer with a consistent overall experienceacross channels, be they branch, digital, or callcenter. They consider factors such ascommunication methods, presence, securitymeasures, and functionality.

Coordination

Lack of coordination is endemic throughoutlarge organizations, and financial institutionsare no exception. Leadership from each line ofbusiness, channel, and product have varyingobjectives, which makes building acoordinated, customer-focused onboardingapproach challenging. For example, at manyinstitutions, a customer cannot start engagingwith the financial institution in a local branchand then finish the interaction online orthrough a call center.

Regulatory compliance is not exempt from thislack of coordination. Yes, regulators expect tosee a consistent approach, but consider therealities: A company seeking 1) trading servicesfrom a bank’s capital markets division, 2)401(k) administration services from the bank’sinstitutional advisory division, and 3) basicbusiness banking services could experiencethree different onboarding processes, eachwith its own compliance paperwork.


On the surface, digitization hasdecreased the emotionalconnection with customers. Butthe increasing complexity ofcustomers’ financial livesincreases their need for financialadvice. As we discuss in the FSViewpoint, “Ditch the productpitch: Winning customers withstory-based content,” customersare looking for companies theyfeel comfortable doing businesswith.

Source: PwC, “Ditch the product pitch: Winning customers withstory-based content,” April 2015, http://www.pwc.com/fsi.


We have also observeddifferences in the use oftechnology, analytics, andthe underlying processeswithin financialinstitutions.

Technology

Underinvestment in onboarding technologyhas led executives to view onboarding as aninherently inefficient, problematic, and costlytask to tackle. This has often resulted in apatchwork of quick fixes, rather than a strategicreview and implementation of a well-roundedsolution.¹

Many systems are built on antiquatedtechnology and cannot support the speed tomarket required by today’s competitivemarketplace. Few institutions comprehend theimmediate value—and strategic necessity—thataccrues from simplifying the technology stackand aligning technology to business goals.

Analytics

We have seen financial institutions strugglewith the following issues related to analytics:data issues, level of analysis, and expertise ofthose performing that analysis.

Obtaining a single view of the customer hasbeen the Holy Grail for financial institutionsfor decades. While they continue to collectmore data, their ability to synthesize data intoinformation and information into insight is stilllacking. For example, we often see analysesthat are not directly connected to the activitiesthat touch the customer. This amounts towasted efforts, because it’s performed offlinefor general insights and not operationalized aspart of the business model. We have also seencases where data quality issues have renderedthe conclusions drawn from analytics incorrect.

Underlying processes

A surprising number of financial institutionsare still heavily reliant on inefficient paper-driven processes that create duplication, breederrors, and introduce privacy concerns. Manyof these have failed to adopt readily availableapplications that convert paper-drivenprocesses into digitized ones.

Some financial institutions have adoptede-signatures for the following types oftransactions: member agreements, change ofaddress, automated clearing house (ACH), andwire transfer, as well as debit cardapplications.² We consider these incrementalsteps along the path to developing moredigital-centric processes, but note that mostinstitutions have a long way to go.


¹ Aite Group, "Client Life Cycle Management and KYC: Things CanOnly Get Better," April 2015.

² Forrester Research, “E-Signatures—A Few Simple Best PracticesDrive Adoption,” December 2014.


Success stories

Some financial institutions are re-engineering processes and digitizingpaperwork to improve the customerexperience:

• A global financial institution usedworkflow software to automate theonboarding process and integrate itwith systems across departments andgeographies. This resulted in asignificant reduction in cycle time andan increase in throughput.

• A commercial bank serving businesscustomers in emerging marketsadopted a mobile app that decreases thenumber of fields the customer mustcomplete. The customer’s signature canbe captured on a tablet.

Some financial institutions are looking attheir onboarding processes from theconsumer’s perspective:

• The hassle of switching automatic bill pay isone reason customers are reluctant tochange financial institutions. However, oneBritish bank maintains a dedicatedonboarding team to assist new customers intransferring direct deposit payments totheir new accounts.

• Several financial institutions use utilities orshared services centers to perform anti-money-laundering (AML)/KYC work. Thisallows them to streamline non-competitiveprocesses and results in a smootheronboarding experience for customers.

• One financial institution appointed a globalonboarding leader to oversee an end-to-endreview of onboarding processes andimplement solutions for simplificationaround the world. This resulted in greatercoordination throughout the organizationand greater focus on the needs of thecustomer.

A handful of institutions have set a goalto integrate and analyze data acrossinstitutional silos:

• During onboarding at a US nationalbank, all customer data is entered intoa universal system and shared acrossall business lines, regions, andsegments. Some customer segmentsare flagged for further follow-up.

• A multinational bank allowsprospective customers to openaccounts online, leveraging third-partydata such as credit bureaus foridentification and authentication.Using this system, the majority ofapplications are eligible for straight-through processing.

• A major financial institution decidedto analyze fraud and Know YourCustomer (KYC) data for marketingpurposes. Using predictive analytics,the firm identified new customersegmentation strategies and identifiedadditional products and services forup-sell/cross-sell opportunities.


Turning paperinto data

Taking advantageof data technology

Reducing frictionacross the process

The following case studies provide concrete examples of how leading financialinstitutions are improving customer onboarding.

FS Viewpoint | Point of view

Make customer onboarding a priority

Financial institutions should not view theirsolution to customer onboarding as a series ofquick fixes. Rather, they should perform astrategic review and implement a well-roundedsolution that more than meets the needs oftheir customers, the business, and theregulators.

Focus on the needs of the customer

Before implementing any changes, financialinstitutions should understand the needs andexpectations of their current and potentialfuture customers.

Focus on the business

Before transforming customer onboarding,financial institutions should create anonboarding governance structure that spansthe organization. Leadership should focus onhow to make customer onboarding profitable,not just cost efficient.

Financial institutions should first simplify,then improve their core processes andtechnology by looking at how each processimpacts customers. Financial institutions thatfail to do this may simply pave over existingproblems with new technology tools.

8

Take a proactive approach to regulatorycompliance

Financial institutions should be especiallycareful to design onboarding processes thatprotect the financial institution while keepingthe cost of compliance low. Financialinstitutions should not implement quick fixeseach time a new regulatory requirement arises.Rather, they should align their processes withthe long-term strategy of the organization. Forexample, financial institutions should build asingle view of the customer to rapidly respondto various compliance requests.

In our view, financial institutions should alsotake full advantage of the information theygather during the onboarding experience.Consider the following example. In response toregulatory feedback, the compliancedepartment of a major financial institutionenhanced its KYC program. As part of thiseffort, a dedicated team spent monthsanalyzing accounts to identify suspicioustransaction patterns. The results helpeddemonstrate to the regulators that the accountswere compliant with AML regulations. Ratherthan stop there, however, the financialinstitution took advantage of insights from thisKYC analysis to generate additional value forthe business: The financial institution used itsinsights into customer travel patterns andforeign transactions to make targeted travelinsurance and credit card offers.¹


We recommend thatfinancial institutionsperform a strategicreview and implement awell-rounded solutionthat exceeds the needs oftheir customers, thebusiness, and theregulators.

¹ For more information, please see our publication, “The extra mile:

Risk, regulatory, and compliance data drive business value,”www.pwc.com/fsi.


We have developed aprocess that helpsfinancial institutionsaddress eightfundamental componentsof customer onboarding.

Each of the eight components discussed in our framework has the potential to makea significant impact alone or as part of a broader plan. As a first step, financialinstitutions should begin by assigning clear accountability and ownership of theonboarding process.


Experience design

Compliance

Risk

Governance and organization

Digitization and automation

Data integration

Analytics

Process

FS Viewpoint | Point of view

Leading practices in customer onboarding

Governance andorganization

• Establish clear ownership of the onboarding function.• Design company culture to meet customer needs, not just sales goals.• Establish shared teams to drive economies of scale, standardization, and controls for

repetitive activities.

Experience design • Offer the ability to complete, submit, and sign applications on mobile devices.• Ease transfer of direct deposits from the former financial institution to the new financial

institution.• Allow application information—regardless of the channel in which it is acquired—to be

accessible via other channels• Enable self-service capabilities that allow the customer to submit applications, track

application status, receive alerts, and upload documents.• Flag high-potential customers for further follow-up and cross-sell opportunities.• Establish enhanced processes for more valuable customers.

Process • Streamline processes to limit bothersome requests for customer information.• Simplify products and processes to deliver only what the customer wants and needs.

Risk • Implement a common risk-rating methodology supported by a centralized risk engineand advanced data analytics.

Compliance • Centralize regulatory oversight and compliance processes to check adherence andcompliance locally and globally.

• Integrate compliance teams and processes with the onboarding process to decreaseduplicate information gathering.

• Explore the strategic possibilities of using the risk, regulatory, and compliance dataalready owned to drive operational efficiencies, lower costs, and increase revenues.

Digitization andautomation

• Eliminate the use of paper and increase the use of workflow software.• Aid workflow by processing documents uploaded by customers.

Data integration • Capture data centrally and share it across the organization.• Integrate data to form a real-time 360-degree view of the customer.• Make cross-sell opportunity prompts personalized and context-aware.• Leverage third-party data and services for decision support.

Analytics • Drive decisions based on customer lifetime value, social engagement, the customerjourney, customer sentiment, and related customer data.

• Integrate analytics into decision-making processes.

10 All aboard: Delivering the onboarding experience customers demand

Our framework helpsfinancial institutionsimplement and achieve aneffective onboardingexperience for theircustomers.

Financial institution executives shouldrecognize that onboarding technologyand processes serve multiple masters:

• The business wants to attract andgrow relationships profitably whileoperating efficiently and effectively.

• The customer wants secure andconvenient access to an importantasset—their money.

• The regulator wants to confirmcompliance with rules andregulations designed to secure thefinancial system and protectconsumers.


Financial institutions thatget it right can expectmultiple benefits.

Customer loyalty and satisfaction

• Receive more referrals from satisfiedcustomers who are significantly more likelyto become net promoters.

• Attract and retain more customers.

• Increase sales of other products and servicesoffered to existing customers who have apositive experience with customeronboarding. Keep in mind that 75% of allcross-selling occurs within the first fewmonths of a customer’s onboarding.¹ Thismakes first impressions crucial.

Customer insight

• Better understand customer behavior andpreferences when data that is captured onceper customer can be used across divisions.

• Improve performance by consistentlycapturing and monitoring key performanceindicators (KPIs) across divisions.

Operational efficiency

• Centralize oversight to facilitate consistencyand break down organizational silos.

• Streamline processes to increase productivityacross the front, middle, and back office.

• Create a flexible component-based process(such as authentication, credit decisioning,and KYC) that can be leveraged acrossbusiness units, products, and geographies.

• Improve accuracy and limit manualprocessing by shifting from paper to digital.

• Accelerate recognition of revenue bydecreasing onboarding time.

Risk mitigation

• Help compliance teams better pinpoint high-risk activity when a single KYC profileincludes data such as negative news andsuspicious activity reports.

• Increase data integrity and provide an audittrail of customer interactions by storingcompliance data centrally.

• Adhere to risk scoring policies bystandardizing risk assessments wherepossible and allowing for local customizationwhere required.


¹ Onovative, "Why your customer’s first 90 days are critical to your bank’sgrowth," January 2014.


Enhancing theonboarding experiencefor customers iscomplicated bynumerous regulatoryrequirements.

Regulatory requirements

Every financial institution answers to various regulators within key business markets, in additionto complying with the applicable legal and regulatory requirements within the jurisdictions inwhich it operates.

The following regulations/standards should stay top-of-mind:


Regulations/Standards Requirement

Know Your Customer (KYC) Requires an understanding of the sources of customers’ wealth and

potential future activity to lessen the potential for financial crimes.

Foreign Account TaxCompliance Act (FATCA)

Aims to confirm that people and entities with US tax obligations report

those obligations to the IRS. FATCA is complex—for example, one

FATCA tax form has 31 categories into which a company could fall.

The Common ReportingStandard (CRS)

CRS is similar to FATCA, but is a multi-jurisdictional tax information

reporting regime. CRS is based on tax residency, not citizenship.

EU Anti-Money LaunderingDirective IV (AMLD IV)

Prescribes a more risk-based approach to evaluating AML threats and ismore aligned with the approach taken in the United States.

Financial Industry RegulatoryAuthority (FINRA) 2111(Suitability)

States that firms and their associated persons “must have a reasonablebasis to believe” that a recommended transaction or investment strategyinvolving securities is suitable for the customer.

Truth in Lending Act Focuses on promoting informed use of consumer credit by requiringdisclosures about terms and costs associated with borrowing.

Markets in FinancialInstruments Directives(MiFID)

Aims to increase competition and consumer protection in investmentservices by aligning actions with the customer’s risk tolerances.

Data privacy rules¹ Limits the transfer of nonpublic personally identifiable information.

¹ For more information, please see our publication, “Closer to fine: Separating data privacy from information security,” www.pwc.com/fsi.

Financial institutions with a globalfootprint must be especially mindfulbecause differences acrossjurisdictions can makestandardization across theorganization complex and daunting.

We recommend that financialinstitutions:

• Create consistent structures andprocesses while allowing sufficientflexibility for local and/or regionalrequirements where appropriate.

• Identify and empower leaders toown and manage risk acrossbusiness areas and locations.


Financial institutions faceadditional challengessuch as distractions, silos,and exhaustion.

Overcoming many ofthese challenges requiresclear ownership of theonboarding process andsetting tone from the top.

Challenge Possible solutions

Distractions

Onboarding often receives lip service but nofunding. Why? Because other initiatives appearmore compelling or critical, whether it’s aregulatory compliance activity or a new productpromising incremental revenue.

• Appoint a senior onboarding leader tospearhead the onboarding initiative, andempower him or her to align organizationalincentives and gain support from allstakeholders. Stakeholders should includerepresentatives from the lines of business, aswell as IT and other key functional units.

Silos

Technology and processes match organizationalsilos and do not promote collaboration,efficiency, and standard practices.

• Use KPIs strategically to create alignment andorganizational support.

• Gain agreement that the development ofshared components will drive organizationalsuccess, and acquire funds to drive progresstoward this goal.

Exhaustion

An unfocused and disjointed program can createfrustration and slow organizational progressbefore positive momentum is established.

• Establish a credible roadmap that includeskey milestones to help keep the institution ontrack.

• Focus on quick wins to show progress andhelp sustain momentum.



Financial institutions thatdo nothing risk losingexisting customers andfailing to attract newcustomers.

Financial institutions can lose existingcustomers and fail to attract newcustomers due to inefficient onboardingprocesses.

Banks that fail to provide a good customerexperience during onboarding risk losing thecustomers they just worked so hard to gain.Customer churn costs financial institutions,because customer acquisition costs are rarelyrecouped.

For example, according to Aite Group, banksthat fail to migrate paper-based onboardingprocesses to web and mobile platforms will beleft behind in their efforts to improve the clientexperience, reduce costs, and meet regulatoryrequirements.¹

Financial institutions also risk losing potentialcustomers who researched products but thendecided to take their business elsewhere.According to a study from Javelin Strategy &Research, only 53% of applicants were able tosuccessfully open and fund their accountonline. The other half abandoned the process,were forced into a branch, couldn’t open thetype of account they wanted, or faced otherissues.²

In our view, financial institutions can preventthese forms of attrition if they provide bothprospective and existing customers with abetter onboarding experience.

Financial institutions that fail to tackleimprovements to the onboardingprocess will also forego the potentialbenefits of doing so.

In our view, financial institutions that fail toact will forego the following operationalimprovements:

• Unified view of the customer across divisionsand functions.

• Increased productivity due to streamlinedand flexible component-based processes.

• Improved data accuracy.

• Accelerated recognition of revenue bydecreasing onboarding time.

Further, financial institutions could faceregulatory penalties for noncompliance.

All aboard

In today’s increasingly competitive market,financial institutions that fail to improve theonboarding process will forego long-standingcustomer loyalty, sacrifice cost-reducingmeasures, miss out on opportunities toleverage data across regulatory complianceprograms, and experience lower revenuegrowth.


¹ Aite Group, “Multichannel Client Onboarding: Anytime, Anywhere,Any… How?," May 2013.

² The Financial Brand, “Online Account Opening Frustrates Customers,As 1 in 4 Abandon the Process,” October 2011.

Competitive intelligence

Our observations ofindustry practices.

FS Viewpoint | Competitive intelligence

We have observed financial institutions at various levels of maturitywhen it comes to the customer onboarding experience.

16

Financial institution A Financial institution B Financial institution C Financial institution D

Governanceandorganization

The customer onboarding processis differentiated by commercialand retail lines of business (LOB),with each LOB maintaining its ownproject and process governance.

Onboarding decisions are madeindependently within each LOB.

Onboarding is currently performedin each country or region. There isa multi-year project to create aglobal onboarding platform.

Leadership appointed a global,cross-LOB onboarding executive-level “czar” who oversees allaspects of the customeronboarding process.

The institution created onboardingshared services locations to takeadvantage of economies of scaleand low-cost labor.

The customer onboarding process isgoverned and managed by anoperations group that sits in a sharedservices organization.

Onboarding decisions are made byshared services senior leadership,with clear ownership defined.

Leadership appointed a cross-functional retail team, including risk,compliance, customer experience,sales, and operations, to overseeproposed onboarding policy andprocedure updates quarterly.

A global, cross-LOB board focuseson short- and long-term onboardingimprovements.

Experiencedesign

Current systems and processesprevent the organization fromproviding customers with a goodonboarding experience. Theorganization is focused on tryingnot to make it any worse, asopposed to looking for areas inwhich to improve.

A single customer experienceowner exists in one LOB, with thedesire to extend it across the firm.

Customer onboarding specialistsprovide a personalizedonboarding experience based oncustomer segment. Specialistsalso focus on reducing onboardingtime by completing due diligenceup front.

The customer onboarding portal doesnot allow customers to upload orenter data. All transactions arehandled by advisors.

E-signature functionality was recentlyimplemented to help simplify theonboarding experience and make itmore user-friendly. The institution hasnot achieved the results it expected,as adoption of the functionality hasbeen less than 10%.

The system provides the onboardingbranch team with automatedoutreach reminders within 14 daysof a new account opening.

Customers opening accounts onlinehave a very different experiencethan those who open an account ina retail branch. For example, after acustomer opens an account online,the financial institution does nothave a process in place to follow upwith the customer.


Leading On par Lagging

FS Viewpoint | Competitive intelligence17


Process

The financial institution is slowlymoving to a common globalonboarding platform that includesstandardized processes whereapplicable and country-specificprocedures when required.

The institution uses a mix ofautomated and manualprocedures that adds complexityand limits flexibility.

The financial institutionstandardized the onboardingprocess across LOBs andcountries of operation based on abest-in-breed solution.

The institution recently purchased anaccount opening tool to addefficiencies to the customeronboarding process.

A new platform will increase straight-through processing capabilities for thecustomer onboarding process.

End customers do not have the abilityto complete any onboardingdocumentation themselves online.The process is manual andcompleted by an advisor.

The financial institution hasstandardized the onboardingprocess for call centers andbranches but not for other channels.

Risk

Both manual and automatedcontrols are in place to helpmitigate risk during customeronboarding.

A dedicated risk group monitorstransactions to help verify that thefirm stays within risk parameters.

A single customer risk-ratingmethodology has beenimplemented.

The financial institution ismigrating toward a globalminimum-risk standard that allowsflexibility to meet local standardsrequired by each country.

Customer suitability checks areperformed manually on an account-by-account basis.

Advisors are required to build a riskprofile for customers upon accountopening, but no standardizedapproach exists for advisors toregularly update their customers’ riskprofiles.

The financial institution centralizedprocessing on questionablebehavioral and financial historyexceptions.

When an existing customer wants touse a new service or obtain a newproduct, a new risk assessment isstarted, instead of using andupdating the existing riskassessment from another LOB.

Compliance

The organization is implementinga new global KYC solution tostandardize data collection andmonitoring processes.

Compliance representatives workwith onboarding specialists to helpverify that regulatory changes arebuilt into the onboarding process.

The financial institution is in theprocess of developing operationalcenters of excellence for KYCprocesses.

The institution is currently in theprocess of implementing anAML/KYC compliance vendorsolution.

Frequently, compliance violations arenot identified until after the customerhas been onboarded, leading tocustomer and advisor frustration.

Centralized processes forcommunications and follow-up onmissing or incorrect KYC elementsare in place across all LOBs.




FS Viewpoint | Competitive intelligence


Digitizationandautomation

The process of opening accountsis semi-automated. Paperdocuments are scanned andstored when possible.

The firm is consolidating manyonboarding systems into threeglobal systems.

Paper documentation is still inuse, though the organization ismaking plans to phase inelectronic records.

E-signature has been implementedto help automate the customeronboarding process, but it has notbeen widely adopted (less than10%).

Limited automation exists forcustomer onboarding, leading tohigh operating costs.

Documents are manuallyscanned and uploaded. No digitalexperience exists. Limitedadvancements are planned.

Dataintegration

Customer data is gatheredprimarily at account openingthrough account-opening forms,KYC checks, tax forms, etc.Relationship managers work withhigher value customers to keeprecords up to date, but lowervalue customers’ information israrely updated unless requestedby the customer.

Systems are not integrated acrossthe bank. As a result, a retailbanker cannot see if the customeralso has an institutional bankingrelationship.

The firm simplified many disparatesystems down to a few strategicsystems. The strategic systemsthat remain support KYC datacollection.

A single customer view exists inone LOB, with the desire toextend it across the firm.

Data that is gathered and enteredwhen onboarding a new customerremains in silos and is not sharedacross business units or systems.

Lack of automation results in theneed for shared servicesemployees to key in customer datamultiple times into varioussystems.

A new account opening processcollects key behavioral andfinancial data. However, data isnot integrated and shared withother systems.

Analytics

Data inconsistencies result inminimal analytics capabilities.

Projects are underway to improvedata quality and data analyticscapabilities.

The organization has begun adata consolidation effort that willallow it to improve the use ofanalytics during the onboardingprocess.

The organization is developing adata analytics strategy to be ableto determine customer profitability.

The use of analytics during thecustomer onboarding process isvery limited.

The organization has begundiscussions on ways to use dataanalytics more prominently in theonboarding process.

The organization has a robustcustomer satisfaction program inplace that provides insightsacross all LOBs.

The organization leverages keyperformance indicators (KPIs)quarterly.

18 All aboard: Delivering the onboarding experience customers demand



A framework for response

Our recommended approachto the issue.

FS Viewpoint | A framework for response20

We have developed aframework to helpfinancial institutionsassess their currentcapabilities and develop atailored onboardingimprovement strategy.

Digitization and automationStrive for paperless processes andbusiness rules that achieve straight-through processing.

Data integrationAggregate and use data asan asset to deliver a superiorcustomer experience.

AnalyticsApply insights to uncoveropportunities for profitable growth.

ComplianceDevelop a robust compliance function.

RiskEffectively manage risk through astandardized risk-rating methodologycoupled with monitoring and feedback loops.

ProcessStreamline processes by eliminatingactivities for which customer ororganizational value cannot be clearlyattributed.

Experience designTransform customer pain points into adifferentiating customer experience.

Governance and organizationEstablish clear ownership of the onboarding functionto help promote a managed experience from applicationthrough relationship expansion.

Each of the eight components discussed in this framework has the potential tomake a significant impact alone or as part of a broader plan. As a first step,financial institutions should begin by assigning clear accountability andownership of the onboarding process.



Governance andorganization:Establish clear ownershipof the onboardingfunction to help promote amanaged experience fromapplication throughrelationship expansion.

We recommend that leadership focus on thefollowing governance activities related toonboarding:

• Build a governance organization that canadapt to changing business priorities.

• Determine funding procedures forredesigning the organization and gainingbuy-in from other C-suite executives.

• Promote a culture of learning,accountability, and continuousimprovement related to customeronboarding.

• Redesign the structures, policies,procedures, systems, tools, and staffing tosupport the end-to-end onboardingapproach from both business unit andfunctional views across the organization.

From an organizational perspective, leadershipshould appoint and oversee customeronboarding specialists (see Figure 2). Thesespecialists should participate in the early stagesof the onboarding process with relationshipmanagers. They should also help confirm thatthe appropriate information is collected all atonce from the customer. This reduces thenumber of customer touch points andimproves the customer experience. Ultimately,these specialists will own the end-to-endprocess, identifying when and how cross-functional expertise (from legal, tax,compliance, and risk) and product and line ofbusiness expertise should be engaged at theright time.

Key considerations:

• Who is responsible for the end-to-endonboarding process?

• Are onboarding investments being deployedto the most productive and/or strategicinitiatives?

• Are onboarding priorities clear? Haveindividual groups been aligned?

Future vision

• Clear ownership of the onboarding processand customer experience.

• Unwavering focus on customer centricitywith alignment of goals across functions.

• Onboarding goals and incentives aligned todrive desired behaviors.

• Shared services organization supports duediligence operations across business units,enabling standardization of processes andcost reduction.

• Agreed-upon metrics, goals, and service-levelagreements drive accountability across theend-to-end onboarding process.


Relationship managers

Customer

Front office support

Operations (shared services)

Legal Tax Compliance Risk ProductLine of

business

Functionalspecialists

Businessspecialists

Figure 2: The entire organization is aligned to achievesuccessful onboarding and to support the relationshipmanager who interacts directly with the customer.

Customeronboardingspecialists

Functional and business specialist support

Legend


Experience design:Transform customer painpoints into adifferentiating customerexperience.

We recommend that financial institutionsbegin by examining the onboarding processfrom the customer’s perspective.

Understanding how customers feel throughoutthe onboarding process is necessary to redesigncustomer interactions that address commoncustomer pain points. As discussed later in theanalytics section, this should be done for allcustomer segments, including commercial andsmall business.

Future vision

• Clearly defined touch points (such as atproduct sign up; account activation; 30-, 60-,90-day check-ins; life events; pre-scheduled;and transaction-driven).

• Enhanced customer insight (includingunknown needs, preferences, andsegmentation/differentiation) leading toincreased cross-sell opportunities.

• New and creative ways of engagingcustomers that may improve intimacy and/orlower onboarding costs.

Key considerations:

• How effective is the current customerengagement strategy?

• Who should own customer touch points?

• How can we apply a test-and-learnapproach to develop an optimalengagement strategy?

• Do we truly understand what thecustomer values? Do we have the insightto enhance the customer experience?

Illustrative painpoints

What customerswant

What financial institutions can do aspart of the onboarding process

“It’s a hassle”Applications arecomplicated andtime-consuming.

Give me simple andconvenient servicesthat save me timeand are secure.

• Deliver convenient mobile capabilities,such as account opening and co-browse.

• Integrate communication across channels,such as branch, email, online, social media,and phone.

• Capture data once and use it to pre-fill formswhen possible.

• Deploy Lean principles to minimize actionsthat add no direct value to the customer.

“Undervalued”I get impersonaltreatment and littlerecognition.

Offer me productsand services for whoI am, wherever I am.

• Tailor advice and products based on anunderstanding of customer needs.

• Enable advisors to put the customer first.

• Differentiate service levels based on customerlifetime value.

“In the dark”I am not in controland not empoweredto make decisions.

Provide access toeasy-to-understandinformation anytime,anywhere, so that Ifeel empowered tomake decisions.

• Build self-service tools (such as statusreporting) into application processes.

• Present relevant and easy-to-understandproduct information.

• Increase transparency to the customer.



Process:Streamline processes byeliminating activities forwhich customer ororganizational valuecannot be clearlyattributed.

We recommend that financial institutionsbegin by streamlining processes that directlyimpact the customer. In doing so, they shouldfocus on onboarding goals such as increasingefficiency and improving the customerexperience.

We also recommend that operational processesbe aligned with a flexible technology platformand that staff be trained to understand howprocesses feed into the technology.

Future vision

• Standardized core processes are aligned toonboarding goals.

‒ Few manual steps, redundancies, andrework. Paper forms only when necessary.

‒Management and staff focused on value-added conversations.

‒Visibility into where the customer is withinthe onboarding process.

• Key performance indicators (KPIs) measuredand monitored to determine processimprovements throughout each onboardingphase (engage, join, grow).

• Utilities or shared services centers used toconsolidate specific, non-competitiveprocesses such as KYC.

Key considerations:

• Are our onboarding processes aligned with our brand statement and what we represent?

• How consistent is our onboarding process across products, channels, and regions?

• Have we optimized the process with a goal of eliminating unnecessary or redundant steps?

• Where is there the greatest ability to create scale?

• Where can reusable services, such as identification, authentication, and credit decisioning,be built and leveraged consistently across products, channels, and regions?



Risk:Effectively manage riskthrough a standardizedrisk-rating methodologycoupled with monitoringand feedback loops.


Figure 3: By analyzing and incorporating datafrom multiple sources, financial institutionscan better understand customer behavior andassociated risks.

When a customer opens an account, thebusiness is the first line of defense protectingthe institution. It is important to keep in mind,however, that risk assessment is not a one-timeevent. Understanding the customer and howthe customer’s risk profile changes over time isalso critical. We recommend ongoingmonitoring based on periodic refreshes of acustomer’s transaction and interaction historyto identify new risks to the organization.

As shown in Figure 3, a complete customerprofile should incorporate data from multiplesources, such as products, geography, andregulations. As risk monitoring capabilitiesimprove and technologies that enable deeperanalyses evolve, organizations will be betterprepared to both manage risk and identifyopportunities.

Future vision

• Risk assessment methodologies arestandards-based and applied consistentlyacross divisions and countries, yet tailored asneeded.

• A global, cross-divisional risk scoring enginecalculates customer risk scores.

• Advanced data analytics assess impacts (andopportunities) resulting from additionalcustomer information.

• Enhanced name list screening and regularnegative news searches using big data andsocial media information.

• Intelligence function created to performportfolio monitoring analytics and to adaptand learn from feedback loops.

• Integrated product suitability monitoringcapabilities.

Key considerations:

• What risk parameters should be established?

• Are risk management priorities clearly defined?

• What proactive measures are in place for risk management?

• How can risk management information benefit other divisions?

Data

Geography

ProductCustomer

Regulation

Assessment

Scoring

Advanced analytics

Monitoring


Compliance:Develop a robustcompliance function.

Each financial institution answers to variousregulators within key business markets, inaddition to complying with the applicable legaland regulatory requirements within thejurisdictions in which it operates.

We recommend that financial institutions gaina complete understanding of the compliancerequirements related to understandingcustomers in each of the applicablejurisdictions. However, understanding newand complex compliance requirements oftenrequires highly skilled customer-facing staff. Insome cases, this entails new responsibilities foremployees for which new training may berequired.

The changing compliance environment shouldbe viewed as an opportunity to build acompliance competency that is integratedfurther into the onboarding process and yieldsbetter information from customers.

Future vision

• Central compliance and governance withrationalized and standardized operatingprocedures across the organization to collectcompliance data consistently in astandardized format.

• Collect compliance data at the optimal pointsin the onboarding process; centrally storedata while ensuring data integrity andproviding a comprehensive, standardizedview to risk management teams.

• Leverage data across regulatory programs sothat data elements are collected once, easingthe burden on both the financial institution’sstaff and the customer.

• Compliance controls tracking to ensureadherence to new/updated customeronboarding regulations.

• Reduce risk in the customer onboardingprocess and improve compliance withregulations such as FATCA and KYC/AML bystandardizing activities across divisions andgeographies.

Key considerations:

• How can compliance data be reused in other areas of the organization?

• What regulatory requirements require customized processes due to local regulations? What canbe standardized?

• How can the customer information gathered for regulatory compliance be leveraged for customerinsight?



Digitization andautomation:Strive for paperlessprocesses and businessrules that achievestraight-throughprocessing.

Future vision

• Common, reusable services acrossproducts and lines of business.

• Real-time process transparency.

• Digitization at the point of capture.1

• Analytics applied throughout theonboarding process to drive customerinsight and manage risk.

Key considerations:

• How can you use digitalapplications as part of yourcore operating model?

• What is the downstreamimplication of manualintervention?

• Do redundant tools driveunnecessary complexity andspend?

• Does the platform provideclear measurement ofonboarding performance?

• How can you make sure youare still engaging yourcustomers while drivingimprovements withautomation and digitization?

We recommend that financial institutionsstrive for digitization and automation. In doingso, every step in the onboarding process shouldbe scrutinized against the following keyobjectives:

• Minimize leakage.

• Increase straight-through processing.

• Eliminate paper.

• Create process control and consistency.

• Measure process efficiency andeffectiveness.


Figure 4: Future-state design is characterized by automation of critical processes and extraction of relevant data thatcan be used across the organization.

¹For more information, please see our video, “Upping the ante: Building trust and being relevant in the digital age,” www.pwc.com/fsi.

Applicationreview

Applicationsubmission

Applicationprocessing

Customer

• Self-servicecapabilities forcustomers to submitdocuments online.

• Data from paperdocuments is digitallycaptured throughoptical characterrecognition (OCR)capabilities.

• Application is auto-validated; businessrules flag applicationsfor follow-up.

• Middle office onlyhandlesexceptions andreceives data throughworkflow software.

• Customer data isdigitally extractedand stored in acentral database.

• Customer data isshared across theorganization.

• Customer data isanalyzed and cross-sell opportunities areprovided to the customer.

Customer has visibility throughout the onboarding journey.

Accountsetup

Key

cap

ab

ilit

ies

FS Viewpoint | A framework for response

Figure 5: Relevant data is extracted from old and new sources and stored centrally as a “golden record,” allowing multipleusers to pull quality data and see a holistic view of the customer.

Future vision

• Robust household view of customers acrossall products and lines of business for cross-sell/up-sell opportunities.

• Improved targeting of messages andpersonalization of products based on thecustomer’s unique preferences, lifestyle, andinteractions.

• Increased speed of analytics and ability todeliver responses to customers in real timevs. batch.

• Data quality standards reinforced in bothdesign and business as usual.

• Data steward function aligned to uncoveringcustomer value amidst increasing volumes ofdata.

Data integration:Aggregate and use data asan asset to deliver asuperior customerexperience.

Key considerations:

• What is the maturity of the organization withrespect to use of shared data?

• What is the measure of data health? Does theorganization have a method for measuringdata quality and its impact on the business?

• Has the organization progressed fromtransaction measurement to behavior andinteraction measurement?

• Is the organization’s data available to informpersonalization and other analytically drivenoperations in real time?

Financial institutions collect an immenseamount of data. However, that data isfrequently scattered and rarely analyzedeffectively to yield productive customerinsights.

We recommend that financial institutionsintegrate traditional internal customer datawith external sources such as social data, news,Internet traffic, and advertising activity (seeFigure 5 for more details). In our view, theresulting centrally stored “golden record” willprovide a holistic view of the customer andenable the financial institution to deliverpersonalized experiences in real time.

All aboard: Delivering the onboarding experience customers demand27


Analytics:Apply insights to uncoveropportunities forprofitable growth.

In the digital world, it is no longer acceptableto deliver a one-size-fits-all strategy. Deliveringa personalized strategy requires an institutionto first understand what the recipient valuesand what he/she is willing to pay for.

As shown in Figure 6, multiple inputs fromvoice of the customer analyses serve as sourcesfor analytics and can help improve customeronboarding.

Future vision

• Analytics competency made up of resourceswith both data and business knowledge andsupported by advanced analytics software.

• Data-driven decision-making framework toinfluence profitable outcomes.

• A proactive approach to data that can predictcustomer behavior rather than react to it.

• Cross-channel data sources support analysisof interactions, not just transactions.

Key considerations:

• Do we know what our customers are sayingabout the onboarding process?

• Who is the target customer? Do you attracta fair share (or more) of those customers?

• What do target customers value? How doyou create experiences that tap thosevalues?

• Which prospects want to join? Whichcustomers want to expand theirrelationship?

• How are customers solving their problemswithout engaging the financial institution?

• How are you adapting to changes incustomer behavior? How do you track this?

Customer

Segments Personas

Sociallistening

Touchpoint maps

Journey maps

Predictiveanalytics

`

Adaptive

conjointanalysis

• What do customers value ininteractions?

• How do you uncover hiddensatisfiers/dissatisfiers?

• What is the personality ofeach customer segment?

• Can you walk in their shoes?

• How do you discoverunmet customer needs?

• How can you become morerelevant for customers?

• Who are your targetcustomers?

• What do they value?

Figure 6: Using various analytic methods, financial institutions can better understand the needs of their customers.


Surveys

Appendix

Select qualifications.

FS Viewpoint | Appendix—Select qualifications

Select qualifications

Project and client Issues Approach Benefits

Customeronboarding globaldesign andimplementation—Global investmentbank

A leading global investment bankrecognized that its decentralizedonboarding model was leading toincreased risk and redundancies. Inaddition, inconsistent processes weredriving a poor customer experienceand higher costs. The bank wanted tocreate a standardized onboardingmodel to be adapted across divisionsand geographies to reduce AML/KYCrisk and reduce costs.

PwC helped the bank develop a lower costoperating model by streamlining technologyplatforms and processes and by revising theorganizational structure. The project team assistedthe bank by:

• Leveraging extensive industry knowledge and peerbenchmarks to help develop the target state.

• Helping to build a business case to supportmigration from a fragmented model to acentralized shared services environment.

• Helping to develop a shared services model withemployees across various geographies.

The client benefited in multiple ways:

• Reduced costs by more than 30% over a period ofthree to five years through the creation of a globalcustomer onboarding center.

• Developed a new organizational structure thatreduced the average onboarding time by 30% to50%, and improved customer satisfaction metrics.

• Rationalized systems from more than 20 down tofour.

End-to-end clientonboardingprocessdigitizationroadmapdevelopment—Regional bank’swealthmanagementdivision

A regional bank’s wealth managementdivision sought to improve thecustomer experience by makingonboarding a key differentiator whilemaintaining operational efficiency. Thebank faced various internal issues,including data accuracy, managementof paper forms, low productivity, ahigh re-work rate due to errors, andmany manual activities, that resultedin onboarding complexity.

The PwC team helped the client perform anassessment to understand current performance andcustomer pain points. The team identified multipleimprovement opportunities, such as automatingmanual steps, using smart pre-filled e-forms, usingsecure document transfers and electronicsignatures, and integrating platforms to facilitatestraight-through processing. Identification ofdetailed capabilities allowed the team to develop aphased digitization roadmap that delivered anenhanced end-to-end client onboarding experience.

As a result of the engagement, the client realized thefollowing benefits:

• Faster account funding with reduced errors.

• Limited paperwork, which enabled easier trackingand improved compliance.

• Enriched client experience.

• Increased time spent on revenue generatingactivities.

• Lowered cost required to onboard new clients.

Utility design andlaunch—Consortium offinancialinstitutions

A consortium of financial institutionswas looking to develop a singlesource of standardized data andprocessing standards to serve theindustry. This included customeronboarding data and processes. Thechallenge was to design andimplement an agreed-upon strategicsolution that met the needs of allparties in the consortium.

The PwC team supported the consortium by doingthe following:

• Helping to create a utility solution that aligned theinterests of each party with the proposed operatingmodel, solution design, and overall business case.

• Helping to develop the entire operating model.

• Setting up the program management office, andhelping select the business process outsourcingsolution.

• Supporting the launch of the first product.

Our efforts helped the consortium successfully launchthe utility and realize the following benefits:

• Alignment on vision, scope of services, and dealterms across all stakeholders.

• Between 30% and 50% reduction in operating costsrelating to customer reference data and onboarding.

• Improved customer experience by reducing multiple,contradictory requests from banks.

• Improved risk management and improved regulatorycompliance for member banks.

All aboard: Delivering the onboarding experience customers demand30

© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved.PwC refers to the US member firm, and may sometimes refer to the PwC network. Each memberfirm is a separate legal entity. Please see www.pwc.com/structure for further details. This contentis for general information purposes only, and should not be used as a substitute for consultationwith professional advisors.

“All aboard: Delivering the onboarding experience customers demand,” PwC FS Viewpoint, August2015. www.pwc.com/fsi.

www.pwc.com/fsi

To have a deeper conversation, please contact:

John Garvey [email protected]+1 646 471 2422https://www.linkedin.com/pub/john-garvey/0/887/96

Michael Savelloni [email protected]+1 646 471 6444https://www.linkedin.com/pub/michael-savelloni/5/239/318

Richard Inserro [email protected]+1 646 471 2693https://www.linkedin.com/in/richardinserro

Peter Sidebottom [email protected]+1 646 471 7743https://www.linkedin.com/in/petersidebottom

Dean Nicolacakis [email protected]+1 415 498 7075https://www.linkedin.com/pub/dean-nicolacakis/0/255/801

Manav Prasad [email protected]+1 646 471 3506https://www.linkedin.com/in/manavaprasad

About our Financial Services practice

PwC’s people come together with one purpose: to build trust in societyand solve important problems.

PwC serves multinational financial institutions across banking andcapital markets, insurance, asset management, hedge funds, privateequity, payments, and financial technology. As a result, PwC has theextensive experience needed to advise on the portfolio of businessissues that affect the industry, and we apply that knowledge to ourclients’ individual circumstances. We help address business issuesfrom client impact to product design, and from go-to-market strategyto human capital, across all dimensions of the organization.

PwC US helps organizations and individuals create the value they’relooking for. We’re a member of the PwC network of firms in 157countries with more than 195,000 people. We’re committed todelivering quality in assurance, tax, and advisory services.

Gain customized access to our insights by downloading our thoughtleadership app: PwC’s 365™ Advancing business thinking every day.

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A publication of PwC’s Financial Services Institute

Marie Carr

Principal

Cathryn Marsh

Director

Emily Dunn

Senior Manager

Kristen Grigorescu

Senior Manager

We would like to acknowledge the contributions of Eileen Perrin, Nathaniel Fisher,Andrew Lawson, Mallika Adarkar, Kyle Calcagno, and Lauren Moran to thispublication.