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To on-board or not to on-board - that is the question

We recently attended two conferences within a space of four weeks - ACT 2016 at Liverpool and EBAday 2016 in Milan. A financial community family reunion to coin a phrase. 

The underlying theme at ACT was around services offered to the corporate treasurer, whilst at EBAday it was around the impact of PSDII, but the strongest undercurrent at both the conferences was clear. Innovation. 

The industry is going through unprecedented change, a point which is widely acknowledged by everyone from technology vendors through to financial institutions, corporates, the Fintech challengers and of course the retail customer.  It is a survival of the fittest and only time will tell who the winners and survivors will be. Suffice to say I believe it is unlikely to be an entity that uses regulation and governance as an excuse; it is likely to be the one who innovates new propositions - one that does so quickly. 

Having spoken to banks and corporates at ACT 2016 in Liverpool, and the banks in Milan, the same sentiments and stories continued to emerge in the corporate on-boarding space. To on-board or not to on-board and/or how to enable rapid on-boarding continues to trouble our industry – both for the banks and the corporates. 

From the outset of any technical on-boarding process, a multitude of differing standards originating from ERP systems force banks to assess whether a corporate’s potential revenue is worth the pain of on-boarding.  Whilst XML and ISO 20022 standardisation is on the right track, it is not a magic bullet, as variations in it are plentiful and it still means that someone has got to take the initiative to change their side. 

Format-stalemate aside, if and when a decision has been made to on-board a customer, the process of understanding the formats used by the corporate, the validations in play and workflow nuances, then begins. On top of this minefield of standards, validation and transformations know-how, comes on-going change in regulation which puts additional pressure on banks to have flexible systems in place in order to remain compliant.   

All in all, technical on-boarding can be a complex, lengthy and challenging process for both bank and corporate; introducing efficiencies and automated processes into the on-boarding process or more succinctly put, into the technology that enables rapid on-boarding, continues therefore to be a goal for financial institutions across the globe. 

Moving the decision up the value chain 

An over reliance on ill-performing IT solutions to perform the on-boarding process can put any institution directly into the path of lost revenue streams; upsetting the bank to corporate relationship-apple-cart and at worst, the bank is left with the realisation that they have wasted valuable resource in terms of time and money - better spent elsewhere in our digital, customer-led environment - on a failed on-boarding project. 

All too often we see financial institutions viewing on-boarding as an IT project involving a plethora of project managers, IT specialists, multiple man hours, specific technical expertise and as stated above, as the technology in play is often not up to scratch, the project can still be at risk of failure.  I met a bank at the conference who mentioned that they have a H2H solution, but every time they have a new customer, they get a full system release from their vendor. This means their testing cycle includes a test for all existing customers as well - hardly an efficient or timely process.  Needless to say, the bank gets involved in a lengthy discussion with the potential corporate to try and convince the corporate to send a format that doesn’t incur a software release. 

One other thing that I have noted during discussions with various corporate treasurers was around the information and data they need to maintain in order to make payments. Not all corporate treasury and systems are payment ‘savvy’ and there is a cost to all this data maintenance needed for making payments. 

Is there a way the banks could offer products that take this pain away from the corporates? Not necessarily removing the pain of formats and standards, but more around the type of payments and information needed to make those payments etc.  Personally, I think this falls in the ‘innovation’ bucket and is a good talking point to which I plan to discuss with banks. 

It’s business time 

If I were a bank I might be encouraging my business heads to look at the problem strategically so that as an organisation we don’t face the same on-boarding challenges every time; so that I avoid working with a corporate for several weeks and then find myself in the position to tell them we are incompatible or I begin to start worrying about my margins. The sentiment of ‘it’s not you, it’s me’ springs to mind. 

Banks should be urging their heads of business to view on-boarding as a business-led process for the simple reason that with their business-hat-on, they are likely to consider flexible technology that will ultimately ease any on-boarding project not just now, but any time in the future. 

If I were a bank….

If I were a bank I’d hope my heads of business would be proactively sourcing solutions that handle the technical aspects of corporate on-boarding quickly and simply.  Solutions that cope with diverse data formats and customer preferences; one that is simple and configurable to use solving the technical on-boarding complexity.  After all we have the KYC and AML aspects to think on next and, as things stand in that process, there are seemingly a whole heap of things outside our control. 


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