Data Management

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Becca Lipman
Becca Lipman
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Getting Onboarding Right in the Age of the Customer

Disparate "Frankenstein" systems slow down the onboarding process and impede customer service, says Pegasystems.

In a survey conducted earlier this year, Forrester found 98 percent of banks believe they’ve lost deals and revenue from poor customer service during client onboarding, and many reported a significant loss of new business for the same reasons. The onboarding experience had an impact on the lifetime value of the customer, said 88 percent the banks surveyed, so building strong standard processes is of great importance to the bottom line.

Across the 140 banking decision-makers surveyed, more than half of whom are investment bankers, it was found that performing due diligence on a client, or "know your customer" (KYC) processes, was ranked the most painful area of onboarding. And when asked the most common reason a customer drops out of the onboarding process, the majority said because it took too long to get a credit decision, and other banks gave a faster response.

The right information at the right time
In a highly competitive market there's no room for these kinds of oversights and inefficient communication, argues Pegasystems, a provider of Business Process Management (BPM) software, and commissioner of the survey.

Client-centric onboarding is important to banks, and, according to the survey, the bigger the bank the more important the client's overall on-boarding experience is to the firm. In fact, customer experience metrics ranked highest (35 percent) as a means of measuring success of the onboarding process, even higher than quality/error measures (28 percent) and identifying cross-selling opportunities (25 percent).

But customer service is still the greatest challenge. Fifty-five percent said keeping clients informed about where they are at each stage in the onboarding process was a top issue during initial deal configuration and pricing. More than half responded that wasted time re-keying data into multiple systems of records is their greatest challenge to the application process, and data collection while maintaining customer experience is the most trying part of KYC/due diligence.

Ron Wellman, director of corporate banking solutions at Pegasystems, explains banks are stuck using onerous processes for application data gathering and due diligence, and, particularly on the lending side of the relationship, that process can still be hindered by not capturing and reviewing the right information at right time.

Perhaps most importantly to the bottom line, keying information into multiple systems and poor visibility across systems slows down the underwriting process of credit, says Wellman. “Many relationships with clients start on that credit relationship, when people are looking for a new bank and new operations. For example, a potential client needs a $10 million line of credit -- the bank that can give them a reasonable deal in a reasonable time frame wins the deal. If you have a long KYC process, and can’t get around to it in time, you lose the deal. That came out as a big deal in the survey.”

Rethinking "Frankenstacks"
Complex and disparate onboarding operations are an example of what Pegasystems founder and CEO Alan Trefler calls Frankenstacks. Like Frankenstein's monster, stitched together with body parts to create the illusion of a functional human being, Trefler says, too many firms are using Frankenstacks, or multiple dead software and applications stitched together to accomplish single tasks, such as credit underwriting. It slows operations and does little to improve the flow of communication.

Trefler wrote in his recent book, Build for Change: Revolutionizing Customer Engagement Through Continuous Digital Innovation, that near-immediate response times are a signature expectation of the newest wave of customers, and companies that fail to adapt to the next generation of users are in for a rough ride. He calls new users members of Generation D, D for digital, the forerunners to Generation C, for content (also a renaming of Generation X, which left too few letters to follow in the alphabet, and lacked potential for witty abbreviations).

This is a generation that is born into a world of connectivity and options, argues Trefler. If they aren’t able to get what they want in the timeline they want, they will find another option. “To keep pace with demanding customers, a digital problem needs a fundamentally digital response, or digital redesign,” he said in a keynote address at the PegaWORLD conference in June. “Harness the ability to change for a fundamental competitive advantage. That power will differentiate the successful from the unsuccessful.”

Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio
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Becca L
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Becca L,
User Rank: Author
8/31/2014 | 1:57:24 PM
Re: is there a perfect solution?
Agreed demands for efficiencies span all generations, and companies need to be wary of everyone's ability to partake in social media shaming. I see it as, when aiming for improved experience with the most demanding customers, the firm will likely have the side effect of pleasing the other not-as-demanding clients as well.
IvySchmerken
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IvySchmerken,
User Rank: Author
8/30/2014 | 11:00:52 PM
Re: is there a perfect solution?
Becca, I agree with Kelly that it's not just the Generation D that's demanding. The availablity of social media and mobile has given the older generation the same tools with which to voice their opinions and to insist upon immediate customer service. While the younger generation may be more impatient, the older generation is not that far behind.
Becca L
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Becca L,
User Rank: Author
8/30/2014 | 7:36:56 PM
Re: is there a perfect solution?
Unrealistic, maybe. It can be argued regulators are basically making the same "do it faster" requests, and it's largely the fear of penalties that are spurring moves towards greater efficiencies. It's sort of a double standard to roll your eyes at the heavy demands of Gen X (Gen D) consumers, and nod understandangly when regulators ask for the same information, just in different formats.
Becca L
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Becca L,
User Rank: Author
8/30/2014 | 7:31:34 PM
Re: is there a perfect solution?
Ivy and Kelly, absolutely right. Tefler also made the important point that Generation D is inclined to tweet and share their satisfactions and dissatisfactions, opinions that will make or break a company.

 

Kelly22
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Kelly22,
User Rank: Author
8/28/2014 | 12:14:48 PM
Re: is there a perfect solution?
Good point, Ivy. While Generation X is probably the most demanding group when it comes to transaction speed, I think the onset of mobile/social has heightened the expectations of all age demographics. Old systems can cost companies more than just younger customers; older customers are also likely to get tired of waiting. 
IvySchmerken
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IvySchmerken,
User Rank: Author
8/28/2014 | 11:12:13 AM
Re: is there a perfect solution?
Companies that have Frankenstack systems can pay the price in losing the Generation X or the Digital Generation, which want instantaneous access to account opening/onboarding. Raised on Youtube, Snap Chat and Imstagram, they are unlikely to wait through a cumbersome onboarding process.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
8/26/2014 | 12:37:52 PM
is there a perfect solution?
Onboarding at most financial firms has gotten a lot better over the past few years, sometimes in spite of "frakenstacks." However, will there ever be a perfect solution? Although the process has gotten better and faster, younger consumers expect instant approvals, which may not be realistic. Is there expectation unrealistic? Or do banks needs to become even more efficient.
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