When the economy is tight, financial institutions face several challenges that reinforce each other. It increases the temptation for bad action on the part of customers. This creates greater regulatory scrutiny, with the risk of massive fines for non-compliance.
The need to reduce costs jeopardizes continued investment in innovative financial products and services, while at the same time, customers have higher expectations than ever for easy, effective and excellent experiences.
On paper, this looks like a slam-dunk scenario for the growing industry of nimble new fintech providers. It isn’t, unless these fintechs can learn some lessons from established companies about customer onboarding. Ultimately, these lessons come down to the marriage of process automation and a data fabric.
Why focus on onboarding?
The onboarding experience is the customer’s first impression of the organization and sets the tone for the relationship. It is also the point at which the organization must determine precisely who the customer is and the true intent of their business. Fast and accurate customer onboarding is always important, but in an economic downturn, it does doubly so: Investors quickly lose patience with startups that can’t deliver growth and margin while regulators de-risk the entire financial sector.
Effective onboarding is fintech’s Achilles heel. A data fabric that unifies information without moving it out of systems of record is the answer.
Effective onboarding is fintech’s Achilles heel. Look at WISE, fined $360,000 by its Abu Dhabi regulator. Or, UK’s Financial Conduct Authority fines GT Bank £7.8m for AML failings. Or, Solaris, the German Bank-as-a-Service (BaaS) provider limited itself to not onboarding any future customers without government approval.
The inability of fintechs to properly manage the data and processes required for accurate onboarding may explain much of the decline in investment in 2022.
Data fabric and process automation improve onboarding
Incorporation starts with verified details such as a name, address, tax ID, details of the proposed business, where the money is coming from and where it is going. The problem is that financial institutions are large and complicated organizations with a myriad of IT systems and applications that contain isolated data sets. These legacy systems from various products, customer types, and fulfillment programs do not integrate well.
This means that there is an incomplete view of the matter, and trying to complete that view usually means manually cutting and pasting between systems and spreadsheets. The chance of human error alone should be enough to strike fear into the heart of any bank manager.
A data fabric, a technology that unifies all enterprise data without moving it out of systems of record, is the answer. The data fabric creates a virtual data layer where mutable business data and the relationships between that data can be managed in a simple, low-code environment. Data is protected at the row level, meaning only people who should see it can see it, and only when they should. Data can be on-premises, in a cloud service, or in multi-cloud environments.
With a data fabric approach, you can combine business data in entirely new ways. This means that not only do you have a 360 degree view of the customer, their identity, their story, their products, but you can also gain new insights by viewing your company’s data holistically.
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Recent advancements in automation and onboarding have enabled the fintech industry to reduce costs, speed up processes and provide customers with efficient, smooth experiences. However, it’s not just fintechs who can benefit from these tools. Banks and other financial institutions have started to realise the potential of automation and onboarding, and they have started to invest resources in them to improve customer satisfaction and efficiency.
At Ikaroa, we have been at the forefront of automation and onboarding and have been helping financial institutions of all sizes turn technology into an advantage. With our knowledge and experience, we are well positioned to shine a light on what fintechs can learn from the big banks in this area.
The biggest lesson we can impart is that automation and onboarding are key to delivering a first-rate customer experience. Banks have realised that digital solutions are essential to meeting customer needs, and they have invested heavily in digital-first strategies. By leveraging automation, they have been able to reduce customer onboarding times, streamline and improve processes, and free up time for staff to focus on more value-adding activities. This has enabled them to remain competitive, meet customer expectations and maintain strong customer loyalty.
For fintechs, the lesson is clear: automation and onboarding solutions can be used to compete with the big banks, even without the same resources. Automation and onboarding are cost-effective solutions that can quickly produce effects, and can provide fintechs with a competitive advantage without having to make a disproportionately large investment.
Ikaroa can provide fintechs with the expertise and technology to find and implement the right solutions for their needs. Our services are tailored to each customer, so we can provide the appropriate advice, technologies and systems. We know that the right solutions can give fintechs a competitive edge, and with our help, they can stand toe-to-toe with the big banks when it comes to automation and onboarding.
Overall, automation and onboarding solutions can be used to great effect by fintechs, and through Ikaroa, they can learn from the big banks and leverage digital solutions to start competing with them. With our expertise, fintechs can use technology to achieve significant cost savings, improve customer satisfaction and reduce onboarding times to stay ahead of the competition.
