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Client Onboarding Strategy for Banks

By  Financial Services Staff Writer Financial Services Staff Writer  on 2015-02-05 10:00:00  |  Featured in  Financial Services
Financial Services Staff Writer
Posted By Financial Services Staff Writer
in Financial Services
on 2015-02-05 10:00:00

Client-Onboarding-Strategy-for-BanksFinancial institutions today are faced with a new reality of tighter margins and higher regulatory oversight. As a result, every dollar of profitability a customer provides becomes essential to managing profits. Acquiring new customers is costly, time consuming and essential to increasing profitability. Looking closely at the client onboarding process can increase customer retention, develop deeper relationships with profitable customers and improve overall profitability.

What is Client Onboarding?

For many years, client acquisition was focused on the sales process. Once a customer was acquired it was considered an unimportant back office process of opening accounts and bringing a customer’s business to the bank. Today businesses are realizing that lack of foresight has resulted in higher customer turnover and lower customer satisfaction.

To be clear, a client onboarding definition simply lays out the major points of standard procedures involved, such as new client assessment; establishing and ensuring an understanding of legal terms; creating a system to ensure compliance throughout the credit process and the actual new account opening.

Effective client onboarding is the process of integrating clients across the company culture so they feel part of the team. Various departments have access to necessary client information for seamless cross selling. A back of the house system that allows accounts, loan department and investment offices access to client information in an efficient way is essential to ensure a process that appears well-organized and useful to the client.

Establishing an Efficient Client Onboarding Process for the Client

There is a great opportunity here for growth. A recent Aite Group report notes only 30% of financial institutions see that effective and efficient client onboarding can set an institution apart from its competition. More than 70% see the process as a back of the house or automated process.


The reality, though, is that for true efficiency, banks must make the process a priority. A client-centered approach should be in place to provide a seamless transition for the client, ensure full compliance and garner necessary pieces of information for potential future transactions. An efficient process upfront can be invaluable in the form of changing clients’ perspectives of why and how the process works. They tend to know and understand the need for the lengthy process, but many end up frustrated with the fractured way information is collected and the seemingly disorganized multiple points of interaction.

Client Onboarding best practices include:

  • An onboarding request - can come from new or existing clients in need of additional services.
  • Moving from sales to a customer-centric approach is most effective.
  • Client due diligence - must follow regulatory requirements for Know Your Customer.
  • Credit terms set-up
  • Agreement management
  • Setting up the accounts in the system

When this process is done efficiently, it stands to reason that clients are more satisfied with the process and more willing to do additional business with the bank or financial institution. The most important aspect of streamlining the process includes a single request for data. With this information, financial institutions can then complete regulatory and credit due diligence. Additionally, now all departments will have access to information, thus eliminating multiple, and often annoying, requests for clients to provide the same information.

A Know Your Customer checklist is an important component of the onboarding process and is essential to allow for a successful system to be implemented.

Your Know Your Customer checklist should include the following:

  • Strict Process for Customer Identification. It’s imperative that every transaction begins with verifying the identity of a customer from trusted third party data and/or documents.
  • Policies for Customer Acceptance. Background checks should be performed to ensure the validity of customer and business establishment as well as lack of involvement with illegal activities.
  • Risk Management Assessment. Compliance and internal audits that make certain guidelines are being followed by every department is required. Procedure and policy training across all employees will ensure that every member knows and understands the risks associated with onboarding. Further, it will allow for roles and duties to be clarified and assigned as appropriate.
  • Transaction Monitoring. Reducing bank risk through monitoring account activity is necessary. Accounts with high risk and/or large unusual transactions should be red flagged and would immediately require analysis. Setting clear boundaries for additional due diligence on certain transactions is also vital.

The client onboarding process can be both efficient and client friendly when the established procedures are client centric. Establishing a meaningful process will ensure consistency with each client, improve customer satisfaction and retention and in the end, ultimately increase bank profits.

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Financial Services Staff Writer

Financial Services Staff Writer


Financial Services Practice team staff writer.

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