Digital onboarding & lending in SME banking

When it comes to digital account opening, many banks focus on meeting the needs of retail customers. But let’s not forget about small and medium businesses. After all, they deserve a seamless onboarding experience and a frictionless customer journey too.

But many don’t get it.

In fact, research by Accenture shows that more than four out of ten SMEs believe alternative providers could deliver a better banking experience than the incumbents.

To make matters worse, SMEs reported feeling neglected as they struggled to survive lockdown, when the need for support was at its highest since the 2008 financial crisis.

Part of the problem is that incumbents have become complacent. Traditionally, the barriers to entry into business banking were high. But those barriers have tumbled, and SMEs now have access to a wide range of service providers.

Just like the retail sector, the incumbents must up their game. Otherwise, they risk losing valuable business customers to more digitally-savvy rivals.

In this chapter, we show you a few ways you can eliminate points of friction from your SME customer’s journey.

Meet Robin Green and Paddy Brian. They recently launched the Green Bicycle Factory, and they want to open a bank account. They decide to apply with Robin’s provider.

Robin completes the first few steps of the application, which is much quicker these days. For instance, his bank only asks for basic details such as the company’s country of operation and tax number. It uses these details to look up the Green Bicycle Factory and automatically fills out other fields.

Robin also has to provide proof of the ownership of the company, which is typically one of the more complex steps in the onboarding process for a business.

What is a beneficial owner?
A beneficial owner owns or controls more than 25% of a company’s shares or voting rights or has some degree of control over a company. Compliance rules force banks to identify them to prevent criminals from using a company as a front for tax evasion, money laundering, financing terrorism or other nefarious activities.

Because Paddy isn’t already a customer, Robin adds Paddy’s contact details so the bank can verify his identity.

Paddy instantly receives an email with a QR code prompting him to confirm his account. He opens the bank’s app on his mobile device and scans the QR code. He’s then presented with the option of submitting three different documents.

So all Paddy needs to do is simply take a picture of his ID and upload it. He also takes a selfie so the bank can validate his face. The app analyzes the biometric data and confirms the authenticity of his ID.

Robin also receives a similar email. He follows the same procedure as Paddy, scanning the QR code within the app. But since Robin is an existing customer, the bank just needs to authenticate his ID rather than verify it, which it does automatically.

And that’s it. No visits to a branch. No week- or even month-long delays which disrupt the fledgeling company’s ability to trade. In three simple steps taking a few minutes, Robin and Paddy are able to open a business bank account.

No matter how much you try to automate the application process, sometimes manual intervention is necessary.

Say Paddy’s name shows up on a sanctions list, known as a hit. The chances are it’s just an unfortunate coincidence, but the bank needs to check it out nonetheless.

What is a sanctions list?
A sanctions list is a database of individuals, companies and countries that are subject to restrictions, usually imposed as a punishment for unlawful activity. It’s illegal for any company, especially a bank, to do business with a listed entity.

This hit generates a task in Backbase’s Employee App for a customer service rep (CSR) to review whether it’s an exact match.

The app estimates the probability in terms of a percentage — the higher the percentage, the greater the likelihood.

The rep then compares the details of the sanctioned Paddy Brian with the owner of the Green Bicycle Factory. It quickly becomes obvious that the hit is a false positive. All the rep has to do is simply reject the match, and the application process continues unhindered.

There’s no need for your CSR to refer up the chain to the compliance team for further investigation — they’re empowered to make decisions quickly and spend more time on serving the customer instead.

Robin started the application on his laptop, but he decides to switch to his mobile device to authenticate his ID. The app gives him the option to either complete the process on his mobile or revert to his laptop.

That’s the advantage of providing customers with an omnichannel experience. It offers the convenience of starting an application on one device and completing it on another.

That’s the kind of seamless journey delivered by the latest generation of apps. That’s what it means to put your customers, whether they’re individuals or businesses, at the heart of the journey.

Fast forward a couple of years. Business is booming for the Green Bicycle Factory.

The balance in their account reflects their success. But after comparing their assets to other customers, the bank senses an opportunity for the Green Bicycle Factory, and decides to nudge them with an offer for a line of credit.

The app allows the provider to switch on notifications. A notification can take various forms; in this case it appears as a banner. The bank’s marketing team carefully crafts the message to catch the attention of the business partners, offering a line of credit to help the company continue growing.

The bank gets the timing spot on because Robin and Paddy are looking to expand. As Robin is effectively the CFO, he proceeds with the application right away.

Clicking on the banner takes him to a form where he lets the bank know why he needs the loan and how much. A slider allows Robin to adjust the amount and see how it affects the interest rate. As the company is an existing customer, the bank’s app is able to scan their financial details and completes the credit checks within seconds.

Happily, it turns out that the Green Bicycle Factory is eligible for the loan. One more click and Robin submits the application.

The next step requires human interaction with a loan officer, but at this point the bank has already sped up the process of securing funding by removing many of the friction points from the earlier stages of the journey.

Helping your SME customers to grow their business quickly means not making them wait for months to receive funding. With a single platform, you can make the process much more efficient and productive — for both your customers and your employees.

For a personalized demo of how Backbase Digital Sales can help you implement a seamless experience for your SME clients, whether it’s simply signing up for an account or handling more complex digital sales processes, get in touch with one of our experts today.