and Origination in Banking
The vast majority of banks believe that by 2020 most of their sales operations will have shifted from their branches to digital channels, mostly web and mobile applications. This has major implications for how they do business. Strong digital sales capabilities and streamlined, end-to-end digital origination processes must play an integral role in any strategy. One-to-one targeted campaigns, microsegmentation, dynamic, tailored pricing and product bundling, third-party integration (e.g. with social networks), product white labelling, and distribution via aggregators – banks need to become good at all of it. Such capabilities are vital to support distinctive mobile and online offerings. It sounds like a lot of work, and it is, but delay is not really an option and banks that get it right will benefit in the long term.
Onboarding or new product origination is traditionally a challenging and time consuming process. Barriers are created from the outset, which seriously impact on conversion rates and the cost of acquisition. This is even more so for banks targeting high net worth individuals, where the biggest barrier to winning business is that many new clients simply forget to “follow-up”.
These abandonment rates come as no surprise. The current set-up, filled with confusing, time-consuming procedures is demanding, both for banks and their potential customers. Manual processes, visiting bank branches, awaiting approval, and passing information through a series of systems consumes a lot of time. In addition to the very real risk of losing a customer along the way, it’s all quite a burden on the bank’s back end systems.
More often than not, there’s a complex paper trail as new customers have their identity verified. Banks must put their customers through this in order to comply with regulations such as Know Your Customer (KYC). The rules are strict and usually require documents to be signed in person or sent via snail mail.
The information banks require to undertake due diligence and assess risk profiles comes from third parties. This means they have to request data, wait for it, and then analyze it, which essentially derails the onboarding process as new customers must wait before taking the next step. Such lead time reduces the probability that they will stay with the bank until the end of the process.