Why a digital business KYC is crucial for customer experience

6 minutes read
solarisBank
By solarisBank
December 03, 2018
Why a digital business KYC is crucial for customer experience

Jackie was running late for her appointment to open a business bank account at a bank branch in the center of Berlin. Her most recent promotion had landed her the coveted CEO role at the medium-sized company she worked at, and she needed to open a new bank account in the company’s name as soon as possible.

The tram pulls up to the station quicker than expected and Jackie jumps out, briskly entering the bank’s stuffy interior. Inside, her thoughts turn to the sunken faces of the tellers. The formalities of filing the right paperwork and providing identification documents to the teller are frustrating and take more time than it should. It will be a few weeks for the paperwork to be filed and for her to gain access to her new account. This is bad news for her new business, as she will not be able to conduct or manage any financial transactions in the name of her company for at least a month. Jackie ends up leaving the branch in a bad mood, with a negative first impression of the institution that will be holding her hard-earned cash.

The above story is fictional, although those who have opened an account at a traditional bank branch — no matter if it was a retail or business bank account — can probably relate to it. A majority of old-school financial institutions have failed to update their customer acquisition process, especially in the onboarding of new clients. Thankfully, technology has provided the opportunity to greatly improve the onboarding of people and businesses at financial institutions.

Our onboarding flow Our onboarding flow.

But what does an onboarding process entail? At solarisBank, we use onboarding as a sweeping term to describe the action of bringing new customers onto our banking platform via our partners in a regulatory and compliant way. A crucial part of onboarding is the KYC (Know Your Customer) procedure, which in the financial industry is defined as the process a business such as a bank uses to verify the identity of its clients, whether these are natural persons or legal entities. To describe the identity verification of businesses, we often use the acronym BKYC (for Business KYC), as this process includes the verification of both business and persons’ identities.

The onboarding process is complex. We simplify it!

solarisBank follows a banking-as-service approach, meaning we empower other institutions (our “partners”) looking to offer banking products, by means of our full banking license. This license allows us to carry out the responsibilities of a bank, some of which include verifying customers on behalf of third parties. We provide the banking infrastructure in the background so that our partners can build their own user experience without worrying about the associated pain points of onboarding.

Like Jackie, clients notice waiting times when signing up for a bank account and might, therefore, be happy to switch to competitors in a heartbeat. By focusing on optimizing the onboarding process, opening bank accounts becomes more cohesive and user-friendly for our partners and their end-users. We’ve identified the following elements that simplify onboarding for our partners:

  1. As a tech-focused banking platform, we integrate (and therefore aggregate) identification providers into our digital ecosystem that help us offer the best customer onboarding experience to our partners.
  2. We don’t only leverage technology to ease the onboarding flow for end-users, but also to enhance the efficiency of our operations and compliance processes. Improving these has led to complex business account openings in under 48 hours.
  3. Partners’ issues with onboarding (often deriving from relying on a single provider, difficulties switching providers or poor provider performance) impact their reach and scalability. We work hand-in-hand with our partners to adapt a solution to their business case.

BKYC in practice at solarisBank

Our partner Penta’s business banking cards Our partner Penta’s business banking cards.

Penta, one of our first digital banking partners, offers bank accounts to businesses throughout Germany. solarisBank provides them with the core banking infrastructure such as digital bank accounts and transactions as well as with a backend to their onboarding flow. During the signup process, end customers using Penta’s app provide key business and personal information digitally and can choose to be verified through video or via in-person identification.

Due to Penta´s business model, they needed a flexible identification option to offer to their customers. By using our BKYC solution, they were able to take advantage of one of many comprehensive identification methods offered by us. The entire identity verification process takes a few minutes and can be done from home or on-the-go. solarisBank informs Penta of the BKYC outcome within 48 hours, allowing their customers to start transacting immediately. When you compare that to the hassle of presenting yourself at a branch and the time consumed filing tedious paperwork (for business owners it could take weeks to get onboarded), this is a real innovation.

And the need for Business KYC doesn’t stop there. Financial institutions with SME or bigger business clients are also interested in optimizing their identification solutions in order to speed up the onboarding process. We recently won BMS MMM BankingGuide GmbH as a partner, a company offering services to approximately 70 cooperative banks in Germany. For the pilot project, four of these banks — Berliner Volksbank eG, Volksbank Raiffeisenbank Rosenheim-Chiemsee eG, Hannoversche Volksbank eG, and Volksbank BraWo — will be implementing our BKYC service for their business clients.

It’s all relative — online beats offline

Our experience at solarisBank has shown that start-ups and large banking players alike struggle to establish user-friendly, effective, and efficient onboarding — especially when it comes to the KYC process.

Jackie from the narrative above will no longer have to wait in line at a bank branch to open her account. With modern banking providers such as Penta, she can download an application and be onboarded seamlessly — straight from her living room. The organization she is signing up with will also benefit from both a faster onboarding and a digital paper trail. Further developing the onboarding process and the technology behind identity verification will ultimately help benefit both end-users and organizations.

Learn more about our KYC Platform here:
https://www.solarisbank.com/en/services/kyc-platform/

Further reading:
Lee, Ron. Onboarding New Bank Customers. Sundog, 2008. www.sundoginteractive.com/uploads/whitepaper_attachments/RonL_Onboarding.pdf

Elst, Ronan, et al. Digital Onboarding for Financial Services. Deloitte, 2017. www2.deloitte.com/content/dam/Deloitte/lu/Documents/technology/lu-digital-onboarding-financial-services-digital-natives-112017.pdf

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