Raising the Bar in Client Onboarding
by Russell Graham, Global Head of Implementation and Service for Trade Finance and Cash Management Corporates, Global Transaction Banking, Deutsche Bank
Complex onboarding processes have long proved a headache for corporates seeking to establish new transaction banking relationships. But the latest initiatives are easing this process and improving the client experience over the entire lifecycle of a relationship, says Russell Graham, Global Head of Implementation and Service for Trade Finance and Cash Management Corporates at Deutsche Bank.
The level of upheaval involved in changing transaction banking provider – often meaning several new IT systems and substantial new documentation – has, in the past, been a significant contributor to the ‘sticky’ nature of this business. However, several trends within the industry, as well as individual initiatives from specialist providers, are changing the landscape in this respect.
One key development has been the move away from proprietary bank technology towards provider-agnostic systems. When a change of provider inevitably meant a complete switch in IT systems and channels, there was always going to be a strong incentive to stay put. Yet despite the continued development of proprietary systems in some quarters, this is now changing. Industry standard formats are increasingly becoming the norm and other initiatives – such as corporate access to SWIFT, the financial messaging network – are certainly lowering the level of stickiness in this sector and smoothing the path for clients that wish to switch providers.
Driven in part by this sea change within the industry, transaction banking providers are increasingly looking at what they can do to enable greater client mobility. One area where improvement is certainly possible is onboarding documentation and the processes that surround it. This has, in the past, been a significant contributor to inertia, as well as representing a time cost to both the client and the bank. By addressing these issues, the onboarding lifecycle can be shortened, delivering tangible benefits to both sides of the relationship.
Onboarding documentation, especially in the transaction banking space, has traditionally been seen as painfully long, highly complex and structured in a way that benefits the bank rather than the client. As a result, addressing the problem on an ad-hoc basis – by, for example, amending individual documents or reforming only some aspects of the system – is doomed to deliver only marginal benefits. Indeed, this is something that banks have been trying to do for years and the experience has shown that only a complete overhaul will properly deal with existing deficiencies and deliver the desired improvements.
Aside from starting from scratch in order to reduce the number of documents and build a new system from the bottom up, addressing the style in which documentation is written, in terms of both the actual prose – avoiding legalese where possible – and its commercial balance should be a priority. Potential clients should be able to negotiate terms without having to first worry about working out what a document actually means.
The ultimate goal of any such initiative should be to establish a single master document that can cover client onboarding in all markets. While this will potentially deliver benefits to all clients, the greatest of these will be to complex corporates with operations spread across many markets. These organisations will no longer be faced with reams of additional documentation when they wish to expand their relationship with the bank to encompass new markets, products or services. Indeed, they should only have to review their terms and conditions once, at the outset of the relationship. However, for all clients, a key benefit will be a reduced onboarding lifecycle, making the establishment of a new transaction banking relationship a more streamlined and less arduous process.