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.

 Overhauled documentation

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.[[[PAGE]]]

Of course, a key difficulty in establishing a single universal onboarding document is the different legal regimes found across different jurisdictions. One way to address this is through first looking at the problem centrally, conducting research and due diligence to establish what features of the documentation are common to all markets, and then repeating this process for individual jurisdictions to see what is applicable at that level. Extensive consultation with a broad range of clients is also likely to shape the development of the new documentation in a positive fashion. 

Existing clients

Though simplifying the onboarding process is clearly the primary goal of restructuring documentation, it can also deliver benefits for existing clients. Deutsche Bank, for example, has recently undertaken a complete overhaul of its documentation and onboarding processes, developing three options for existing clients.

Transaction banking providers are increasingly looking at what they can do to enable greater client mobility.

First, clients can elect to stay entirely with legacy documents. This may suit those that have a complex, well-established relationship already in place and may have already gone through extensive negotiations over existing documentation. Organisations may have also shaped some of their own internal processes around the requirements of existing documentation. Second, clients can decide to re-paper their existing solutions, so that everything is covered by the new simplified documentation. The third option is to maintain the old documentation for old solutions and use the new documentation for when new products and services are needed or when existing solutions are expanded to cover new markets.

For most clients, the third option is likely to be preferable as this minimises any upheaval in the relationship while still delivering the benefits of the new documentation. However, the second option may suit those that wish to improve the visibility of documentation and agreements between themselves and the bank – something that can become very complex when a relationship has grown and developed over many years. 

Streamlined processing

Alongside overhauling documentation, restructuring the way the documents are processed can also deliver significant benefits and contribute to improving the overall client experience. Indeed, streamlining how a bank processes documentation during onboarding is just as important as looking at the documentation itself. Client feedback has shown that disparate processes across different markets – though still within the same bank – can prove extremely time-consuming and be the cause of significant frustration.

In this respect, Deutsche Bank has developed a ‘one envelope’ approach to making the onboarding experience consistent across all jurisdictions. This means that clients receive all information on account opening, delivery channels and relevant products and services through a single source, and can easily monitor the status of documents, as well as make queries and receive reminders when action is required. This structure allows clients a greater role in managing how the onboarding project is completed and can simplify the process of securing all the required approvals and signatures.This single enveloped approach – normally a ‘virtual envelope’ – also provides a central filing location for electronic versions of customer documentation – such as, for example, passports – that may be needed at various stages in the onboarding process and later in the relationship. By dematerialising as many documents as possible and moving towards purely electronic systems, this approach can also make it easier for the bank to process documentation in parallel rather than sequentially, cutting down on waiting time and further expediting client onboarding.  

Tangible benefits

The introduction of new, simplified documentation and the reengineering of processes have, so far, led to significant reductions in implementation cycle times. For example, in a recent client onboarding in Spain, Deutsche Bank reduced the cycle time by over 20% using the new documentation and processes. This represents a win-win situation for both the client and the bank. The bank is able to take on new clients in a more cost-effective manner, while the client loses less time when switching provider. However, the goals of such a project go further than merely enhancing the client’s experience of their first few weeks or months doing business with a new bank, but extend to improving it over the entire lifecycle of a relationship. So, despite these measures certainly contributing to a reduced level of stickiness between customers and providers in the transaction banking industry, they should actually serve to improve client retention and satisfaction over the longer term.