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WHEN PROCESS CREATES POTENTIAL: NEW OPPORTUNITIES FOR BANKS IN CLIENT ONBOARDING

By adjusting their onboarding processes financial institutions can enhance their client experience, reduce costs and pave the way for new cross border services, explains Stephan Wolf, CEO, Global LEI Foundation.

It’s no secret that regulatory compliance doesn’t always sit comfortably with a bank’s desire to deliver a smooth, hassle free user experience (UX) for its clients. The job of onboarding a new corporate client is a key case in point; extensive anti-money laundering (AML) and know your customer (KYC) checks mandated by regulations like AML5 typically require more back and forth than either the financial institution (FI) or the client would like.

For the FI, its client onboarding UX is only part of the problem. To ensure compliance, internal processes have necessarily become both granular and time consuming, reducing internal efficiency and inflating costs as a result.

As legal entities, clients that perform financial transactions in capital markets are mandated by various regulatory bodies across the world to have a Legal Entity Identifier (LEI) for reporting purposes. By doing so regulators are able to paint a clear picture of who is involved in their markets, thereby enabling more effective risk management. To date FIs have not broadly adopted the LEI to improve their portfolio surveillance and in this respect are a step behind regulators in realizing the benefits from LEI adoption.

Until now, the process of obtaining an LEI is most commonly undertaken when an entity is onboarded by their FI, and has required the entity to liaise directly with an LEI issuing organization, thereby repeating many of the onboarding processes the entity just undertook. Considering that for many clients obtaining an LEI is a legal requirement, this process duplication can create frustration.

To enable FIs to overcome these challenges and realize a variety of onboarding cost, efficiency and customer experience benefits, the Global LEI Foundation (GLEIF) has created a new operating role for banks in the LEI issuance process, called the Validation Agent.

 

Introducing the Validation Agent Framework

The Validation Agent Framework empowers banks to leverage their KYC, AML and other regulated business-as-usual onboarding processes, to obtain an LEI for their customers during initial onboarding or a standard client refresh update. In other words, banks acting as Validation Agents can liaise with the LEI Issuer on its client’s behalf to ‘validate’ key identity data, such as the legal name and business registry information, confirming that these checks and processes have already been performed.

 

Enhanced customer experience and market differentiation

A bank in the Validation Agent role can benefit from a greatly streamlined and cost-effective LEI issuance process for clients, resulting in a faster and more convenient client experience in onboarding and lifecycle management. The removal of process duplication also means less time and resource investment needed from their client which, ultimately, reduces the time to trading revenue.

By acting as a Validation Agent, banks also have additional opportunities to add client value and achieve market differentiation. They have, for example, the chance to pioneer new, revenue-generating digital services in areas enabled by the LEI – from corporate identity management to legal assurance level e-signing with digital certificates.

 

Leading the way in identity management

Although the Validation Agent Framework will initially appeal to FIs seeking to streamline regulatory compliance processes for their clients, the role is designed to foster broader appeal among banks and to encourage voluntary LEI adoption outside of capital markets.

Validation Agents can leverage the LEI and eliminate manual linking of entity data from disparate internal and external sources. McKinsey estimates that this alone would save the global banking industry $2-4 billion per annum by improving full time employee productivity in client onboarding.

By expanding LEI issuance beyond legal entity clients that require an LEI for financial compliance, a Validation Agent can equip its whole business client base with globally recognized identities, which can be used across borders with any legally registered counterparty or supplier around the world.

In this way, FIs can use the LEI to solve the problem of cross border trust for their clients worldwide. It is the only open, commercially neutral, standardized and regulatory endorsed system capable of establishing digitized trust between all legal entitles, everywhere. As awareness of these enabling attributes increases, the Validation Agent role is also likely to be assumed by banks seeking to become recognized leaders in identity management, positioning themselves as facilitators of global trade.

What’s more, if the LEI becomes more prominent and available in AML reporting then regulators, in particular across borders or jurisdictions, will be better equipped to identify and trace illicit financial behavior, which in turn protects both businesses and the general public.

Any FI that serves legal entity clients may apply to become a Validation Agent. GLEIF is actively engaging with the global banking community to support trials of the Validation Agent Framework and invites FIs to enquire about participation within the trial phase.

 

Banking

THE ART OF BIOMETRIC PAYMENT CARDS: WHY BANKS NEED TO GET DESIGN-SAVVY

Lina Andolf-Orup, Senior Director at Fingerprints

 

Biometric payment cards have ticked several important boxes in the last year. The technology has achieved certification from major payment networks, costs have reduced, and manufacturing has become simpler, and the first commercial launches have begun.

But as more banks move to offer this technology to their customers, it is important to consider design. The look and feel of any new technology is central to its success among consumers, but it can be commonly overlooked or an afterthought. In fact, when asked about biometric payment cards, 30%1 of consumers cited design as important, while just 15%2 of banks we spoke to had it on their agenda.

But why is it so important? And what considerations have already been made to ensure this technology offers not only a technical edge, but a desirable addition to a bank’s offering.

 

A makeover on the cards

Even before the pandemic, the physical bank branch was dying out as consumers moved to digital, on-demand services. As such, the payment card is one of the few remaining physical relationships customers have with their bank.

Mobile-centric challenger banks have captured the attention of consumers with design and user-experience (UX) at the heart of their strategy. Beautiful cards alongside sleek mobile apps are helping them build bigger brands, with the traditional card reimagined by the likes of Monzo with its bright coral card, Starling with its sleek, minimalist front and vertical orientation, and Klarna with its card delivered to you in a fluffy ‘fur-lined’ envelope. Other banks have even launched ‘design-your-own’ options.

Lina Andolf-Orup

For traditional banks, there’s huge opportunity to strengthen relationships and build customer loyalty, especially when launching a new technology. The opportunity to strengthen brand is key, which is just one of the reasons the latest generation of fingerprint sensor for cards is even smaller, meaning more space to play with on-card, and hence more space for banks to build their brand.

 

Defining design

For banks, there’s a business case for a wide scope of consumer segments with biometric payment cards – from millennials and gen Z, to business, more premium, or older customers. While unsurprisingly younger demographics rated the card design’s importance highest, 1 in 4 over 50s also noted it as significant factor.

So, any design needs to appeal to a broad audience, but what exactly do consumers want to see from their biometric payment card? We sought feedback from consumers to help decide our latest sensor design and the responses made interesting reading.

‘Modern’ and ‘personal’ were the highest rated design traits across all age groups and geographies, with Europeans especially favouring a ‘modern’ design. It makes sense – the excitement of getting the latest technology would undoubtedly be dimmed if it looked just like any old bank card. Interestingly, the Chinese market ranked a techy feel as important too, with over 50% marking it as a preference.

We also wanted to see how different designs made consumers feel. Here there was some variance but undeniably, responses show that consumers felt that having the biometric sensor in the card was something to be excited about and to show off. Crucially, consumers also responded that it was easy to understand how to use the sensor from the design. Which leads me to another important aspect…

 

“Cool card, now what?”

How a technology feels and the UX it delivers is closely intertwined with design. On this point, our research also found a gap between banks and consumer opinion. Nearly half of consumers cited usability, how the card feels, and knowing where to place their finger as a priority, while just 1 in 3 banks saw it as a concern.

Consumers are quick to feel frustrated and abandon new technologies if they are too complex or difficult to use. Poor design can easily lead to poor UX, compromising successful onboarding and adoption even after significant investment.

The enrollment process is another vital aspect. Our consumer research and trial feedback has shown just how important this initial ‘meeting’ with your new payment card is. Enrolling your fingerprint needs to be intuitive and uncomplicated as a minimum. To truly make biometric payment cards a success, consumers need to feel engaged and excited from the get-go, as well as trust that their new card is going to work from first tap in store.

Last year, we collaborated with UX-specialist BlockZero to create an ‘out of the box’ creative enrollment concept with a companion mobile app, but banks have options to offer to their cardholders, including enrolling via a mobile app, with a powered sleeve, or in-branch. Banks need to carefully consider their customer base to select what option best fits, as undoubtedly the preferred way to enroll will differ between markets and demographics. From our research it’s clear however that both consumers and banks want a simple and secure self-enrollment option and a rich first touch-point with these new cards.

 

Looking good

From our research, we shaped our new sensor design to be one that struck the perfect balance between modern, personal, and techy, while gesturing to our branding. After all, design savvy cards need a good-looking sensor, too!

 

Too often, design and UX is shoe-horned in after the fact but for consumers, it is a priority. Already at an early stage we thought about the actual aesthetic design of the new sensor, and not just the technology and performance. For banks rolling out this exciting technology, factoring in ergonomics and design from the start guarantees their customers – and prospective customers – have something they can be proud of, use, trust and maybe even talk about.

Learn more about launching biometric payment cards.  

Fingerprints research in collaboration with Kantar, Dec 2019, 1,200 consumers across France, UK, China

Fingerprints in collaboration with PayTech, 2019. 25 card issuer/banks in 7 countries

 

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Banking

ORGANISATIONAL ALIGNMENT KEY TO MAXIMISING POTENTIAL OF OPEN BANKING

  • Lack of internal alignment risks holding financial institutions back from realising open banking potential
  • 70% of C-level executives recognise the open banking opportunity but just 45% of product owners feel the same
  • Majority of respondents (59%) across financial institutions are confident they have the talent available to make the most of open banking, but only 43% of product owners feel they have the necessary resource

New data from open banking platform Tink has today revealed that whilst there is overall positive thinking about open banking within European financial institutions, a lack of internal alignment risks holding them back from realising its full potential.

The findings reveal notable differences in how the open banking opportunity is perceived throughout financial institutions, and diverging views on open banking capabilities and skills across different parts of the business. This organisational divide reflects the sheer size and scale of the task banks are facing to transform their operations to become open banking ready and meet new customer needs.

According to the new data, over two-thirds (70%) of the C-suite see the opportunity that open banking presents right across their organisation. They also believe it provides good value for money with a similar percentage (67%) believing the benefits outweigh the potential costs.

However, whilst senior teams may be buying into open banking, the research paints a more varied picture across other parts of the business. Most channel owners (63%), responsible for the online, mobile or developer interfaces, recognise the open banking opportunity across their organisation. In contrast, less than half (45%) of product owners feel the same way.

 

 

Differing views on skills and resourcing requirements may go some way to explaining the levels of buy in for open banking across the business. The majority of respondents in financial institutions are positive about having the talent available within the organisation to execute on open banking objectives (59% on average).

Those who work in IT are the most confident (65%) they have the skills to deliver on open banking, followed by groups working with management (61%) and digital or mobile banking channels (60%). However, only 43% of product owners are confident their team has the required resources to capitalise on open banking.

This might explain a lack of agreement on whether products and services being offered to customers are taking full advantage of the organisation’s open banking capabilities. The overwhelming majority of those within the IT department (67%) said they believe open banking capabilities are being leveraged in this way. This is in stark contrast to under a third (32%) of executives in the digital and mobile banking department who feel the same.

 

Rafael Plantier, UK and Ireland Country Manager at Tink, said: Whilst fast-growing challengers in the industry continue to make moves, banks remain in the best position to offer integrated open banking services. As custodians of money and providers of financial services they already have a solid foundation of customers that trust them and are therefore willing to share data.

“However, we should not underestimate the enormity of the task that financial institutions face in transforming their operations to become open banking ready. It is to be expected that there are differing levels of buy in for open banking across the organisation, and pockets of the business that may lag behind in embracing the opportunity.

“As those in the C-suite evolve their open banking strategy, there is opportunity to fill possible knowledge or culture gaps to ensure alignment. Whether it be through strategic fintech partnerships, acquisitions or internal re-alignment, banks can ensure they are well placed in the race to create the best possible customer experience from open banking.”

 

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