How Community Banks are taking their new business onboarding flow digital

Takeaways from our “Zero to Digital” webinar with American Banker

Digital onboarding has become a crucial component of modern banking, allowing financial institutions to offer a seamless and secure online account opening experience for their customers. However, regional and community banks encounter unique challenges when converting a traditionally in-person, paper-based process to digital. Banks are put in the difficult position of balancing the customer desire for a digital-first experience, a fear of fraud, and the increasingly complex regulatory environment within which they operate. 

American Banker recently invited Kyle Mack, CEO of Middesk, and Craig Pawling, VP of Product Management at Apiture, to discuss why these challenges persist and how smaller institutions can start moving towards digital onboarding adoption. Here are our top 6 takeaways from the webinar that can help you move your business from zero to digital.

De-risk the digital front door with data

Craig and Kyle both emphasized that much of what holds community banks back is the fear of the digital front door as a result of the new risks this channel makes their business susceptible to. While there is more fraud today than ever, partnering with technology providers and data vendors that know how to combat digital fraud is the best way to implement modern, digital banking practices while mitigating risk.

When considering how data will help combat digital fraud, consider first where data comes from. Broadly speaking, there are three types of data that can be used to build a business identity: (1) customer-provided information (e.g. entity name), (2) information about the business that exists freely in the world (e.g. website URL), and (3) data provided by vendors (e.g. TIN). A robust digital onboarding and risk mitigation strategy will take advantage of all three sources of data. Working with technology partners that have proprietary data sources that are trusted and current will enable community banks to compliantly onboard businesses more accurately and faster than traditional in-branch onboarding flows.

Invest thoroughly in identity verification 

Identity verification is the cornerstone of an effective account opening solution. Craig from Apiture shared that when he builds onboarding programs for community banks he evangelizes getting the best-in-class data solution for identity verification. Cutting corners with your identity verification strategy can lead to gaps that make you more susceptible to fraudulent activity. This is the most critical stage in a bank’s customer onboarding flow, and he recommends paying for the most accurate and up-to-date data. Craig elaborated that identification requirements can be tailored to meet each banks’ specific needs, and that working with a configurable account opening solution, like Middesk, allows banks to regularly adapt their practices to meet evolving regulatory requirements.

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Select the right vendor for your business 

For banks considering taking the first step towards digital onboarding, the speakers stressed the significance of conducting thorough research and testing prior to selecting a vendor. Start by outlining the outcomes that are most important to your business (e.g. reducing account opening time or improving auto-approval rates) and share those outcomes with your short-list of vendors. Depending on your business priorities, certain vendors may be a better fit than others. Look for an organization that is ready to be a thought partner and build solutions with you.  Any vendor you select should offer flexibility and configurability in their product so they are able to adapt their solution to adhere to regulatory requirements and meet your unique business needs as they evolve.

Crawl, walk, run

The speakers discussed the need for small institutions to start slowly when migrating to a digital onboarding solution. They suggested implementing manual reviews initially, then gradually automating the process based on real experience and outcomes. Craig emphasized that investing in a digital front door has many benefits, including the ability to expand a bank's reach and allow them to compete for a broader pool of potential customers. While it’s clear that digital banking does open up the market of potential customers, it’s still worth making every step intentional and ensuring your business is prepared to onboard and serve new business clients in a new way.

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Get fluent in data

Data is central to any digital banking system. But what data do you really need in order to offer a competitive digital banking solution? Middesk relies on the most trustworthy and authoritative data sources, such as entity formation data, IRS information, and secretary of state data as the best source of truth. Alternative data sources like web presence and online reviews are additional data sources that can be used to gather information and build an accurate picture of the businesses. Make sure you know where your vendors are acquiring their data, how accurate it is, and how often that data is refreshed. Your ability to de-risk your digital onboarding flow will only be as strong as the underlying data that powers it.

It’s not a matter of if, but when

Customers of all shapes and sizes—even business customers—are looking for simple and delightful new digital experiences to replace more cumbersome existing manual processes. In order to stay competitive, banks must invest in serving customers through new innovative, digital channels. It’s not a matter of if banks are going to offer digital onboarding experiences for their customers, but when. 

Embracing digital onboarding and partnering with the right solutions providers will help regional and community banks unlock new opportunities and expand their customer base. Start slowly, invest in identity verification, thoroughly evaluate your vendors, and dig into the sources and quality of the data they provide. By leveraging authoritative and alternative data sources, banks can improve identification verification and provide a seamless account opening experience for customers while remaining in compliance. 

Experience what a digital onboarding flow powered by Middesk could look like for your customers.