The fastest path to driving growth for financial institutions lies in automating the digital customer onboarding processes. The more quickly financial institutions can onboard high-quality customers, the faster they can offer those customers their products and services and grow revenue. While fully automated consumer onboarding has thrived, the complexities of business identity have hindered progress towards automating this process for financial services. Challenges such as incomplete data, poor user experiences, low pass rates, and increasing fraud are at the core of what has prevented the business onboarding process from becoming fully digitized.
In their webinar “Automating ‘Yes: solving identity in digital business onboarding,” American Banker welcomed Middesk CEO, Kyle Mack, and Managing Director at Liminal, Will Charnley, to discuss some of these challenges in more detail. Here are our top 6 takeaways from the webinar that can help you navigate the evolving business onboarding landscape.
1. There’s a Race to Capture the SMB Market
Banks and Fintechs grow by onboarding more accounts, and the biggest opportunity in the market right now is the explosion of newly formed small and medium businesses (SMBs). It’s hard to overstate the growth in this sector - the U.S. Census showed that in 2023 for every 1 person born, there were 2 businesses formed. Nearly all of those businesses need access to financial services, and financial services providers are scrambling to capture potential new customers. And yet, while there are outsized opportunities, there are significant challenges: there are high expectations for a seamless onboarding experience, and finding data on brand new businesses requires data providers that can offer that dependably.
2. Automation requires Quality Data
Shifting from manual reviews to automated reviews in business onboarding processes is driving an increase in demand for high-quality data. Automation is a key buying criteria for 74% of the decision makers that Liminal polled, indicating that financial service providers already know that they need to create compliant, yet fast, onboarding solutions to reduce costs and increase efficiency. Kyle Mack pointed out that “data quality is the ceiling for what can be automated”, and suggested that all businesses will focus on efficiency moving forward.
3. The Crucial Role of Vendors
After talking with many leading buyers in the industry, Liminal reported that selecting the correct vendors is the only way to overcome challenges related to stale data, slower pass rates for SMBs, and fraud prevention. Effective vendors are those offering up-to-date and enriched data, and expertise in industry-specific verification and onboarding processes. When vendors bring these capabilities to their offerings, the result is lower abandonment rates, less manual processing, and overall cost savings for the buyer.
4. Urgency around Fraud Prevention
While fraud is traditionally considered later in the business banking customer lifecycle, there are reasons to look for fraud signals earlier in the onboarding process. A timely challenge that financial institutions are looking to mitigate is the ease with which fraudsters can create new businesses, accentuating the urgency of near real-time capabilities in mitigating fraud. The right solution will incorporate up-front and ongoing fraud monitoring to address the complexities associated with fraudulent banking activities, particularly at the time of onboarding.
5. Automation improvements: Dynamic Application Processes and Optimization
A strong solution to collecting accurate data from applicants at the start of onboarding is by creating dynamic application flows. Rather than a one-size-fits-all static process, leaders in the industry are using dynamic application processes where business identity information is gathered in stages and verified in real-time. This leads to better data accuracy and an improved user experience with lower onboarding dropoff. When optimizing for automated pass rates, the speakers went into depth about the impact that dynamic optimization by rule sets can have when you trust the data your vendor is providing you.
6. Data vendors are partners
And finally, your data vendors should be more than just providers - they should also be your thought partners. The leading vendors are adding value by conducting data tests alongside their customers and developing a full understanding of their onboarding flows. LIminal suggests that the best data providers, like Middesk, consistently work with their clients to identify new strategic datasets and invest in other product strategies that make automated digital business onboarding more efficient.
At Middesk, we are dedicated to helping businesses navigate these complexities and tailor their verification strategies to meet these evolving needs. Our team of experts is eager to help you troubleshoot your digital business onboarding program.
Excited to dig deeper?
1) Sign up here to be the first to know when registration opens for the next American Banker x Middesk collaboration where we'll review how real banking leaders have navigated the challenges of automating digital business onboarding and identiy.
Or
2) Hear even more from Kyle Mack and Will Charnley in the "Automating 'Yes'" American Banker Webinar in full here.
