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Future-proofing client onboarding with CDI: a roadmap to long-term sustainable value

By Clare Puplett | Tue 22 October, 2024
Future-proofing client onboarding with CDI: a roadmap to long-term sustainable value

In the final part of this series, we explore how financial institutions can transition to a CDI-centric approach. With a focus on how to streamline corporate client onboarding, while unlocking long-term value.

Challenges in corporate client onboarding

Onboarding for corporate clients is resource-intensive, with Tier 1 banks spending over US$13 million annually on customer due diligence (CDD). These inefficiencies are compounded by large volumes of unstructured data, leading to duplicated efforts and long timelines.

Despite these high costs, manual workflows remain common, costing up to US$11 million, with US$4 million preventable through automation.

The CDI solution: streamlining onboarding

Corporate Digital Identity (CDI) automates data and documents collection, risk assessment, and client profiling. With the additional benefit of integrating structured and unstructured data for real-time risk insights. Automation through CDI can achieve efficiency savings of 59% within five years. Furthermore, with 21% reduction of total cost being achievable in year one. Faster onboarding, reduced churn and technology consolidation can further drive savings, pushing total reductions to 57% in year one, when looking at the commercial and adjacent aspects of onboarding.

Building a business case – take stakeholders on a journey

Taking stakeholders on a gradual journey will convert any detractors to become advocates. Steps for successful CDI implementation include:

  • Assess inefficiencies: Identify tasks ripe for automation, especially those prone to duplication.
  • Calculate ROI: Build a strong business case. With the ability to show that up to 21% of efficiency gains can be achieved in the first year. With the potential to offset up to 57% off costs by combining the commercial uplift opportunities, with further incremental gains as the impact of CDI matures further.
  • Develop a strategic roadmap: Implement CDI in phases, ensuring a balance between short-term wins and long-term transformation.
  • Engage stakeholders: Overcome internal resistance or inertia by showcasing tangible benefits like incremental cost savings and improved client experiences.

Upskilling and retaining talent

A key, yet often overlooked, advantage of CDI is its ability to upskill employees. This is achieved by automating repetitive tasks such as data collection and manual reviews. CDI allows analysts to focus on higher-value activities, like risk management. This not only leads to more informed decision-making but also boosts employee satisfaction, contributing to better talent retention.

The power of perpetual KYC

One of CDI’s most transformative features is its support for a perpetual Know Your Customer (pKYC) model. By continuously maintaining and monitoring digital client records in real time, CDI minimizes the need for periodic manual reviews. Any significant changes in public or private data can be flagged for refresh and trigger a materiality assessment, allowing banks to proactively manage client risks without disruptive, time-consuming interventions.

Driving growth

An efficient onboarding process directly impacts commercial success in two major ways. First, quicker, smoother onboarding elevates the client experience, reducing churn and optimizing lifetime value. Second, a deeper understanding of corporate client risks and sector-specific vulnerabilities opens doors to new growth opportunities. This gives institutions a competitive edge over peers who may appear to have lower risk thresholds but lack the insights to mitigate risks effectively.

Moreover, the data generated by CDI can be leveraged for marketing and business development, helping firms refine client segmentation and execute more targeted strategies.

The ROI of CDI: a long-term value proposition

While CDI offers immediate cost savings and efficiency improvements, its full value becomes evident over time. As CDI systems evolve, banks can expect incremental gains each year, with total efficiency savings potentially reaching 59% over five years and beyond. This aligns with a shift in how banks view their technology investments—moving from a short-term, two- to three-year focus to a longer-term, five- to seven-year horizon.

CDI as a strategic imperative

Automating corporate client onboarding, whether sooner or later, is essential for banks. While there are challenges to adopting technologies like CDI, this three-part paper series offers valuable guidance for those exploring this transition.

Paper one focused on the time, effort, and resources consumed by traditional onboarding and due diligence processes, identifying key inefficiencies that can be addressed.

Paper two outlined where CDI can make the biggest impact in the onboarding and review cycle, providing readers with a foundation for developing their own action plans.

This final paper presents models based on extensive research to help institutions estimate ROI and plan their transformation.

Though each bank’s situation is unique, this series provides a starting point for financial institutions to tailor their own CDI strategies and begin their journey toward more efficient, automated client journeys.

 

Read the final report in our series with Chartis

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