How Corporate Onboarding Spurs The Data Ownership Debate

Businesses large and small are demanding better user experiences from their financial service and other providers, whether that be banking, accounting, legal or otherwise.

While this often comes in the form of more digital-savvy services or more seamless user experiences, the customer journey begins from the moment of first interaction, with onboarding a major opportunity for B2B service providers to get the customer experience off on the right foot.

Due to the complexities and regulatory requirements of initiatives like know your customer (KYC) and anti-money laundering (AML) checks, however, the onboarding process can be a friction-filled, negative experience — for businesses and their service providers alike.

Speaking with PYMNTS, Horizon8 Managing Director Patrick Horgan explained how a reframing of the data ownership conversation can not only place corporate customers in greater control of the data they need to share with their providers during the onboarding process, but can strengthen business client relationships, too.

An Opportunity To Innovate

Despite the well-known pains of onboarding, service providers and their customers have struggled to navigate increasingly complex and demanding regulations as technology providers often overlook this particular area of friction, according to Horgan.

“Those operating in this space have almost succumb to the status quo,” he said. “They haven’t seen innovation in being able to onboard customers more quickly.”

From insurance to banking, onboarding plays several key roles for service providers. In addition to adding a new customer, this process ensures that clients are who they say they are, enabling service providers to maintain compliance and mitigate fraud risks. Yet historically, it’s a process that can take weeks. Horgan said corporates often have to wait an entire month to be onboarded by a financial institution (FI), for example, with the greatest challenge emerging in the data collection experience.

Back-office team members will spend the majority of their time manually collecting information to verify the identity of the individual needing to be onboarded. When that individual is a corporation, however, it can be even more difficult to determine who even is the main beneficiary of an entity.

“Ultimate beneficial owners can be directors that sit on the boards of a number of entities,” Horgan said. “There might be a number of directors.”

These individuals then end up having to upload key information about their identity, proof of address, and other information about themselves and the corporation over and over again.

Reframing Data Ownership

Recently, Horizon8 moved to address this point of friction with the launch of valid8Me, a tool that aims to reframe the concept of data sharing by placing greater control over sensitive information with the individual that needs to share it with a service provider. Data is uploaded to a digital identity “vault,” which an institution can then access on demand.

This strategy can ease friction in other areas of data sharing between customer and service provider. Increasingly, for example, FIs are having to continually validate their clients and stay up to date with any changing information, like change of address, to keep pace with evolving regulations.

“Ongoing due diligence can be even more problematic than the initial onboarding,” said Horgan.

There is an opportunity here for initiatives like open banking to automatically take information from sources like monthly bank statements to update those digital identity vaults, and then seamlessly ensure every service provider is provided that updated data without having to manually request it.

Beyond improving the experience for the service provider, this strategy of placing greater data control with the corporate end user may also help to mitigate other areas of friction that can make for a negative user experience. Current measures to mitigate fraud risks, for example, are compromising the experience to legitimate business clients, Horgan noted. Yet through technologies like biometrics and automated document forensics, fewer false red flags may be raised.

Ultimately, the data privacy conversation is beginning to shift toward end users’ ownership and control over their own information. It’s a positive progression for the onboarding landscape, noted Horgan, and may be good news for service providers and business clients alike.

“It’s amazing how common this onboarding problem is,” he said. “Customers are going to own their own data, and they decide to grant access to it. That very simple concept is data privacy by design.”