In the wake of the U.K.’s multi-year Faster Payments initiative — a government-backed plan to get banks to clear payment transactions in hours instead of days — some banks are beginning to speed up other traditionally slow corporate-banking processes too — and not just in the U.K. Case in point: The Royal Bank of Scotland is slashing the time and paperwork required for corporate clients in 23 countries to open new accounts, cutting the process down to a single online form.
The bank’s Accelerated Onboarding Service, which is already being tested with some of the bank’s largest clients, lets corporate treasurers open a new bank account using a single signature interactive form, which replaces 70 individual signatures and 38 separate documents that total 86 pages, cutting customer paperwork by 75 percent, the bank announced on Thursday (Oct. 16) at the Eurofinance conference in Budapest.
Corporates will also be able to set up online banking and payments quickly and securely through RBS’s new system.
The new system is launching in the U.K., the U.S., Australia, Austria, Belgium, Canada, Czech Republic, Denmark, France, Germany, Greece, Hong Kong, Ireland, Italy, Luxembourg, The Netherlands, Poland, Singapore, Spain, Slovakia, Sweden, Switzerland and the U.A.E. Eventually, corporate customers in China, India, Indonesia, Japan, Malaysia, Thailand and Turkey will also be able to use the system.
The lengthy process of opening accounts is a major pain point for corporate customers. How lengthy? Falk Rieker, global industry business unit head for banking at SAP, said he was in a roundtable discussion at the Sibos banking conference in Boston earlier this month when the subject of onboarding came up. “One guy was saying it takes three to six months to onboard a corporate customer. Another said, ‘How did you get it down to six months?'” Rieker reported, according to American Banker.
Part of the reason is that many banks use manual documentation processes, which they consider “a necessary evil,” said Carole Berndt, head of Global Transaction Services for RBS.
Legal and regulatory requirements, including anti-money-laundering and Know Your Customer requirements, have recently been piled on top of legacy proprietary documentation processes at most banks.
RBS’s accelerated onboarding, which Berndt said was designed to make the process “simpler, less time-consuming and more cost-efficient” for corporates, is one of the bank’s first steps in an initiative to simplify customer documentation processes, and part of an overall move signaled in February by the bank’s CEO, Ross McEwan, to speed up and simplify customer processes.
Other banks have also chopped away at the not-so-necessary evil. According to Bill Pappas, CIO for global wholesale banking at Bank of America, speeding up onboarding was a driver behind a four-year project to streamline his bank’s corporate treasury technology.
But at many banks, the business case for overhauling systems and processes isn’t seen as solid. A big part of the reason is the cost and risk involved. Existing systems may be slow, but they’re reliable and have passed regulatory muster. They’re also already paid for.
RBS, like other U.K. banks, has already spent heavily for upgrades to meet the Faster Payments push — all told, British banks spent about $1.8 billion on those upgrades. RBS didn’t confirm that that its Accelerated Onboarding was built on the Faster Payments foundation, or whether its Faster Payments implementation was specifically designed to speed up other processes such as onboarding.
Without a similar government mandate in the U.S. to speed up the entire corporate payments system, the current transaction fees that banks charge corporates are too small to pay for big-ticket items like near-real-time payments, said B of A’s Bill Pappas — and thus the business-case problem.
But for smaller speed-ups like B of A’s faster-onboarding project, corporate customer dollars resolved that question. “For us it’s revenue,” Pappas said. “We need to bring them in as fast as we can.”