• Patricia Hines, Head of Banking and Payments at Celent


• 20.10.2023 07:30 am
#corebanking

In corporate banking, the end-to-end process of onboarding new technologies encompasses multiple components. Account opening, credit analysis, know-your-customer (KYC)/know-your-business (KYB), maintenance, sales automation, and service/product fulfillment are all areas that require attention. This complexity often results in unresolved implementation and integration challenges for corporate clients, especially when moving to a new banking provider.

The missing element, all too frequently, is technical onboarding. A streamlined, efficient technical onboarding process can distinguish a bank from its competitors, reducing processing costs, introducing new services that enhance customer satisfaction, and accelerating fee revenue.

The what and why of technical onboarding

Technical onboarding—an important element in a broader set of onboarding processes in corporate transaction banking—refers to an exchange of specifications and communications protocols, testing sample files or messages, and determining production readiness. It incorporates building, testing, and implementing interfaces between client and bank applications for information reporting, payables, receivables and fraud solutions. Technical onboarding is commonly an asynchronous process, leading to delays, prolonged implementation timelines, and increased operational costs as multiple handoffs occur between clients, treasury sales, treasury operations, and implementation teams. Each bank relies on different channel providers, file formats, and transmission protocols. With corporate clients using a wide range of enterprise resource planning (ERP), treasury management systems (TMS), and accounting systems, smooth integrations with corporate clients prove to be quite challenging. 

Without focused onboarding initiatives that provide appropriate training on integration and connectivity, a critical step is absent. This absence becomes especially apparent for complex transaction banking services. Common challenges in technical onboarding include integration with multiple client applications and systems, file formatting issues, testing procedures, the overall ease (or lack thereof) of integration, the use of bank security protocols and procedures, and the failure to run processes based on the perspective of customers and their employees.

When clients are frustrated—whether by inconsistencies, redundancies (such as the lack of data reuse), lack of process transparency, or unnecessarily prolonged communications with support teams—the relationship is at risk. Hurdles can be so great that some clients may choose to remain with their current bank provider instead of risking implementation issues likely with the move to a new technology.

The increasingly complex corporate-to-bank connectivity space

Growing cross-border payment volumes, migrating message and payment formats, expanding message and file sizes, increasing demand for fast-tracked digitalization initiatives, and competition from emerging challengers are among the top factors influencing the increasingly complex corporate-to-bank connectivity space. The ongoing migration to the “universal financial industry message scheme,” ISO 20022, will likely increase the need for file format translation services.

Banks have the opportunity to aid business clients by streamlining daily cash forecasts, integrating receivables reconciliations, and tracking payments with embedded finance. Many banks are investing in corporate digital channels and platforms. Yet, those financial institutions with outdated, siloed technology stacks and other limitations that present hurdles to technical onboarding will face ongoing challenges.   

Options for improving technical onboarding

Multiple approaches are available for banks that choose to proactively improve their technical onboarding processes. These include: 

• Application of easily accessible standards: Published standards (e.g., the Swift MyStandards program) that a client’s IT team may access and use easily can enhance technical onboarding. This approach is particularly useful with ISO XML-based standards; it is also valuable for any bank-proprietary format or standard that a client will be required to use.

• Readily available testing facility for clients: As banks and their clients continue to rely on formats including Swift MT, BAI2, and others for information reporting and payment initiation, file format translation remain a critical component of corporate-to-bank integration. Particularly beneficial for any standard a client must use (such as ISO XML-based standards, SWIFT MT, or ISO 20022 formats), a file format translation and transformation layer can enable a bank to support mixed formats, old and new, while avoiding the potentially costly process of upgrading legacy tech stacks. 

Providing visibility for clients and bank operations staff can help accelerate the onboarding process. This visibility is possible through adopting off-the-shelf solutions, which can be integrated into a bank’s internal systems and customer relationship management (CRM) and can provide secure client communications. Another approach is to adopt low-code solutions that have purpose-built templates for processes, such as format validation, file translation,  and message testing.

Improve the efficacy of your technical onboarding

Banks motivated to provide best-in-class digital experiences can make strides by evaluating the efficacy of their onboarding process and tools. Determine if your file specifications are easily available, if you support testing portals tailored for each client, if all documentation is accessible in a central repository, and if file format translation is an option. Lastly, be certain to have and maintain visibility into how your technical onboarding process is progressing. Careful evaluation of and attention to your bank’s effectiveness can help deliver a competitive advantage.