the executive’s guide to customer onboarding in a digital...
TRANSCRIPT
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Customer Onboarding in a Digital Age
The Executive’s Guide To
How to become a superhero and onboard new customers in less than 15 minutes
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““
Winning new customers and keeping existing clients in a challenging market can be extremely difficult; however, providing an efficient and differentiated client experience has become the key to any financial institution’s ability to not only survive, but to thrive.
- Accenture
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“ If banks can take out costs in the processes that handle routine transactions, they will be able to serve mass segments more profitably and invest disproportionately in high-margin services for the affluent. The way to accomplish this is through an omnichannel approach—integrating disparate digital and physical channels into a single, seamless experience—tailored to address the priorities of each customer segment.
– Bain and Company
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Who this book is for& information about the author
Who this book is for:
This eBook is an executive guide to reengineering customer onboarding processes for financial institutions. It was written for leaders of financial services firms responsible for operations, process improvements, customer onboarding, customer experience, mobile strategy, or business process reengineering. After reading you will understand why most financial institutions’ customer onboarding operations need to be reengineered, how to do it, and how other firms have found success implementing rapid customer onboarding processes.
Beginner | Intermediate | Expert• •
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Who this book is for & information about the author
Peter Fitzpatrick is an Account Executive at Recombo with extensive experience in the electronic payments space where he worked for Canada’s fastest growing payment processing ISO. Peter studied Commerce at the University of British Columbia and is responsible for publishing Recombo’s ideas and learning from our business process reengineering practice, as well as the experiences of others in the industry.
This eBook is written for leaders of financial services firms responsible for business process management, business process reengineering, or for those who simply want to learn how to craft a more efficient business process. It’s an introduction to smart process applications, and how they can make processes more efficient. After reading you will have an understanding of why smart process applications were developed, how they work, and how other firms have found success implementing them.
Who this book is for: The author
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The author
Peter Fitzpatrick is an Account Executive at Recombo with extensive experience in the electronic payments space where he worked for Canada’s fastest growing payment processing ISO. Peter studied Commerce at the University of British Columbia and is responsible for publishing the ideas and lessons learned from our business process reengineering practice in customer and employee onboarding, as well as the experiences of others in the industry.
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Agreement Express
Agreement Express is a rapid customer onboarding platform for
financial services firms.
Easy to implement
Any company can design, test, and implement a rapid customer onboarding process in less than 16 weeks.
Agreement Express is expandable, and it’s flexible, so you can integrate it into future IT initiatives.
Agreement Express works with your legacy systems to keep information up-to-date. Extend your core systems of record without the risk of a major IT overhaul.
Future Proof
Comprehensive
click here to speak with one of our team
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Table of contents:What is rapid customer onboarding and why is it important?
Rapid customer onboarding philosophy
Step one: Select your team
Step two: Map your process
Step three: Reengineer your process
Step four: Phase in - implement, measure & iterate
Case study: Merchant card application process reengineering
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Page no.
04. 10
05. 13
06. 16
07. 26
08.
09.
30
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03. What is rapid customer onboarding and why is it important?
Rapid customer onboarding is the fastest way to collect, use, and store the customer information needed to open a new account. Developed from agile ideology, this new generation of customer onboarding processes uses automation to deliver immediate service to customers anywhere in the world, at any time, on any device. Information already stored in corporate IT systems, along with new information collected from the customer is used to complete as much work as possible automatically. Fully automated customer onboarding is now possible, enabling customers to be onboarded in minutes instead of days. Installing a rapid customer onboarding system is as if your back office found superpowers.
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Why rapid customer onboarding is important today
Rapid customer onboarding is important because your clients expect it. Regardless of whether you work with consumers or companies, everyone you interact with has come to expect the expedience and seamless self-service offered by industry innovators like Square Payments.
Your customers experience instant onboarding when working with other companies, and expect the same from you.
In addition to meeting customer expectations, rapid customer onboarding increases revenue and decreases cost.
When a customer is onboarded in one day instead of 21 days, you earn 20 extra days of revenue from that customer. And because most of the process is automated, your back-office can handle a much greater volume of new accounts.
Finally, document automation and real-time quality assurance removes the risk of human error, nearly eliminating compliance risk.
Become more profitable
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04. Rapid customer onboarding philosophy
Investing in your first impression
The first impression new customers have of your business is the result of their experience during the onboarding process. You may offer the best product or the most outstanding customer service, but their opinion begins with their onboarding experience. It’s the first opportunity to WOW them, but most financial services companies don’t. We believe you should be the company that does. Invest in your first impression, because you only have the opportunity once.
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“ “[Agile] teams run in sprints of two to three weeks to develop a workable prototype or new functionality. It is very different from the traditional planning and budgeting model used by many organizations.”
– McKinsey & CoCompeting in a digital world: Four lessons from the software industry
Agile vs WaterfallRapid customer onboarding gets its superpowers from the Agile development methodology. Rapid customer onboarding requires agile design and implementation, a type of development unfamiliar to many financial institutions. Originating in high-tech software development, the agile methodology takes advantage of user feedback early in the design process to make frequent design improvements. Design and implementation is completed in phases, with each phase incorporating new feedback from users into the design, and expanding to a larger user group.
This differs from waterfall development methods which most IT departments utilize when developing their core IT systems. Waterfall methodologies involve a long design process and linear development. The software and processes are deployed in fewer, longer stages, without collecting feedback.
To successfully implement a rapid customer onboarding process, financial services companies must learn to take a rapid, feedback-centric, agile approach; or else their competitors will beat them to the punch by months or even years.
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Document flow vs. data flowEnterprise onboarding processes have revolved around paper forms since the inception of business process management in the early 1990’s. This is because they were the only vehicle for collecting, sharing, and storing information. We no longer use paper to share or store information, but many financial institutions still use paper to collect it.
This no longer needs to be the case. It’s finally time to replace paper. Smart process applications offer the artificial intelligence needed to automate account opening,
while cloud computing and mobile computers provide the power and the connectivity needed to support it.
Business process managers can now relieve themselves of confines of paper forms, opening up the possibility of efficiency gains and customer experience improvements through automation. By designing onboarding processes around digital information instead of paper documents, 21 day onboarding timeframes shift to less than a day.
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Before starting you’ll need to bring together a team to help you reengineer your onboarding process. Assembling the right team is kind of like assembling the right superheroes, The success of your mission depends on it. We recommend you form a team that resembles the description below. If you do, you’ll be a happier and more successful process innovator.
05. Step one:
Select your team
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Executive SponsorExecutive sponsors make sure the onboarding reengineering project maintains alignment with the company’s strategic goals. They are a crucial part of the team because without them the project won’t have the organizational clout needed to make changes that can truly impact the business. The best sponsor is creative, stubborn with deadlines, and not afraid to ruffle feathers.
Responsibilities• Communicate the vision and mission of
the initiative across the Enterprise• Provide strategic guidance • Monitor key metrics, collect feedback,
track project schedule• Control budget
Business LeadThe Business Lead is accountable for project’s success from planning to implementation. Business Leaders are system minded, creative, well liked, and empathetic.
Responsibilities• Guide the design and architecture of the rapid customer
onboarding process• Consult and manage stakeholders• Continually align the project with targets and goals• Promote new process adoption at implementation
phase
Business AnalystBusiness Analysts understand how to design efficient business processes, but may not know very much about the onboarding process being redesigned. These individuals are most often good with spreadsheets, well read in business strategy, and enjoy solving a good puzzle.
Responsibilities• Conducts research and analysis to
determine the expected impact of important decisions
• Translates technical information into business terms
• Builds and maintains reporting tools• Draws process maps and documents
new processes
Project ManagerThis person is the quarterback of the process reengineering effort. They manage the short and medium term plans, make sure they are on schedule, and report back to the Business Lead.
Responsibilities• Assists Business Leader with project planning, scope
definition, and process redesign• Forecast benefits, costs, and schedule• Reports progress
Process ExpertProcess Experts operate within the current process everyday. This person should have lots of experience with the process, not be afraid of change, and should be in a position to gain support for the new process once it’s implemented.
Responsibilities• Use their understanding of how the
process is conducted to help build an accurate process map
• Provide user feedback on old process and on new ideas
• Responsible for getting buy-in for new process from their coworkers
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06. Step two:
Map your process
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Important Concepts
Entities
Metrics
Symbol What Example
Where decisions are made either by software or people.
A smart process application makes an adjudication decision for a new merchant account based on the client’s credit history
Where data is transformed or acted upon
Using an applicant’s SSN and birthday to fetch credit information
Queues for information waiting to be acted upon
A back office employee’s inbox
Shown below activity, in Flow time
or Capacity rate (see table below)
A group or pool of resources
A group of back-office employees
What Example
The number of activities that a resource pool can perform in a given time period
An underwriting clerk can process two applications per hour
The resource pool with the lowest capacity rate
A corporate underwriting clerk processes two applications per hour, every other activity in the process can process three applications per hour
The amount of time an activity takesIt takes 30 minutes for one underwriting clerk to process one corporate application
Entity
Decision Points
Activities
Buffers
Resource Pool
Metric
Capacity rate
Bottleneck
Flow time
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An Example Process Map
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Decide on processes to reengineer
Opportunity selection
Complexity
High
Low
Low HighImpact
Before you begin you must choose which customer onboarding process to start with. Don’t try and do it all at once, pick a high impact process that is well suited for automation.
What makes a process high impact depends on the business. Low-cost providers focus on reducing cost while customer service leaders choose to upgrade processes that most affect their customers’ experience. It’s up to you to decide which will have the highest impact.
Processes well suited for automation are not complex. They require little collaboration and creativity. They are repetitive and often tedious. They require little interpretation.
Definitely not Maybe
Probably not
Yes – The sweet
spot!
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Quick case studyQuestrade Inc., a Canadian discount brokerage firm, achieved a 10% increase in the number accounts opened per month by digitally automating their new account onboarding process for individual accounts.
The project was high-impact because two thirds of their application volume was individual accounts, and it was low complexity because each customer filled out the same set of documents. Read more here.
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How to map your process
Step 1Determine the purpose of your onboarding process by asking yourself why does the process exist? And what outcome needs to be achieved? These are important questions because you’re about to be surprised at how many exception cases your onboarding process has. Understanding the outcome you’re trying to achieve will help you stay on track and avoid getting stuck in the mud.
Don’t
do this!
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Step 2Follow an application around the office. Most onboarding processes are based on the flow of documents through an organization, so it’s a great way to figure out how the whole system works. Follow the path of a new application from when it first reaches your organization until it has been filed away.
Make sure to map out exception cases and variable routes. Our process architects use Microsoft’s Visio software as their drawing tool (but a pen and paper works!). Ask lots of questions to figure out what the real process looks like, not what it is supposed to look like. You’ll be amazed at what you find out. After a process mapping session we frequently hear clients say “I didn’t know we did it like that!”
Good questions to ask • Why is it done that way?
• Why does it need to be approved by the manager?
• What exceptions are there to that rule?
• Is there anything about our process that you think is redundant or unnecessary?
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Step 3This part is easy! To find the bottleneck first determine how many new applications each resource pool can process per hour. Whichever resource pool has the least capacity per hour is your bottleneck.
Keep in mind that resources close to your bottleneck in capacity are important as well. This is because once you remove your initial bottleneck another takes its place. In order to see significant increases in efficiency or revenue you’ll have to tackle more than one bottleneck.
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Processes with multiple application typesMost onboarding processes work with more than just one application or document type. And often each application type takes different amounts of time to process at each stage. This makes finding the bottleneck a bit more challenging. But have no fear! It still isn’t hard to do.
To find the bottleneck, first find the percentage breakdown of your incoming applications by type. In the example, we analyze three application types for an acquirer in the electronic payments industry: card not present at the time of the transaction, card present at the time of the transaction, and foreign currency. Our example payment processor focuses on American ecommerce, so each application type represents twenty percent, twenty percent, and sixty percent of applications respectively.
Take each application type’s weighted percentage and multiply it by the time it takes the application type to be processed at each stage. Then add them up to find their weighted average processing time (unit load). Whichever has the highest weighted average processing time will be the bottleneck. Using a table like we have makes this calculation easy.
Merchant Card Services Customer Onboarding Process
Unit Load (minutes/unit)
Foreign Currency (20%)
Card Present (20%)
Card Not Present (60%)
Weighted Average
15 15 15 15
30 30 30 30
80 45 60 61
5 5 15 11
5 5 5 5
Process Stage
Initial Review Q/A
Supporting Documents Verification
Credit Check & Underwriting
Equipment/eCommerice
Request Form
Send to Fulfillment and Notify Customer
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07. Step three:
Reengineer your process
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Set your priorities
Cost
Speed Experience
The first step is to prioritize cost, experience, and speed. The good news is that most customer onboarding reengineering projects provide so much benefit that they will return significant improvements in all three. But despite that you will have to make trade-offs. Set your priorities now before you start.
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Think big
Use this brainstorming session to help your team think and dream big. If you don’t, your new process isn’t going to accomplish much. Encourage crazy ideas, explore them until they become totally unreasonable. It’s often the craziest ideas, brought back to reality, that provide the biggest benefit.
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One: BrainstormA very important, and often overlooked, step in a process redesign is the initial brainstorming session. Without taking the time to brainstorm about what’s possible with your team, you’re sure to limit the project’s potential.
Use your favorite brainstorming techniques, or follow the direction of the Stanford Design School. The most important thing to remember in this stage is to be open-minded. Allow, encourage, and build-on ideas, even if they seem a bit crazy.
Two: Investigate and shortlistAfter your initial brainstorm, take a realistic look at the ideas you have come up with. Use a democratic process to shortlist ideas; focus not only on what is realistic but also on what offers the largest opportunity. Commit to exploring at least one ‘crazy’ idea. It might work out, and if it does it will probably offer huge benefits compared to the rest.
Three: Model, shortlist and prioritizeAssign each member of your team to explore an idea, and report back with more information about the opportunity. Instruct your team to reach out to potential vendors, look for stories about other companies in business publications (we like Harvard Business Publishing, Forrester Research, McKinsey Quarterly, and successfulworkplace.com), or hire a consulting firm to help out.
Short list again and learn more about your remaining opportunities. Keep refining your list until you’ve chosen your new onboarding process design.
How to reengineer an activity
Option One: Skip the activity altogether Processes are often built in an ad-hoc manner in response to challenges and opportunities that come up over time. Ask tough questions and think back to the purpose of your process. Is this activity necessary?
Option Two: Conduct the activity fasterTo conduct an activity faster you can automate the work, reduce the activity’s scope, or increase the resource pool.
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08. Step four:
Phase in,implement, measure & iterate
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One: Implement in phasesThe first step of phasing-in your new process is to implement it. We most often start with a sub-set of an onboarding process, for example their least complex customer to onboard. Or maybe a medium sized territory. Implementing in phases accomplishes three things: it reduces the impact of any unexpected outcomes, gives you the opportunity to implement under less scrutiny, and offers the opportunity to prove value before you roll it out completely.
Two: Measure key performance indicatorsAfter implementing your first phase, be sure to measure some key performance indicators (KPI’s) so that you can measure your success. Some common KPI’s are:• Time to process a single application• Percentage of applications sent to clients that are returned• Length of time between sending an application to the client and receiving it
back complete and in good order• Percentage of applications that are returned complete and in good order
the first time
Use a rapid customer onboarding platform to collect good data
The best rapid customer onboarding processes are the result of data-driven design. Each iteration is made better using data collected from the previous. But accurate data collection can be difficult. Manually collecting data can be time consuming - you’ve got to sit there and watch a process all day sometimes for weeks; and inaccurate - by watching someone all day, or asking them to time themselves, you’re likely to alter their work habits.
The answer to this problem is the use of a rapid customer onboarding platform. A good rapid customer onboarding platform provides real-time
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Embrace iteration
Achieving the 15 minute onboarding timeframe won’t happen overnight. It’s a difficult thing to accomplish, and comes after a number of iterations. Thoughtfully design a process, use it in a live environment, collect data, and then use that data to improve your process until you reach your 15 minute goal. The good news is that once you achieve 15 minute onboarding, it’s tough for the competition to catch-up.
Three: Iterate frequentlyOne of the most important reasons you should implement your new rapid customer onboarding process in phases is so that you have the flexibility to make improvements before implementing it company wide. After implementing a new process and measuring it’s KPI’s look for parts that aren’t working (don’t sweat it, nobody is perfect) and fix them. There might be new bottlenecks that you didn’t anticipate, software integrations that don’t quite work, or process steps that take longer than expected. Your software platform should make collecting this data easy. To learn more about software that can help collect and analyze process data, read our eBook on smart process applications.
process data on activity lengths, exception cases, and document not-in-good-order rates. A great rapid customer onboarding platform will provide analytics that help you optimize your process.
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09. Case Study
Merchant card application process reengineering
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A payments industry case studyAt Recombo we work with three of the top five acquirers in electronic payments to automate their customer onboarding processes. During a new implementation for one acquirer we learned first hand how valuable a phased approach is.
Instead of attempting to automate all customer onboarding processes at once, we started with the processes most suited for automation. For the reasons we’ve already discussed we used Recombo’s Rapid Delivery Process™ and limited their initial project scope.
Start with the process most suited for automationBy starting with a process that was high-impact and low-complexity, our client maximized their immediate benefit. They prioritized by estimating four factors: how complex each process would be to automate, whether personal interaction added to the customer experience, whether or not the process was independent from other processes, and whether regulation required human review.
Use a rapid implementation process with small-scale iterationThis is often a challenge for large financial institutions because their IT departments have traditionally used waterfall methodologies to develop big projects. It’s a challenge, but it’s important. We helped our client embrace the agile development methodologies that allowed them to quickly get users on the platform, collect feedback, and implement improvements. From start to finish the initial phase ran for only 60 days before they made improvements and increased the project’s reach.
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Limit project scopeOur client limited their project scope early on. After users in phase one experienced a substantial increase in sales, other employees wanted to be included in the new process. Soon after other departments asked for access as well.
But by now, our client understood agile methodologies well. They had not yet had not yet finished designing their new rapid customer onboarding process. Without the initial scope commitment, the pilot project could have ballooned into an unmanageable change effort.
The results? After a few initial kinks training their pilot team, they reported value almost immediately. Our client’s customers now return their applications in three and a half hours on average (compared to 21 days previously). They also now experience a return-rate of more than 60% (and it’s continued to improve since).
And the best part? The rest of their sales team is clamoring for access to the process. They are “having to beat them off with a stick”, until they have flushed out their process design.
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Further ReadingAutomating the Back Office (McKinsey)
Competing in a digital world: Four lessons from the software industry (McKinsey)
Smarter On-boarding: the key to higher client retention and cross-sell (Accenture)
Customer Loyalty In Retail Banking, Global Edition 2012 (Bain & Company)
An Introduction to Smart Process Applications (Recombo Inc.)
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