How can Financial Institutions use AI to Digitally Onboard SMBs?

Internet-related assets remain a core expense for SMBs, particularly for smaller organizations that invested more in fixed internet and mobile during the second half of 2022 than ever before. A recent study found that mobile banking saw a meteoric rise post-pandemic, tripling in the United States alone. Across industries, businesses are looking for digital solutions to their problems.

Banks today have invested in tech to keep up with their clients. However, even if the days of pen and paper are reducing, digital banking cannot merely be reduced to uploading forms online as PDFs. Consumer satisfaction and convenience are imperative to today’s generation of SMBs.

By 2025, the global digital onboarding market is expected to reach $30.8 billion, growing at a CAGR of 16.2% from 2020-2025. It’s fair to say that financial institutions must invest in it to keep up with the times.

Read on to learn more about how to digitally onboard SMBs without any hassle.

What is digital onboarding?

Digital onboarding introduces new customers into a financial institution’s system, giving them access to various products, facilities, and services that would otherwise be cumbersome traditionally. In addition, when driven by artificial intelligence, onboarding becomes quick and efficient. It also ensures that sensitive data remains secure and away from human error. This survey found that companies see a 40% reduction in errors using digital onboarding.

Developing a digital onboarding process that meets all your customer's needs is vital to serving clients effectively. “Too many steps” (29%) and “too much manual entry” (26%) also are among the top reasons prospects abandon an application, according to a survey by Sapio Research.

Research at Oliver Wyman found that only 13% of prospects will complete the application for account creation after looking through a bank’s website and/or applications. The issue begins with the lack of a seamless onboarding process.

Benefits of digital onboarding for banking

The client onboarding process for every financial institution can be complicated. Major banks' compliance with regulations and consumer data safety is of utmost value. Gartner’s reports predict that 85 percent of organizations will use document-centric identity proofing in their onboarding processes by the end of 2023.

The advantages of using artificial intelligence for onboarding SMBs digitally include the following:

Easy Regulatory Compliance

To comply with Know Your Customer (KYC) regulations, a thorough background check of every prospect is required. This translated to long wait times when seeking financial services, especially while opening a new account.

A digital onboarding platform can speed up this process using electronic KYC (eKYC) methods. The same can be said for anti-money laundering (AML) rules. However, research by Experian found that 52% of financial institutions struggle with regulatory compliance requirements when implementing basic digital onboarding.

With the help of AI, banks can cross-check client background information and credit history and complete the documentation process in real time. In addition, banks can instantly compare submitted documents against pre-existing government records.

Human errors in the onboarding process could be legally catastrophic for both financial institutions and SMBs. Therefore, determining the legitimacy of an SMB’s assets is of utmost importance.

Streamline credit underwriting

With AI-powered underwriting, banks can financially assess SMBs almost immediately. Business loans require data like collateral, equity, and credit scores which require high turnaround times to verify. Digital onboarding can reduce the onboarding process time by up to 90%. This ensures an ideal experience for all parties involved.

To conclude

Businesses today use the latest technology to optimize all processes. Therefore financial institutions need to update their approach to appeal to their prospects better. Digital onboarding, when done well, ensures customer satisfaction and reduces customer attrition. With artificial intelligence, the friction faced by banks and SMBs is reduced to a minimum.

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