More Than Half Of Bank Salespeople Spend Quarter Of Time Onboarding New Client Organisations

Research findings published by the Global Legal Entity Identifier Foundation (GLEIF) revealed that six in 10 (57%) senior salespeople in banking spend more than 1.5 days of their week (27% of their working week) onboarding new client organizations.

The research surveyed over 100 senior salespeople in the banking sector in the UK, US and Germany.

In addition, 50% of financial institutions use, on average, four identifiers to help identify client organizations and the process takes, on average, six weeks. This length of time spent onboarding creates a significant burden as salespeople have less time to work on their core focuses, such as acquiring new business and servicing existing clients.

The findings form the basis for a new research report from GLEIF titled ‘A New Future for Legal Entity Identification’, in which GLEIF outlines its view that replacing disjointed information with a globally accepted approach based on broad adoption of the Legal Entity Identifier (LEI) would remove complexity from business transactions and deliver quantifiable value to financial services firms.

The report as well as a separate document detailing the research findings are available for download on the GLEIF website.

The onboarding burden

Overall, the research results show that the onboarding process for new business relationships, including know your customer (KYC) due diligence, is too time-consuming and requires too much administration.

Other key findings include

57% of respondents agree that reliability of reference data is a challenge

55% of respondents agree that the resourcing of onboarding is a challenge

55% of respondents agree that lengthy processes mean risk of business loss

61% of respondents agree that digital technology will further complicate the process

In a globalized digital economy, verifying the identity of customers, partners and suppliers is becoming an increasingly complex and costly challenge. However, the growth of identifiers is leading to problems that must be resolved to assure their vital place in oiling the wheels of the growing global digital economy.

The research identified that the crux of the problem is the lack of a standardized approach to legal entity verification. As a result, 54% of respondents agree that the use of different legal identifiers for the same legal entity leads to inconsistencies with updates to different reference data sets. The research found that 58% of those surveyed said that the associated reference data is not up-to-date, while 46% said reference data from different sources is inconsistent, and 49% said the same ID is used for different legal entities. Overall, only two thirds of financial institutions believe they hold accurate client information.

The burden also continues even once the client is established. Client data must be kept up-to-date throughout the business relationship. This includes regular verification of business card information and changes to the ownership structure. Identifiers of legal entities are easily obtained from a host of different issuers but are not kept up-to-date in a systematic way. Organizations need a more efficient system for legal entity identification. Some think technology will help but there is no general consensus about what the solution should be (keep an eye out for our upcoming blog for more on the role of digital technology).

The way forward

At GLEIF, we are convinced that financial services businesses can save time, gain greater transparency and work in a more streamlined fashion by adopting an LEI for each client organization. Banks operate in multiple jurisdictions and therefore need a global standard. The LEI offers businesses a one-stop approach to identifying legal entities, which has the potential to take the complexity out of business transactions. Via the Global LEI Index, we make available the largest online source that provides open, standardized and high quality legal entity reference data. No other global and open entity identification system has committed to a comparable strict regime of regular data verification.

Integrating the LEI into other entity verification methods, including solutions based on digital certificates and blockchain technology, will allow anyone to easily connect all records associated with an organization, and identify who owns whom. By becoming the common link, the LEI will provide certainty of identity in any online interaction, making it easier for everyone to participate in the global digital marketplace.

The research has clearly identified that without the adoption of a publicly available, global directory of legal entities, onboarding will continue to be a long and laborious process, liable to take experts away from servicing and sales, and demanding too much focus on administration.

To find out more, our research report details the inefficiencies of today’s onboarding process, explains how the issues surrounding the inefficient identification of legal entities can have real business consequences and explores the impact of rising digital technologies and the potential capabilities and benefits afforded by adopting a standardized method for identifying legal entities.

Source: Company Press Release