How to choose the right communication channels to retrieve data from your clients?
Digital account opening and KYC/AML client file updates have traditionally been carried out in a variety of ways. In the past, in-person meetings at branches or the client’s home, postal delivery and email are all commonly used to collect documents. ‘Wet ink’ signatures were often a necessity, and this meant that physical documents were aplenty, along with the paper trail that came with them: physical receipt, filing, manually updating your systems and so on.
Today, digital onboarding and client file updates can be triggered through email messages, SMS texts or even through paper letters leading to an online form, requiring nearly no in-person interaction.
While we often hear of the pros of digitalisation, are there any negatives to consider? Are there also ways to combine different channels to improve conversion rates or tailor interactions to your business and clients? Here are our insights:
Collecting documents (signatures, ID, account opening forms etc.) has been the norm for many years. Sending documents through the mail can take considerable time to receive responses and they typically require a lot of manual data input.
Practically, most of your customers are likely to prefer different methods to sending and receiving account opening or KYC/AML update documents by post. That said, it should be noted that sending documents in the post remains important for older client age groups who might not be as comfortable with or trusting of technology as younger generations. Anyone without a smartphone or email also tends to prefer interactions by post – or alternatively, in person – and it is highly likely that you will need to retain some capability to collect documents and signatures by post and input them into your systems.
Official mail from your institution is highly likely to be opened and read attentively by your clients, however. Many financial institutions choose to send initial login KYC and AML remediation platform details to existing customers by mail because of the extremely high conversion rate and attention paid to relevant postal mail. Official mail is an inherently secure channel, making it ideal for sending access details and instructions for new digitalised processes.
Some sweeping statements would suggest that all clients are open to digitalisation and that collecting documents manually is a thing of the past. However, for many customers, a face-to-face and highly personalised interaction is actually preferred in quite a few contexts. High-net worth clients onboarding at a private bank or subscribing a life-insurance policy could fall into this category, for example.
That said, the client of a large retail bank, for example, where a less personalised approach is more the norm may be likely to find manual document collection cumbersome to the degree that it can impact conversion rates. Electronic signatures, digital onboarding and digital updates of KYC and AML files can be an ideal alternative.
Email has facilitated client interactions to some degree, allowing clients to send copies of their ID to regulated institutions quickly and easily in some scenarios, for example.
While your customers are likely to enjoy an ability to send documents digitally, email isn’t necessarily an all-encompassing option in some scenarios. For instance, providing original paper documents is often still required even if copies have been sent by email. And even if electronic copies are appropriate for the matter in question, email typically is a non-encrypted and non-authenticated channel, and most of the time, it still requires manual work to upload documents and input data manually to your systems. The quality of documents provided can also be an issue as no validation is carried out before submitting.
Where email really comes into its own is in client communication and providing a gateway to your digital onboarding and KYC/AML update platforms. It is also a highly effective way of communicating with clients, for example notifying them of a KYC or AML client file update campaign that they need to respond to. KYC platforms often allow you to create campaigns and send notifications to clients (either all clients or just a selected group, based on your requirements) at the touch of a button. You will be able to track actions clients have taken, and provide evidence that you have launched a campaign with a digital record of the steps you have taken to contact clients. The same tracking using paper letters, for example is only possible with rather costly registered mail.
Email is one of the most commonly used channels of communication with clients to trigger KYC client file updates.
SMS text messages can be a very efficient channel for client file update campaigns and for security. While it is a relatively new channel for client communication, text messages have increasingly come onto the scene as a result of one-time passwords (OTP). SMS can also be used to notify clients that a client file update has been launched. The downside of this channel can be its perceived casualness: as text messages are typically limited to 160 characters and are commonly used for quick and straightforward communications, financial industry professionals sometimes refrain from using them when a higher level of formality is required. Even though SMS texts are also unencrypted, they provide a higher level of security compared to email messages as entry points and number allocation is managed by mobile operators.
While each channel has pros and cons, it is important to note that you do not have to pick a single or specific channel for all contexts and purposes. Likewise, KYC Manager allows you to switch between channels depending on your campaign and available contact information: one remediation campaign might be better suited to email and another to SMS and you will have the flexibility to choose between each channel as required. Client preferences and context are other factors that may determine the use of a particular channel. Also, changing channels can come in handy when escalating client notification, to increase efficiency and conversion rates.
A mix of digitalisation and non-digitalised approaches can also work well. We have seen financial institutions use paper letters to launch KYC updates with great success, for example: clients were informed of the KYC file update campaign via paper mail and received their credentials to access the KYC Manager platform in a letter. Combining two channels can also work; you could opt to send an initial email launching a client file update campaign, followed by SMS communications as reminders, for instance.