Fenergo, a provider of digital Client Lifecycle Management (CLM) solutions, announced the results of new research which reveals that slow and manual onboarding processes could lead to commercial and business banks individually losing $4.5 billion in revenue if they don't bring their technology and systems up to date. With onboarding times rising by an average of three weeks in the last 12 months, if this trend continues, customers could be facing a six week wait to be onboarded by 2020.

With the threat of challenger banks including Revolut, Simple, Tide, Monzo, Apple Pay and new entrants including Alibaba and Amazon, commercial and business banks that rely on traditional processes to onboard new clients are in danger of becoming obsolete. In the last year alone, the global commercial and business banking market has lost $3.3 trillion because of abandoned applications during onboarding.

Despite the shift to digital banking, a surprising 18 percent of banks still rely on manual processes for Know Your Customer compliance (KYC) - including telephone, email, letter or in-person meetings. 14 percent also say that 20 or more people are involved in the onboarding process for just one complex client and 15 percent say that they had to get in touch ten or more times for data or documents to onboard new clients.

"With more and more digital-first challenger banks entering the business banking market, customers now have the ability to sign up to a new bank within minutes. Business and commercial customers are naturally going to gravitate to banks that provide the same low-touch experience as the consumer digital services they are familiar with," says James Follette, Global Head of Commercial, Business and Retail Banking, Fenergo. "Whilst banks such as Revolut and Simple have the benefit of being digital-first, it's not too late for more traditional commercial and business banks to bring their processes up to date and adequately compete. If they don't make these changes, money and customer losses will be such that they're unlikely to survive a downturn."

"It's essential for banks to keep pace with market-moving technologies and regulations, and support new business models, including digital client onboarding to meet the expectations of customers," says Sidhartha Dash, Research Director, Chartis Research. "Clients are demanding a frictionless, transparent and rapid onboarding experience, which they can easily find at challenger banks. It's time for traditional banks to up their game or risk losing out."

In fact, 78 percent of the banks surveyed said that they have lost customers to digital-first, disruptive competitors. There is recognition amongst the market that changes need to be made with 92 percent of CEOs agreeing that they need to transform radically to compete with digital-first neo banks. This will be particularly important as they compete in a constantly shifting regulatory landscape. Banks are almost unanimous (96 percent) in saying that increasing and fast-evolving regulation is the reason behind longer client onboarding times. The majority (93%) of those surveyed say increasing regulatory focus as a result of rising financial crime is a challenge and keeping up with evolving regulation is a top concern for 40% of banks. This suggests that almost all banks are at risk of incurring major fines, along with all the reputational repercussions that holds.