A survey conducted by Muinmos, a leader in RegTech solutions, sheds light on the significant hurdles financial institutions face during client onboarding.
The survey included insights from 103 financial sector professionals, pinpointing five key onboarding challenges.
An overwhelming 42% of the survey’s participants highlighted the complexity of regulation as a major barrier. With global increases in legislation, particularly concerning crypto-assets and technical standards, financial institutions struggle to keep pace with regulatory changes and ensure compliance.
Manual procedures, extensive documentation, and prolonged interactions characterise the current onboarding practices of many financial institutions. This slow and cumbersome process, identified by 24% of respondents, not only deteriorates the customer experience but also hampers the institution’s competitive edge and contributes to internal burnout.
Effective data management and integration pose significant challenges, according to 18% of respondents. Financial institutions must navigate the complexities of handling data from multiple sources, necessitating robust systems to maintain data accuracy, security, and compliance.
The protracted and complex onboarding process can result in high churn rates, with 8.4% of respondents recognising it as a critical issue. The frustration borne from such bureaucratic processes can drive clients away, costing institutions valuable business opportunities and creating tension between sales and compliance teams.
Although it overlaps with broader regulatory challenges, the Markets in Crypto-Assets (MiCA) regulation deserves special mention. Establishing a rigorous framework for the regulation of crypto assets, MiCA introduces new requirements for a previously largely unregulated sector, spotlighting the evolving landscape that institutions must navigate.
RegTech firms like Muinmos are at the forefront of addressing these challenges, leveraging technology to streamline regulatory processes and enhance the efficiency of client onboarding. This technological adoption not only solves regulatory problems but also significantly improves the client onboarding experience.
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