Acquirers are always struggling with the cumbersome merchant onboarding process. The need is of an enhanced digital merchant onboarding experience. A platform that is agile. A platform that supports a 100% automated onboarding.
One that incorporates checks for fraud and Anti Money Laundering (AML), digital Know-Your-Customer (KYC), and risk decisioning. Digitizing the process is the solution for faster onboarding and better compliance.
3 Key Problems with the Traditional Onboarding Process
The traditional merchant onboarding process is frustrating and siloed. This means that each linear step is isolated in its functioning. An inordinate delay of about a week could come up to complete the application process. There is no status monitoring process which could track applications end-to-end. In the short term this could choke operational excellence. In the long run threaten business growth.
Existing data entry systems used for traditional onboarding are manually-driven and painfully slow. The process is susceptible to human error and can result in squandering of days of time. It could cause rampant inaccuracies in the entered data. The situation is extremely precarious because data inconsistency could prove to be detrimental to user privacy and the reputation of the business. Trust cannot be built in a system prone to error.
Merchant onboarding journeys are tedious, long and inconvenient. They stretch across numerous drawn out touchpoints and channels. This leads to excessive service delays lasting up to days or weeks, and poor customer experience. In case of an error the to and fro communication causes further delays.
These key problems thwart any chance of a seamless process. They peak their heads in the following 3 friction points, which slow down and complicate the merchant onboarding journey. This section explains what they are and how the digital onboarding process can solve these issues:
Friction point 1: Manual Form Filling
Data from physical paper applications has to be manually put into the computer database. This requires considerable effort from many physical operators. This is a common source of error and denied applications. An AI-based OCR (optical character recognition) performs extraction at the front-end. It is optimal to reduce time and error. With this, it is now possible to fetch customer information by extracting it from their IDs. The field filling process is also automated. This reduces the mistakes which were made by individuals filling the application. The cumbersome need for manual form filling is eradicated.
Friction point 2: Time-consuming Document Verification
Significant diligence checks and third-party verification is needed to ensure merchants aren’t involved in fraud. The solution must validate the authenticity of documents as part of the onboarding process. When this is done manually it takes huge amounts of time. It is also prone to human error. If additional details are required like court history, there emerges another layer of research. With digitization it is just a matter of ticking the box for another method of verification. Details are then pulled automatically from the Ministry of Corporate Affairs (MCA) database and tallied.
Friction point 3: Risk Assessment/ Underwriting
Information collected in the application paired with a rule-based engine is what decides if an account is approved or declined. The rules-based verification engine determines whether or not a merchant is a pass/fail. According to the required verification needs, data can be retrieved on the merchant very fast.
An interactive scorecard or report needs to be made. Organizations generally have access to required data. The question is how do they automate the process and stitch it all together. Risk assessment done manually is arbitrary. But, an automated process has set parameters.
Major Advantages of this Solution
Smoothening over these 3 friction areas results in a host of benefits. They can be boiled down to the following three advantages:
Taking down time
With automated onboarding abandonment is largely avoided due to the simple process. It cuts through red tape and desk delays. Even in the case of insufficient information, the merchant can be contacted and details clarified without leaving the house.
Apart from that, merchant onboarding solutions like Signzy empower a business to create easy real-time processes without sacrificing the risk strategy. A customizable fully automated onboarding process that meets all compliance and KYC regulations can be created with Signzy tools.
Whether it’s a straight through process or more complex processes to verify high-risk merchants decisions can be made in real-time. For a merchant, the need to spend hours in filling applications is eradicated. For banks, the verification of documents is expedited with some automation.
Digitization with an onboarding solution successfully streamlines the merchant onboarding process to the point where the merchant doesn’t have to even speak to anyone to set up. With manual data entry not required and the time taken to process the applications at the backops drastically reduced, the operational expenses of onboarding come down.
A major pain point for the industry is manual work like data entry. The work is often done multiple times. Manual work slows down the process. It can also introduce points of failure in the system and adds a significant cost to the process. This should not be translated as eliminating people from the process.
But, people should concentrate human effort on identifying fraud. Data entry is easily automated. Automation also enables smoother integration between the steps. If data is digital from the start, then the entire process has the potential for automation, especially in the case of smaller merchants.
New risk assessment automation, as well as integration and optimization tools, are on the market, so dramatic improvements are already possible.
About the author: Ankit Ratan is the co-founder of Signzy, Signzy an AI powered RPA platform for financial services.