To understand quite how transformative and beneficial digitising client onboarding can be, law firms need to look no further than banking. Like law, banking (and financial services more broadly) has always been subject to a huge amount of regulatory pressure. After the financial crash of 2008, compliance requirements spiralled to such an extent that one large bank was forced to expand the ranks of its manual compliance team to a huge 30,000 staff – and was still hit with a $400 million fine. Clearly, just adding more people doesn’t work. Adding tech into the process does.
Pretty soon, digital banks started to realise the need to transform from traditional and self-minded environments into truly digital and client-focused marketplaces. By prioritising the customer experience from the point of onboarding and using tech to power the whole process, they captured the iPhone generation and made a huge splash in the market. Now, digital banks in the UK serve almost 20 million customers.
It’s easy to understand why. Digital banks are able to onboard customers and conduct CDD efficiently online, rather than relying on manual checks of varying quality and consistency. The majority of digital bank users cite ‘convenience’ and “a smooth and seamless onboarding process, free from the red tape of incumbents” as the biggest benefits. Crucially, those customer experience gains don’t come at the cost of rigorous compliance as the end-to-end onboarding process is both safer and slicker.
This is a double advantage. Digital onboarding tools get clients in the door faster increasing billable capacity, decrease time spent on admin work and provide new ways to deliver a service that is more focused on the clients’ experience.
The general approach that has been broadly effective in the finance sector focuses on:
✓ Adopting a risk-based approach to anti-money laundering, as the SRA likewise requires
✓ Considering factors like delivery channels, countries or geographic areas, types of transactions for enhanced due diligence
✓ 5AMLD specifically provides for firms to use electronic means of ID, and regulators support this approach
Some forward-thinking firms have already started the transition to more modern – and more competitive – approaches.
By prioritising technology and customer experience to drive growth, they are putting pressure on traditional law firms to catch up, finding ways to offer better services faster, and without the baggage of legacy processes.
For law firms who are serious about their survival it’s no longer a could, but a must. Thanks to digital banks and their influence, customers now have higher expectations about what onboarding should look like.
Happily, this isn’t as daunting a task as it might sound. Digital banks are now extremely sophisticated, supported by a thriving industry of FinTech enablers. The legal world is poised to follow suit. ‘LawTech’ has exploded in the last few years; there’s been a huge amount of investment in the startups providing the systems, tools and processes to support the legal industry, the positive effects of which are already being felt. They can help take the burden of digitising off law firms’ shoulders. By partnering with LawTech providers, firms can up-level onboarding processes without having to become tech experts.LegalTech