Singapore’s banking industry is facing an “unprecedented” challenge as the number of clients abandoning banks due to “slow and inefficient onboarding practices” has surged to record levels, according to research from Fenergo, a global firm focused on client lifecycle management (CLM), Know your Customer (KYC) and transaction monitoring solutions.
A research study of over 150 C-level executives across corporate, institutional, and commercial banks in 2024 in Singapore revealed “that nearly 90% have lost clients over the past year due to delays and inefficiencies in onboarding — a staggering 35% increase from 2023.”
While banks worldwide, including in the US, UK, and Japan, are grappling with similar issues, Singapore has “been hit the hardest, signaling a critical industry-wide problem.”
The research highlights that banks in Singapore are spending “more time and resources on KYC processes, an integral part of AML compliance, than any other region surveyed. 91% of respondents attributed high abandonment rates to poor data management and siloed workflows.”
While 79% of executives pointed to “subpar customer experiences, and 47% blamed overly complex onboarding processes.”
These inefficiencies come at a time when Singapore’s FIs are under pressure to “comply with the national anti-money laundering (AML) strategy, launched following the high-profile money laundering scandal of 2023.”
Cengiz Kiamil, Managing Director at Fenergo said:
“It’s no coincidence that the spike in banks losing clients because of burdensome KYC and onboarding closely follows one of the biggest money laundering scandals in Singapore’s history. Banks are now required to double down on client due diligence to better understand client risk as part of the country’s clamp down on AML. The extra scrutiny and a wide scale dependence on manual processes is having an immediate and negative impact on the client and the bank’s bottom line.”
While only 1% of banks surveyed have successfully automated the majority of their KYC and onboarding workflows, the report reveals “a growing appetite for AI-driven solutions. 38% of respondents indicated plans to deploy AI to enhance operational efficiency, while 30% aim to improve data accuracy with AI-powered tools.”
Kiamil added:
“In today’s fast-evolving regulatory landscape and rising financial crime, it has never been more important for firms to strengthen their client onboarding and KYC procedures.”
Fenergo’s management also mentioned:
“Yet traditional banks in Singapore have historically been reticent about adopting transformative technology such as cloud and AI despite guidance from the regulator. Banks that fail to digitally transform these processes risk frustrating clients who are accustomed to seamless digital experiences in other parts of their lives. In contrast, those that embrace automation and AI can turn effective KYC and onboarding practices into a competitive advantage. It’s no longer a back-office issue; it’s a boardroom priority.”
As noted in the update from Fenergo:
“Through AI, banks can not only reduce operational inefficiencies but also enhance the customer experience, making KYC and onboarding smoother and faster. Our findings suggest that financial institutions embracing these technologies may be better positioned to navigate growing regulatory complexities in Singapore while regaining client trust.”