By adjusting their onboarding processes, FIs can enhance their client experience, reduce costs and pave the way for new cross border services, explains GLEIF CEO Stephan Wolf.

It’s no secret that regulatory compliance doesn’t always sit comfortably with a bank’s desire to deliver a smooth, hassle free user experience (UX) for its clients. The job of onboarding a new corporate client is a key case in point; extensive AML and KYC checks mandated by regulations like AML5 typically require more back and forth than either the FI or the client would like.

For the FI, its client onboarding UX is only part of the problem. To ensure compliance, internal processes have necessarily become both granular and time consuming, reducing internal efficiency and inflating costs as a result.

As legal entities, clients that perform financial transactions in capital markets are mandated by various regulatory bodies across the world to have a Legal Entity Identifier (LEI) for reporting purposes. By doing so regulators are able to paint a clear picture of who is involved in their markets, thereby enabling more effective risk management. To date FIs have not broadly adopted the LEI to improve their portfolio surveillance and in this respect are a step behind reglators in realising the benefits from LEI adoption.

Until now, the process of obtaining an LEI is most commonly undertaken when an entity is onboarded by their FI, and has required the entity to liaise directly with an LEI issuing organisation, thereby repeating many of the onboarding processes the entity just undertook. Considering that for many clients obtaining an LEI is a legal requirement, this process duplication can create frustration.

To enable FIs to overcome these challenges and realise a variety of onboarding cost, efficiency and customer experience benefits, the Global LEI Foundation (GLEIF) has created^[1] a new operating role for banks in the LEI issuance process, called the Validation Agent.