Onboarding Orchestration: A Guide to Secure Client Activation in Financial Services

As the complexity of digital sign-up journeys continues to increase, onboarding orchestration has become critical for ensuring a seamless and secure user experience. Today, financial organizations such as banks, neobanks, and fintech companies require sophisticated methods to manage and optimize all the onboarding process steps, including fraud detection, KYC screening, and customer activation. Risk intelligence and digital signals can be combined effectively with more traditional ID verification and anti-money laundering checks to detect and prevent fraudulent activities from the very beginning of the customer journey.

What is onboarding orchestration?

Onboarding orchestration is the process of coordinating and managing the various steps involved in the sign-up and activation of a new user. This process usually involves integrating multiple tools and technologies within a unified workflow to ensure that new users are legitimate, validate their contact details and personal information, and verify their identity against official documents, all while providing an efficient onboarding experience.

While onboarding orchestration can apply to multiple sectors, it is particularly relevant to financial services providers, who are required by regulations to perform a series of checks before accepting a new customer and are also prime targets for fraud due to the nature of their business. Effective onboarding orchestration helps these organizations verify the identity of new users, assess their risk levels, and ensure compliance with regulatory requirements without disrupting the user experience.

The traditional three stages of onboarding orchestration

Traditionally, onboarding orchestration in financial services has involved the coordination of three primary stages, all contributing to the risk assessment of new customers: document collection and verification, AML screening, and client activation. While the complexity of each one of these stages depends on whether the customer is an individual or a business, the same principles apply in both instances.

1. Document collection and verification

The first stage of onboarding orchestration involves collecting necessary documents—such as ID documents in the case of individuals or company incorporation documents and annual returns in the case of corporate customers. This is usually the first step in the mandated Know Your Customer (KYC) or Know Your Business (KYB) phase of the onboarding process. Verification methods can range from manual checks by dedicated team members to automated solutions that validate the provided documentation, each with varying levels of accuracy and user friction. Usually, the key challenge here is to ensure that the verification process is thorough and meets the regulatory standards without being too cumbersome for the user.

2. AML screening

Anti-Money Laundering (AML) screening is a regulatory requirement to detect and prevent financial crimes. During this stage, the applicant's information - both in the case of individual and business customers - is screened against various AML watch lists to identify any red flags, such as being a Politically Exposed Person (PEP), appearing on a sanctions list or having a history of suspicious financial activity. AML screening is vital for ensuring compliance and protecting any financial organization from financial, regulatory, and reputational risks.

3. Risk-based client activation

Traditionally, the final stage involves giving access to the requested financial services if allowed by the applicant’s associated risk. The final risk assessment is based on the information collected and verified in the previous steps and it helps determine whether the user should be activated as a client or if further scrutiny is needed.

The emerging fourth stage: pre-KYC screening for fraud prevention

As onboarding processes continue to evolve and digital sign-up workflows increasingly become the norm, financial services providers are starting to expand their onboarding orchestration efforts to include a new preliminary stage: pre-KYC screening for fraud prevention. This stage involves the validation of the applicant’s information - in the case of both individual and business customers - based on the digital footprint associated with the contact details, IP address, and device used during the sign-up process.

Why pre-KYC screening is gaining traction

Pre-KYC screening involves filtering out fraudulent users early in the onboarding process before the more costly and time-consuming KYC and AML procedures are undertaken. Traditional KYC and AML processes often involve manual steps, making them expensive and resource-intensive. Implementing pre-KYC screening creates reduces the burden on these processes for financial institutions, thereby focusing resources only on users who pass initial fraud detection checks.

Using digital signals for effective pre-KYC screening

Digital signals and digital footprints are key elements in the pre-KYC screening phase of any onboarding orchestration process. These signals are data points that indicate with extreme accuracy a user's legitimacy on the basis of their online activities.

Collecting and analyzing digital signals such as phone numbers, email addresses, IP addresses, browser configurations, and device information, allows financial organizations to detect suspicious behavior and identify potential fraudulent accounts, enriching profiles for new users with highly actionable insights.

Different types of digital signals

The collection and interpretation of digital signals is also referred to as risk intelligence or identity intelligence. Typical digital signals include:

• Phone signals: indicators such as phone number type (e.g., mobile, landline, VoIP), carrier information, and number portability can provide insights into the trustworthiness of a user.
• Email signals: factors like email domain reputation, email age, and the history of the email address (e.g., whether it has been involved in past breaches) help in assessing the risk level of its associated user.
• IP signals: an IP address can reveal the geographical location and usage patterns of its associated user, as well as raise red flags when it is part of a known proxy or VPN service.
• Browser and device signals: browser configurations and device characteristics (e.g., operating system, device model) help identify inconsistencies that may indicate fraudulent behavior.

Key Obstacles to Effective Onboarding Orchestration

Onboarding orchestration is a complex process sitting at the crossroads between compliance and customer acquisition. For this reason, it often presents numerous challenges which, if ignored, can lead to costly inefficiencies and increased risks for financial institutions.

1. Vendor Overload and Lack of Centralization
One of the main obstacles to effective orchestration is the use of too many vendors across different stages of onboarding. This can lead to a fragmented process with no centralized view of the customer, which makes it virtually impossible to manage the entire onboarding journey efficiently.

2. Siloed Teams and Processes
In many organizations, different teams handle the stages of fraud prevention, KYC, and AML separately during onboarding. This siloed approach can result in duplicated efforts, with each team performing similar checks independently, sometimes using similar services provided by competing providers, increasing cost.

3. Manual processes and reporting challenges
When effective onboarding orchestration is not seen as a priority, time-consuming manual processes tend to become the norm. In this context, repetitive tasks like document verification or data entry are left in the hands of staff, increasing the risk of human error. Additionally, reporting results across different systems can be cumbersome, leading to delays and inconsistencies in data management.

Solutions to onboarding orchestration challenges

While these challenges are significant, they can be addressed with a strategic approach to onboarding orchestration.

1. Mapping the ideal journey
The first step in overcoming these challenges is to map out the ideal customer journey. This involves defining what the perfect onboarding process looks like, striving to balance security with a seamless user experience. Once this journey is accurately mapped, it serves as a blueprint for implementing changes.

2. Understanding legacy systems and gaps
Next, it's important to assess existing systems and identify gaps between the current onboarding process and the ideal journey mapped in the previous step. This assessment helps determine what changes are needed and where integrations or upgrades may be required.

3. Involving relevant stakeholders
Engaging all relevant stakeholders—including compliance, risk, IT, and customer experience teams—is crucial for a successful onboarding orchestration. These stakeholders should collaborate to ensure that their needs are met and that the onboarding solution addresses the organization's goals as a whole, while never forgetting about the most important silent stakeholder: the end user.

4. Choosing the right vendors with integration capabilities
If working with external vendors to fill existing gaps, it is essential to assess their integration capabilities and prioritize those with the strongest offering in this area. The presence of Rest APIs and extensive tech documentation should be a non-negotiable starting point, as it ensures that different systems can communicate effectively, reducing the risk of data silos and improving the overall efficiency of the onboarding process.

5. Thorough testing and edge case scenarios
Thorough testing is essential to ensure that the onboarding process can handle all potential scenarios, including edge cases. The ability to simulate and assess a wide range of situations, allows organizations to identify and address any weaknesses in the process before they become real-world issues. Specifically, working with vendors that make it possible to test various models and rule changes in a sandboxed or controlled environment can help test all assumptions and edge cases without impacting live sign-ups or potential revenue.

6. Maintaining a seamless customer experience
Finally, it's essential to prioritize the customer experience throughout the onboarding process. While security and compliance are vital, they shouldn't compromise a smooth, user-friendly journey. The goal is to create an onboarding process that is as seamless as possible, minimizing friction while ensuring maximum security.

Effective onboarding orchestration is a critical component of modern financial services. To increase efficiency, scale customer acquisition operations, and protect themselves from fraudulent users, the most innovative providers in the industry have recently started combining know-your-customer (KYC) checks and AML screening with preliminary risk scoring based on digital signals for fraud prevention.

At Trustfull, we understand the importance of seamless onboarding orchestration. Our fraud prevention solutions make it possible to quickly integrate digital signals and real-time risk scoring within any existing sign-up journey through Rest APIs, allowing organizations to tailor their processes to their specific needs.

Pre-KYC remains a very important component of onboarding orchestration. Businesses can use it as an efficient process to streamline operations and enhance security, all while providing an excellent user experience.

To discover how we can help your business deliver seamless, secure onboarding journeys, schedule a call with our team of anti-fraud experts today.