The need for technology-driven KYC solutions and other compliance tasks appears more urgent than ever, given that banks in Singapore appear to have a problem with clients abandoning them because of slow onboarding. This remains a pain point for the industry worldwide.

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 new research.

The study comes from Fenergo, a Dublin, Ireland-headquartered provider of client lifecycle management (CLM), know your customer (KYC) and transaction monitoring solutions. The research drew views from more than 150 C-level executives across corporate, institutional, and commercial banks in 2024 in Singapore.

Nearly 90 per cent have lost clients over the past year due to delays and inefficiencies in onboarding, rising by more than a third (35 per cent) from the level in 2023.

While banks worldwide, including in the US, the UK, and Japan, are grappling with similar difficulties, Singapore has been hit the hardest, Fenergo said.

Banks in Singapore spend more time and resources on KYC processes than any other region surveyed. Some 91 per cent of respondents attributed high abandonment rates to poor data management and siloed workflows. 

The research found that 79 per cent of executives pointed to poor customer experiences, and 47 per cent blamed overly complex onboarding processes in Singapore. These inefficiencies come at a time when Singapore’s financial institutions are under pressure to comply with the national anti-money laundering strategy, introduced following a high-profile money laundering scandal of 2023, which continued to cause ripples into last year.

“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,” Cengiz Kiamil, managing director at Fenergo, said. “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.”

In other findings, only 1 per cent of banks surveyed have successfully automated the majority of their KYC and onboarding workflows; there is a growing appetite for AI-driven solutions. Some 38 per cent of respondents indicated plans to deploy AI to enhance operational efficiency, while 30 per cent aim to improve data accuracy with AI-powered tools.

“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," Kiamil continued. “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."