High NIGO Rates? How Data Errors Create Unique Challenges for Financial Services

December 10, 2018

If you work in banking, you need to capture all sorts of customer information across account opening, onboarding and maintenance. That might happen on paper in a branch – or in many cases today it’s entered on a mobile app. Without proper data capture and verification, most financial institutions struggle with sky-high “Not In Good Order” (NIGO) rates on their forms. This means the data may be incomplete, illegible or inaccurate.

Why NIGO Errors are a Problem for Banks and Financial Services

These mistakes on forms data often require significant manual work to resolve before that customer’s bank or financial account can be opened or updated, creating inefficiency and impacting the customer experience.

NIGO errors are a particular cause of concern for banks and other financial institutions because they slow down time to revenue, increase overhead costs and can damage the customer relationship when it takes too long to complete an interaction. Did you know:

  • Research shows NIGO rates reach 30-40% of form submissions, sometimes much higher.
  • Resolving NIGO errors can increase transaction processing costs by three or four times
  • NIGO errors can cause customers to stop doing business with you out of frustration

Where NIGO Errors Start

NIGO errors mainly come from one source — processes that require manual, paper-intensive data collection from the customer. These problems are heightened because of the complex nature of selling banking and investment services. The type of information you need to capture varies widely by the type of customer, the financial services they need, their level of understanding, current finances and much more.

Many financial organizations try to move from paper to digital by leveraging Optical Character Recognition (OCR) to scan paper forms and extract data. But the reality is OCR doesn’t deliver 100% accuracy either, demanding manual intervention in many cases.

And even if you provide customers an online form, if it’s not prefilled, you’re still opening the door to typing errors. And customers may abandon a process when you need them to go look up information along the way.

Know Your Customer Data Collection for Banking and Financial Services

Unlike other industries, banking and financial services organizations are under special regulatory pressure to keep customer information secure and verify its accuracy. This means complying with Know Your Customer (KYC) and Anti-Money Laundering (AML) laws, as well as data privacy laws like GDPR in the European Union.

Here’s a brief overview of KYC: “The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently.” – Enforcement Directorate

KYC introduces particularly stringent data collection requirements for banks and other financial institutions, including:

  • Capture and analysis of identity information with identity documents
  • Name matching of identities against lists of known parties
  • Risk analysis to determine if a specific customer might commit money laundering, terrorist finance or identity theft
  • Monitoring of a customer’s interactions and transactions to identify unusual behavior or variance to norms

In many cases, the simplest way to meet these requirements is to use a digital system to capture identity information from customers and other verifiable outside sources. This data can then be prefilled for a customer’s convenience and can help to reduce errors in completing necessary KYC and AML forms.

Automating Customer Data Collection for Financial Service Best Practice

The natural choice is to move to a technology-based solution that digitizes and guides customers through data collection. You can lead customers through an online interview, or have an adviser run through the onboarding experience on a tablet or other device. While this is definitely a step in the right direction, it doesn’t deal with another underlying issue — customers hate filling in forms.

A static web form or getting multiple, complex questions from an adviser just isn’t a great customer experience. It requires the customer to put aside plenty of time, gather all the information and be in the right frame of mind to answer complex, multi-layered questions. Sticking with this paradigm just doesn’t work in the digital realm.

Create a Great Customer Experience and Reduce NIGO Errors at the Same Time

What if you could combine accurate identity and financial data collection with a good customer experience? There is a way — interactive, adaptive interviews.

  • Customers can confirm “known” information that you prepopulate from your core system, rather than rekeying it in
  • Customers can start and stop the process at any time and all their information will be saved
  • Customers can easily upload identity documents to comply with KYC and AML requirements
  • They can pick up where they left off on any device, 24/7, for a true, multichannel approach
  • The financial interview can be personalized to each specific customer and the financial services they are interested in, as well as their state, demographics, or other personal information
  • Multiple people can be invited in to a single transaction, such as inviting a spouse to enter in loan information needed for a joint loan, rather than needing to process two forms

This leads to a much better customer experience, and ensures data is captured quickly and accurately. Because the interview is adaptive and contextual, it will also bring in additional questions if they’re relevant to that customer and the banking or financial services he or she needs. Finally, the information can be presented back to customers so they can check, verify and sign off on it – ideally with a digital e-signature.

The result? An enormous drop in NIGO errors. We’ve seen clients move from higher than 40 percent to around 2 percent! That means much less regulatory overhead, faster close times and time to revenue, reduced costs, and happier customers.

Learn how to transfer your data collection forms into something your customers will love.

 

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