B2B onboarding is more than an orchestration problem, it is a decisioning problem
Assessing the identity of prospective customers, vendors, and partners is essential to a company's compliance and risk management processes and, more broadly, revenue engine. While some organizations may view B2B onboarding as a mere orchestration problem, it is much more than that. In this blog post, we will explore why B2B onboarding is not just an orchestration issue but a decisioning problem that requires a strategic approach.
First, it is essential to understand the definition of Business Identity.
The notion of Business Identity is increasingly evolving to encompass more than just KYB - For reference, KYB / Know Your Business) refers to verifying a legal entity's identity and the individuals associated with it. Such a verification process applies to verifying a business customer, a merchant, a supplier, a reseller, or a third party. This information is critical in mitigating the risk of fraud and financial crime and ensuring compliance with regulatory requirements. But increasingly, assessing a business goes beyond retrieving data on a company and includes assessing risk and other factors such as reputation, ESG, and many more.
The process of entering into a B2B relationship is complex and involves multiple stages, including data collection, identity verification, risk assessment, and decision-making.
Despite its complexity, many organizations still view B2B onboarding as a mere orchestration problem, meaning that they focus on collecting and verifying information without considering the full implications of the decisions that will be made based on that information.
A checklist-based approach can fail to recognize some of the more complex fraud patterns: how recent a company is can have a more complex answer than its creation date. For instance, a fraud pattern can involve a dormant company that new shareholders have recently revived for a criminal purpose.
One of the critical aspects of moving toward a decision-based approach to B2B onboarding is creating and maintaining a risk-based decision matrix. Not only does a risk scoring engine open the door to straight-through automated onboarding of businesses, but it can also let risk and compliance teams better handle edge cases suggesting further enhanced due diligence processes.
While dealing with sanctions list can be pretty binary, with mainly a risk of false positives, dealing with adverse media can be much more subtle, especially with Politically Exposed Persons. While some companies may want to be very restrictive, others might consider the nature of adverse media as a factor in their decision.
Organizations who want to improve the way they onboard and continuously assess their business customers, vendors, and other third-party providers must understand the complex nature of Business Identity and adopt a risk-based, technology-driven approach to make informed decisions. Doing so can also open new doors to better combat fraud and assess the commercial viability of businesses by sharing information across multiple players, building a networked view of a Business Identity. More on this in future blog posts.
If you want to learn more about how the Ondorse platform can help you make better decisions when onboarding customers, contact us here