At FinovateSpring in San Diego last week, I led a working session with over 30 leaders from banks and fintechs on the future of business verification and onboarding.
I opened the session by framing the landscape with three key data points:
- 300,000 people are born every month in the U.S.
- 400,000 new businesses are formed every month in the U.S.
- 65% of financial institutions in the U.S. reported an increase in fraud incidents in 2024
There are now more new businesses launching each month than there are people being born, a staggering indicator of strong economic activity. Yet, as business formation accelerates, so does the creativity and sophistication of fraudsters exploiting gaps in verification and compliance processes.
This dynamic underscores both the opportunity and the challenge in front of us. New business formation presents an enormous growth opportunity for banks and fintechs — more business customers to be onboarded, more deposits for the taking, and more revenue for the institution. At the same time, the risk landscape has never been more complex. Fraudsters are getting more creative, compliance expectations are tightening, and the cost of getting it wrong is high.
This tension runs through nearly every topic you can imagine in the banking and compliance space. Leaders in financial services are tasked with balancing growth and risk in ways that were once thought to be opposing forces. There is relentless pressure to grow: open more accounts, move faster, and expand into new markets. Yet every acceleration increases exposure to fraud and compliance failures. The real challenge is managing both at once: enabling growth while building the safeguards to withstand rising risks.
Another persistent dichotomy is the drive for speed versus the need for precision. Everyone wants onboarding to be faster. But speed at the expense of accuracy can lead to missed fraud signals, false positives, and regulatory missteps. The shared goal is not just fast decisions, but accurate decisions made as quickly as possible.
We also explored the tension between automation and human judgment. Automation is critical to scaling operations and reducing costs. However, not every scenario fits into a rules engine. Edge cases, complex ownership structures, and subtle signs of synthetic identities still require human expertise. The best programs don’t choose between the two but rather they build workflows that combine automation for efficiency with human oversight for nuance.
With those tensions in mind, we shifted to a focused discussion about the areas where institutions are making progress and where the industry still falls short of meeting rising customer expectations.
What’s working
Participants agreed that faster, more consistent onboarding outcomes start with clear internal expectations. Teams that set aggressive service-level agreements (SLAs), such as committing to same-day KYB approvals for low-risk entities, reported stronger alignment and faster execution. Several attendees cited success with “single-threaded ownership,” where a dedicated individual or team owns the end-to-end onboarding process, minimizing handoffs and delays.
Even as onboarding speeds improve, most institutions remain disciplined about maintaining strong due diligence to meet regulatory obligations and protect against fraud. Striking the right balance between efficiency and risk management remains the benchmark. Several participants candidly shared that their organizations are still working to calibrate this balance in a way that aligns with their unique risk profile and growth goals.
Where it breaks
The pain points were just as consistent. The verification process at many institutions remains highly manual, especially for complex business types like multi-member LLCs or layered holding companies. One participant described the process of verifying a Delaware LLC with foreign ownership as “a weeks-long maze of document collection and manual reviews.”
Data fragmentation was another common frustration. Teams cited delays caused by disconnected systems and inconsistent recordkeeping, particularly when information had to be stitched together across legal, compliance, and risk teams.
Regulatory ambiguity continues to create friction. Several participants shared how inconsistent state-level guidance forced teams to interpret rules differently for similar business entities. Even seemingly minor technical issues, such as browser compatibility problems with internal platforms, were flagged as avoidable bottlenecks that erode team efficiency and customer experience.
A final and widely shared challenge was the lack of real-time visibility into where applications stand in the onboarding process. Many participants described how customers are often left in the dark, unsure of what stage their application is in or what information may still be required. Internally, this creates frustration for relationship managers, compliance teams, and operations staff who must manually track down statuses or answer urgent customer inquiries. The absence of a centralized, transparent system leads to unnecessary delays, duplicated efforts, and a poor overall customer experience.
What’s next
The group strongly aligned on the need for cleaner data and smarter automation. Real-time data sharing across systems was seen as the most immediate opportunity to reduce delays and manual work. Many institutions are now exploring ways to unify KYB and KYC workflows to streamline verification across both businesses and their owners, cutting down duplicative processes.
There was also interest in emerging solutions to verify entity age, flag unpaid actors or high-risk associations, and monitor business status changes after onboarding. These capabilities were seen as critical to evolving verification from a static point-in-time process to a dynamic, continuous assessment.
Finally, everyone agreed that customers of all types expect onboarding to feel as seamless as signing up for any modern digital service: fast, clear, and intuitive from start to finish. Any institution that does not recognize this and adjust its processes accordingly will lose prospective customers to competitors that do.
The path forward
As fintech infrastructure and risk management tools advance, the expectations for business verification have fundamentally shifted. What was once viewed as a regulatory hurdle is now emerging as a competitive advantage if effectively navigated. Institutions that can master both sides of the equation—mitigating risk while delivering a fast, seamless onboarding experience — will be the ones that win and retain the next generation of business customers.
At Middesk, we believe the institutions that embrace smarter, more dynamic verification processes will define the next phase of growth in financial services. We are committed to partnering with banks and fintechs to help reimagine business onboarding for this new era.
Smarter verification starts here
Learn how Middesk empowers fintechs and financial institutions to move faster, reduce fraud, and stay compliant. See what modern onboarding can look like. See what modern onboarding can look like.
