What is the Impact of Expiring Tax Forms on the Customer Experience?

Financial Institutions’ Digital Savvy Customer

Today’s digital-savvy customer expects an effortless, straightforward, and pleasant interaction with their financial institution. Unfortunately, even the most advanced global financial institutions still rely on inefficient and manual processes for FATCA and CRS compliance, frustrating clients, and customer service officers alike.

Digital solutions eliminate the challenging balancing act of providing a superior customer experience while complying with regulatory obligations. My recent aggravating experience with my online broker demonstrates why financial institutions should never take customer experience for granted.

Customer Experience of an Expiring W8 Tax Form

I received an email from my online broker requesting a new Form W-8BEN before 31 December 2022, because my existing form was expiring. The email informed me that if I failed to provide a new valid Form W-8BEN by the expiration date, my account would be blocked from trading U.S. securities, and any U.S. securities in my portfolio would be sold. I would incur hefty charges for each sale along with FX costs associated with those transactions.

Like most customers engaging with an online broker, I was expecting a journey where the entire process was digital and online. However, my online broker provided me with a link to access a PDF version of the Form W-8BEN to complete.

This meant that I would need to print, sign, scan and email it back to my broker. I even had the outdated option to return it by post. I have yet to find the time and equipment necessary to return the completed form to my broker.

How Does the Negative Customer Experience Affect the Client?

I was taken aback by this online broker’s antiquated process for soliciting tax documentation, especially because their platform provides a first-class trading experience with investing insights tailored to my portfolio.

Unlike me, a tax professional who knows how to complete the Form W-8BEN, most customers are unfamiliar with traditional tax forms and find them confusing and challenging to complete.

Layering the frustrations of a cumbersome and time-consuming process on top of an already confusing task means that customers often resist returning their tax forms. Financial institutions then have to resort to chasing customers or blocking their accounts, adding more frustration.

Customers often experience delays in feedback when waiting for the validation results, which can take up to a week. Adding to that, if a W-8BEN is invalid, a client would have to repeat the clunky process that starts with reprinting the form.

The problem is that they may not know where they went wrong the first time, or how to correct the error, so they will have to consult a tax professional. This causes further delays and exacerbates the client’s growing aggravation.

With a general 65% error rate, poor customer service is a common reason online brokerages lose customers, and I am one of those customers. As a result of my frustrating experience, I will be changing to a different online broker who can offer me a seamless digital end-to-end experience.

While pdf versions of forms may have been acceptable 5 years ago, today they are outdated. Customers no longer have the time or the patience to endure an outdated manual experience.

How can TAINA Help?

The TAINA automated FATCA and CRS Validation platform has transformed the customer lifecycle journey at many financial institutions, including online brokerages. Our clients experience 85% reduction in tax form rejection rates and their customers save 63% time in completing tax forms.

The Platform helps clients simplify the challenging compliance environment with an intuitive and straightforward tax form submission journey, in a way that doesn’t feel like a traditional tax form.

Our online portal provides hints, tips, and real-time validation checks along the way to guide clients while they are completing the forms. Tax forms can also be pre-populated, reducing data entry errors and helping to get customers onboarded and back to using your financial product quicker.

Data is only required once from a client unless there is a change in circumstances. TAINA’s ongoing monitoring module alerts tax operatives of changing customer tax information and form expiries so that tax operatives can proactively engage with customers and confirm their tax information changes without interruptions to their trade activity.

Automated Regulatory Compliance as the Competitive Advantage

At TAINA we understand that customers and investors may not choose their financial institution based on their robust FATCA and CRS validation and reporting processes however they will compare institutions' overall customer experiences.

Regulatory compliance no longer needs to add friction and frustration to the customer experience. By automating your processes financial institutions can benefit from providing a superior customer experience that will both differentiate them from their competition and ultimately become a commercial competitive advantage in a rapidly changing world.

We would love to talk to you more about your current approach to FATCA and CRS compliance and discuss how the TAINA Platform can help improve your overall customer experience. For more information reach out to us or request a demo today.