Digital Onboarding in Banking: A Critical Component of a Customer’s User Journey

Onboarding Landscape

Customer Onboarding is a critical step, and the customer’s first impression of your bank, relative to establishing their relationship with your bank.  Processes associated with onboarding are heavily driven by banks’ policies and risk and regulatory compliances for Know-Your-Customer (KYC) requirements.  It also includes copies of many physical documents and the customer’s physical presence in front of bank staff.

However, over the last few years, the fintech, the neo/challengers, or the digital-only banks have changed the digital banking landscape insofar as leveraging digital capabilities provided by smartphones and tablets to offer omnichannel onboarding experience to customers end-to-end from account origination to making the first transaction.

Changing customer expectations and user experiences provided by other techfins such as Amazon, Facebook, Monzo, etc. have been seamless and with millennials entering the workforce, banks must think about onboarding as a “digital-first” experience.  While traditional banks will continue to have a physical presence in the market (and not just through a branch), digital-only banks rely on the digital touchpoints as the doors of the branches. Digital natives aren’t looking to just check their balances. They want to open an account without ever walking into the bank says Craig Peasley, Director of Marketing at Adobe. 

Delivering a frictionless digital onboarding by banks is important as it serves as the first touchpoint for the customers and sets the tone for all future interactions customers have with the bank.  Today’s millennials also expect a ‘near real-time onboard and transact experience’ and won’t have any qualms in opting out of the application process if they experience a cumbersome or time-consuming journey. 

Imperatives for Digital Onboarding

So what are the imperatives driving banks to move from manual and cumbersome onboarding processes to be able to digitally onboard customers and in turn focus on improving the customer experience?

It goes without saying, but a digital-first, omnichannel approach is the enabler to relationship expansion.

Some of the key points to consider:

1. Broken and Complex Manual Onboarding Process

The existing manual onboarding process is fraught with several friction points such as completing tedious forms, being redirected to different channels, being asked to provide physical documentation/copies, and potentially multiple visits to the branch leading to a broken customer experience. The process entails a minimum of a few days for the customer to be onboarded and finally getting access to a new account/product relationship.

2. The Advent of Newer Technologies – Adoption of Smartphones

With the changes in customer behaviour, resulting from the rapid changes in technology, banks must adopt a real-time and digitized process for customer origination. 

The emergence and rapid adoption of smartphones have provided opportunities for banks and technology vendors to use technologies such as facial recognition and verification, biometrics using fingerprints or iris scans.  From the graph below, it is evident that the adoption of smartphones has grown consistently over the last 5 years.

Source: Statista

3. Changing Customer Expectations

Changes in customer’s expectations have not only changed with the adoption of digital channels but also the use of these channels across other industries.  You only have to look as far as Amazon or Lazada to see how retail is shaping the customer experience.  The digital capabilities offered by digital-only and challenger banks have also contributed to what customers of traditional banks expect from their banks.

Customers are keen to provide information to their bank if they know it will result in a better customer experience; meaning information like life events; i.e. getting married or having a baby, would allow the bank to customize financial recommendations.

4. Expensive and Resource-Intensive Process

For banks, manual onboarding processes face several challenges.  Resource-Intensive, physical verification of the customer, document storage results in increased costs to the bank, and reliance on employees to always follow the same process.  Banks have been through multiple iterations of trying to improve the manual processes by introducing technology for document storage and retrieval, or centralized back-office functions, but these are still cumbersome and costly. The banks inadvertently spend the same amount of money onboarding a transactor type of customer as they would spend on a middle-income customer who has money to save and/or invest.  These economics simply don’t make sense.

5. Digital Banks

Digital banks that don’t offer a physical presence had to work with technology providers and the regulators to resolve the issue of how to onboard customers in the digital-first world.  This has driven a lot of change over the last few years and onboarding technology has matured since then.

Benefits of Digital Onboarding

  • Enhanced User Experience: Digital onboarding provides greater flexibility and a user-friendly interface for customers to create accounts & to use the banking services.
  • Reduce Cost-to-Serve: Automation of process reduces the overhead of manual interventions while increasing productivity.
  • Accurate Evidence Validation: Enhanced customer due diligence process using AI, ML for banks and credit score reduces AML/ blacklist risk.
  • Reduce Customer Lead Time: An integrated streamlined process of document validation & faster support reduces onboarding time from hours/days to minutes resulting in a better customer experience.
  • Streamlined Process: Personalised digital onboarding journey for customers with a reduction in multiple touchpoints has a significant impact on banks’ revenue.
  • Increase Customer Acquisition: Effortless digital enrolment with better user experience increases account openings, decreases drop-out rates, and enhances customer loyalty.

Conclusion

Digitally Onboarding a customer will become a critical requirement for banks and financial institutions going forward to align and meet the expectations of the millennials and the digital-first customer.  Both the mushrooming digital banks and traditional financial institutions will need to formulate a strategy and devise solutions that best suit their landscape.

MobeixTM  Digital Onboarding enables banks to accelerate the customer onboarding journey by automating the end-to-end process in a simplified and streamlined manner by using the most current biometrics capabilities, capturing accurate information, adhering to regulatory standards, and optimizing operational efficiency. Our solution can provide the bank with the ability to provide a seamless omnichannel onboarding experience, end-to-end, without any human intervention, or provide human intervention when and where required.

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