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04. 13. 2018

Digital onboarding: How to lose a customer in 10 minutes

Digital onboarding: How to lose a customer in 10 minutes

Let’s face it: signing up for a new bank account, a credit card or a loan is usually quite a hassle, to say the least. But it doesn’t have to be that way. Banks today have various tools at hand to speed up the process and provide the quick and seamless digital experience customers demand.

Onboarding digital banking customers is a real pain point for banks, affecting user experience a great deal. Banks spend a fortune on attracting new customers and talking existing clients into additional services. The problem is that with product application workflows being sluggish and far too complicated, poor onboarding processes can seriously undermine these efforts.

Signing up a new customer for a new account takes less than 10 minutes at 32% of incumbent banks but it still requires more than 24 hours at 19% of financial institutions, a Marketforce survey found. What’s more, about 39% of respondents can’t even onboard entirely on digital channels. Is it any wonder customers often end up feeling frustrated or angry during the application process?

And that’s how banks lose customers. A whopping 40% of banking consumers abandon their application, according to a survey by Signicat. About 39% give up because the process drags on too long, while 34% drop off because too much personal information is required. More than half of the respondents would be more likely to apply for a financial product if the process was fully online.

ID verification is a major obstacle

Of course, onboarding doesn’t finish with the customer getting their confirmation. Banks must make sure all the identity verification and money laundering checks have been completed before a new account is activated. These requirements can be stumbling blocks to frictionless onboarding, especially in countries where customers are required to present identity papers in person or via post.

Technology, like facial recognition through smartphone applications, might be the answer to this problem. Customers can now open a bank account with just a selfie and get all the support they need from AI-powered digital assistants. Leading innovators in this field include digital-only banks, like Monzo and Atom in the UK, or Fidor and N26 in Germany, which use video selfies or chat-based ID verification.

Another option is teaming up with third-party providers offering innovative digital tools. Australian fintech venture Tic:Toc has come up with a completely online mortgage solution that uses a digital decisioning system to assess and approve online applications in real time. Eligible customers may be granted a full home loan approval in just 22 minutes compared to the usual 22 days, including mortgage document production and delivery upon approval. Tic:Toc works together with Bendigo and Adelaide Bank in Australia to extend mortgages.

Identity may go digital, killing onboarding pain

In an ideal world, there would be a universal digital identity scheme for ID verification, allowing any consumer to prove their identity online. Such a scheme seemed unworkable in the past for a great many reasons. But initiatives to move towards freeing proof of identity from the ties of offline sources like driving licences and passports are gaining traction. And the real game-changer for verification would be establishing standardized online identities.

A promising example is the Gov.UK Verify initiative, which has already partnered up with banks and other companies. Other players, such as OneName and ShoCard, are creating centralized services that allow companies to outsource verification activities using blockchain technology.

In Sweden, leading banks developed BankID, an electronic identity document similar to physical IDs. This way companies, organizations and government agencies can authenticate and conclude agreements with individuals entirely online. It now has as many as 7.5 million active users, who use it for online and mobile banking, e-commerce, tax declaration and signing legally-binding contracts.

The Marketforce survey found that about 75% of institutions expect the majority of the adult population in their country to have a digital identity which banks can use for verification purposes within just five years. Combine this with open APIs that speed up credit assessments by enabling customers to give lenders read-only access to their online banking, and there you have it: a swift onboarding process across the entire industry.

Digital onboarding: Let customers save and resume

We have a long way to go though. In most cases, customer’s onboarding is still an omnichannel process, including a visit to the branch, where paper documents have to be presented. And even if onboarding is fully online, you can’t sit back. Customers also want to have the option to switch between digital channels, using multiple screens from smartphones to PCs and tablets when signing up for new banking products.

But giving customers the chance to save an incomplete application form and resume working on it later, maybe through a different channel, is anything but common practice. As of last year, only 22% of banks included a save-and-resume feature in their account opening process, according to a survey by Avoka. The grimmest picture comes from Europe, with only 14% of the surveyed financial institutions offering this feature.

And that’s not all. Marketforce also found that customers at 85% of its surveyed banks couldn’t start an interaction on one channel and complete it on another without having to restart the whole process from scratch. Seven out of ten said that having to re-input data when moving between channels was a major cause of customer dissatisfaction.

If you would like to know more how banks can compete with new competitors, read W.UP’s latest white paper about the digital sales best practices in banking.

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