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In many ways, the digital aspects of onboarding customers have been led by mobile network operators (MNO’s) especially in Africa and more so in East Africa. Mobile devices and SIM cards were given out at will until the Communications Regulatory Authorities had to pull the plug and force all Networks to also perform “Know your Customer” (KYC) checks or get the SIM cards disconnected. Since then, MNO’s who are regulated mostly outside of the central banks, have paved the way for Banks to easily adopt the “How to” from an eKYC and Data Management perspective.
Digital onboarding is not new to the African continent.
This led to mobile network operators expanding more rapidly into mobile money services, which then fed back into central banks’ regulatory evolution. There are approximately 91 million mobile money users in Sub-Saharan Africa.
Banks have traditionally looked from the outside in, and because of their expansive networks of brick-and-mortar infrastructures, the reliance on face-to-face onboarding has stood the test of time. Clients are used to the traditional relationship banking, visiting representatives and navigating the appropriate documentation to open their first bank account.
With the onset of COVID, the traditional operating model of onboarding grinded to a halt. A year into the global pandemic, banks and financial institutions across the continent have noted the change. They have realizing that their negative year-on-year growth cannot be sustained.
Naturally, regaining a state of positive growth demands customer acquisitions, but driving foot traffic into brick-and-mortar institutions has been wrought with friction due to COVID. The opportunity is quite clear, with a massive $500 billion generated from mobile banking transactions and fee charges.
COVID-19 has caused isolation among people and created a gap between businesses and their customers. Effective communication of products and services has become crucial, especially as we look forward to a post-pandemic future. To cultivate strong customer relationships, it is essential to have a channel that engages users from their initial interaction and throughout their entire journey with the company. By enhancing the customer experience, businesses can foster lasting connections and navigate the evolving landscape successfully.
Process Shift for Banks
The most important function for a bank to continue to grow, is to find a way to acquire customers without the need for them to enter the branch and to remain relevant with them throughout their lifecycle. A diversity of powerful, versatile channels then becomes the only way to move the needle.
Looking at the Generational shift, Banks need to ensure Gen Y’s and Z’s can gain access, get engaged, and expand their usage of more products and services. These generations typically embrace digital options because it’s the type of technology that they utilize on a daily basis. Any financial institution embracing the instant gratification mindset is moving in the right direction. If not, who are your new customers? The younger generation embraces anytime, anywhere. Bank Loyalty does not feature – Why must I go into a bank if I can do everything I need from the comfort of my home?
Digital Onboarding for Financial Inclusion
Digital onboarding is the initial phase of building a customer relationship, and it plays a crucial role in achieving financial inclusion. In Africa, a significant 62% of the population remains unbanked, despite the widespread use of smartphones by over 456 million people. However, institutions have a tremendous opportunity to expand their customer base exponentially by recognizing the existence of a simpler and more cost-effective approach to driving financial inclusion. Digital onboarding is the first step to true Financial Inclusion – Onboard Anyone, Anywhere, Anytime.
Smartphone growth in underdeveloped countries is astronomical. The rate at which customers are utilizing smartphones for daily use is rising every day, even in rural areas. This is a clear opportunity for financial institutions, who are already prioritizing both financial inclusion initiatives as well as enhanced customer acquisition strategies.
By implementing a simplified digital onboarding system, institutions can minimize the need for physical presence. This not only reduces operational costs but also enables them to engage customers from anywhere. Financial inclusion initiatives are evolving swiftly as Financial Institutions increasingly adopt digital onboarding. Central banks are supportive of this shift, recognizing that easing manual KYC procedures fosters digitalization, enhances financial access, and contributes to a robust economy.
Institutions need to realize that improving customer acquisition strategies doesn’t mean completely overhauling their systems. The banking and financial services sector has seen technological advancements that enable institutions to enhance their existing infrastructure. This allows them to offer their full range of products and services in a cost-effective and customer-centric manner.
Similarly, the institution itself doesn’t need to commit to an 18 to 24-month technology overhaul. Time to Market and operability is always a factor – these solutions can be customized, tested, and implemented in less than 3 months.
Bank where life happens.
Tagged:
- africa, digital onboarding, financial inclusion
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Paul Nilson, Commercial Director
Strategic business leader who has scaled local and international platforms managing teams and creating sustainable recurring revenue streams.
