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For the longest time, banks and other financial institutions have been trying to rebound from their traditional models through digital transformation – to infuse automation in their offerings and take care of the dynamic expectations of modern-day customers. But of the many aspects, a greater majority have neglected digital consumer onboarding despite it being the anchor to improving the end-customer experience. For instance, according to a recent Accenture metric, 47% of consumers now prefer to open a savings account online, yet only a few global institutions have holistic digital onboarding practices in place to offer the same.
Current Industry Standards of Digital Onboarding
Today, the onboarding process at most leading financial institutions starts when a prospective customer makes first contact & thus, it is common knowledge that the first impression the bank makes at this point could make or break the relationship. In addition to this, modern customers have no patience to complete lengthy KYC or KYB forms, upload additional documents for approval, or, at times, make branch trips.
Although a great percentage of banks have identified this disjoint & are taking proactive steps to shift the emphasis from institution-centric approaches to customer-centric experiences while ensuring smooth customer acquisition, retention, and ultimately, driving growth, there is an equal half who are still struggling to increase customer acquisition rates during onboarding while ensuring cost efficiency.
Evolution of Customer Workflows
Different financial institutions have adopted various workflows over the years to cope with the evolving ecosystem, technology advancement, and customer expectations. The transition went from an entirely branch-based onboarding to partially digital & finally to omnichannel onboarding.
Shared below is a holistic snapshot of each.
Branch-Based Customer Onboarding
This method of customer onboarding is largely manual & thus, customers only have access to a few online utilities such as confirming account eligibility & document requirements. As a result of this, customers need to physically visit bank branches and complete lengthy application forms to set up an account.
This is not only a time-consuming approach, especially at an age when 88% of customers want to create accounts instantly, but also expensive & taxing for the institution across multiple fronts.
Transitioned Approach (Partial Digital Onboarding)
Transitioned channel approach involves three stages. First, the customer fills in their details via online forms and submits them to the bank for decision-making ahead of the visit. The bank then reverts with a call to verify the submitted details. The idea of submitting in advance is to give the bank adequate time to make the onboarding decision, so the customer only visits the branch to finalize.
Omnichannel Onboarding
Omni-channel onboarding is a fully digital framework that combines all functionalities of the previous approaches into a single, reliable, easy-to-navigate sign-up process.
It encompasses everything from account opening and user authentication to eKYC, AML checking, and document management. With omnichannel onboarding, banks and other financial institutions leverage cutting-edge technologies like cloud computing, blockchain, artificial intelligence, data collaboration, biometrics, and machine learning to automate the entire onboarding process.
Understanding Customer Expectations on Digital Onboarding
When the world went into lockdown, almost all our daily activities – from working and shopping to banking, shifted online and are likely to remain so forever. A McKinsey publication recently pointed out that the lockdown accelerated digital adoption by ten years, which created a new baseline of customer expectations on digital onboarding, consequently requiring institutions to rethink their digital onboarding implementation models.
Yet so, according to a study by Forrester, every year, around 64% of banks incur losses because of the inefficiencies in their onboarding experiences. This is a major concern considering its 20 times harder to acquire a new prospect than to retain existing customers. Thus this poses a new challenge to financial institutions to look beyond and see the need for new innovations such as omnichannel banking, which has the potential to effortlessly convert prospects to customers.
Cost of Not Meeting Customer Expectations
The consequence & associated costs of not meeting customer expectations are many fold. Shared below are some of the most significant.
Increased Customer Abandonment Due to Decreased Satisfaction
A significant percentage of today’s digital banking customers are millennials and Gen Zs, who are obsessed with modern CX and instant gratification. Banks and other financial institutions need to stay up to date with dynamic customer expectations and lend them an ear. In the age of omnichannel banking, institutions need to leverage the simplicity, security, and transparency it arrives with to provide the experience that customers are longing for.
Leveraging modern technologies to meet consumer demands will not only enable institutions to capture customer suggestions on how best they can tailor the products by carrying out surveys but also analyze and find areas of improvement to ensure products are always ahead of the market.
On the other hand, failing to capture current market sentiments & develop up-to-date & personalized products will not only contribute to decreased satisfaction but weaker retention in the long run.
Losing Market Share & Falling Behind Peers
Today, customers share both positive and negative views about a product based on their past experiences on social media and other digital channels. Friends, peers, and even online strangers often take these reviews seriously when evaluating what would work for them, and thus this has the potential to either make or break your market share.
Falling Behind the Digital Race
Unlike simpler times when different services were offered and categorized in terms of geographical location, today’s digital landscape has evolved exponentially. For instance, customers can now order food from a restaurant, shop online, & pay for both these services right from their mobile phones. Thus it becomes evident that banks need to start asking, “is my mobile banking app meeting customer expecations?” This question will not only stir innovation but also ensure that institutions don’t fall behind in the digital race.
Conclusion
To make the right first impression at the point of entry and maintain it throughout the customers’ banking lifecycle, financial institutions need to consider a personalized onboarding approach. For instance, a McKinsey study on “Digital Identification” shows that integrating eKYC simplifies the onboarding process, especially for customers in remote areas, and can reduce operation costs by 90%.
Banks can thus take cue & leverage on modern technologies to centralize customer data and automate the onboarding workflow making the process less demanding for modern customers.
In a nutshell, adopting digital onboarding in this era of contactless banking can help address the most dominant issues branch-based and transitioned approaches have faced, such as wastage of time and resources. This will not only help financial institutions avoid the cost of missing out on digital onboarding but also allow them to monetize customers’ digital intent!
Tagged:
- africa, digital onboarding
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Paul Nilsen, Managing Director Africa, CIS and Global SaaS
A highly qualified Business Management Professional in the Financial Technology field with over 16 years of experience within the financial technology banking, retail and IT Industries, Outsourcing Sectors including exposure to Global Markets.
