Revolutionizing customer experience in banking with digital onboarding

Make a lasting first impression to win customer loyalty

Remember the ordeal of opening a bank account or even applying for a loan just a few years back? With the multiple trips to the local branch, endless paperwork, being redirected to different stakeholders, the uncertainty of getting stuck in tedious processes, and long-haul customer onboarding seemed like an accepted norm back then.

The things were not pretty either on the other side of the table. For a banker, it was a time-consuming process with several repetitive works. The manual processing made it more prone to human errors impacting the quality of KYC procedures. There was a large fraction of the workforce involved, causing unnecessary delays. This, in turn, reduced the field –time of sales teams, restricting expansion efforts of the bank in other areas. Outcome:

• Time-consuming and costly affair for banks
• Security subject to human errors
• Low speed of service delivery
• Lower employee efficiency/productivity
• Risk of lower customer retention impacting the overall performance of the banks

However, much has changed since digitalization. Banks have been readily embracing digital solutions across a large part of their operations. Customers today have the option to go online for most of their banking activities, including learning about products and services, conducting routine transactions, and soliciting support. Despite progress in several areas, digital customer onboarding remains in its infancy. However, banks are increasingly recognizing the need to gain customer confidence and make the first impression right at the outset of their journey during the onboarding process.

Why the shift from traditional to digital customer onboarding so critical now?

A renewed focus on customer-centricity is redefining the paradigm of the banking industry.
First, the advancement in technologies, the advent of smartphones, followed by the increasing penetration of Fintech players like Facebook and Amazon culminated in a shift in customers’ behavior. Today’s tech-savvy customers naturally expect a similar ‘near real-time’ and ‘digital-first’ experience even for their banking solutions.

The emergence of new players like neobanks or challenger banks across the globe, who put customer-centricity at the forefront, makes this possibility a reality. All these factors were already prompting banks to reimagine their digital customer strategy. Traditional banks are expected to digitalize their onboarding service and provide a ‘frictionless’ experience to retain new-age customers.

The Covid-19 pandemic has further set the ‘digital’ wheel in motion with its lockdown rules and contactless service. Today, it is rather compelling for banks to deliver immediate client value such as quick digital onboarding, seamless lending, or being agile in adapting to the ‘new normal’s’ dynamically changing policies. It no longer serves as a differentiator but rather an enabler for banks to sustain the challenging environment. The current crisis only reinforces the need to embrace a solution that determines a path to the future.

What is digital customer onboarding?

Now that we have established the increasing prominence of digital onboarding let us delve into the term’s critical elements and revolutionize the customers’ onboarding experience.

The key factors that dictate a typical onboarding process are:  Identity verification, regulatory compliance, and risk. Technology advancement can ease each of these areas enabling a seamless customer journey. For example, the former identification or Know-Your-Customer procedures that could have only been achieved through branch visits and face-to-face meetings are no longer a prerequisite. Today an online bank can use facial recognition and verification and biometrics with fingerprints or iris scans to confirm a customer’s identity. Concurrently, the different risk elements could be analyzed through automated flagging and machine learning capabilities. With these technologies, much of the burden of different regulatory compliance checklist can also be addressed with ease.

How does digital onboarding revolutionize customer experience?Speed: Accessibility and convenience: Omnichannel experience: Ease in user-experience: Affordable services: How does it help the banks?

While making the first impression right and winning customer loyalty is critical, and an appropriate onboarding solution enables banks to go beyond and reap greater benefits through technology:

Speedier service delivery – The reduced cost to service and operational efficiency: Scope of expansion: Viability of increase in the sales of products and solutions: Improve services: While fully digital banks like N26, Revolut, and Munzo have already set precedence in the digital onboarding process, the increasing importance of this process is being reflected even at a government level across different countries. For example:

Dubai recently launched its Know Your Customer (KYC) blockchain consortium with six major banks to align its vision around digitalization. This is a crucial stepping stone in building a UAE-wide digital banking ecosystem and encouraging banks to embrace digital onboarding.

The regulatory framework across Europe for a Digital Single Market provides a host of regulations such as the Revised Payment Service Directive (PSD2), the Anti-money Laundering (AML5), eIDAS Regulation, and The General Data Protection Regulation (GDPR). These together ensure that the digital information is both free-flowing and secure, enabling banks to embrace it in the full life cycle.

In India again, the Reserve bank has permitted Video-based Customer Identification Process (V-CIP) as a consent-based alternative of establishing customer’s identity.

All these changing policies are a manifestation of a burgeoning digital revolution taking place in the BFSI sector. It is up to the banks to act fast and imbibe these changes or soon be rendered expendable. Are you ready to offer your customer the banking and financial experience they want?

If so, rely on specialists who can help you address the inevitable operational challenges of transforming your legacy-based onboarding process to digital onboarding. My next blog aims to provide a sneak peek of the common challenges and solutions around it. Keep a lookout!!

• BFSI
• Digital and Automation
• Omnichannel experience
• UX