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Players in the financial sector are currently battling fierce competition. They are struggling to make an impression and leave the best first impression on customers. Why? Simple digital onboarding is a key first step to customer acquisition and retention.
The importance of digital onboarding
More traditional banks and financial institutions, such as securities dealers, are investing heavily in digital transformation. This transformation is driven not only by the pandemic situation but also by regulatory changes and the threat posed by new fintech players in the market. It also aligns with the demands of “tech-savvy” customers, who expect easy and instant access to the bank through multiple touchpoints.
Digital onboarding is an opportunity to make the right first impression. If a financial institution fails to do this, it could be saying goodbye to many potential customers. The facts are clear: according to a recent Deloitte survey, up to 38% of customers consider user experience the most important factor when choosing a bank. Proper and simple onboarding is, therefore, critically important.
Digital onboarding is constantly changing, as are customer expectations and the way their needs are met. To help you understand this process, we’ve put together a survey and a collection of facts and useful statistics.
What is digital onboarding?
To understand the whole process, let us first explain the basic concepts:
- Onboarding – acquiring new customers. It results in including the customer in the institution’s customer database, thus ensuring easy and quick access to all the services and products offered by the organisation.
- Digital onboarding – a process used mainly in the banking and financial sector to open accounts and provide financial services to clients. Typically, digital onboarding can be done online and remotely, without physical contact with the client, using any “smart “device.
Thanks to technical and security controls, companies in various sectors, including sensitive ones such as the financial sector, can attract new customers and users from anywhere, anytime, and through any channel. Mobile or web applications use electronic means for this purpose, such as electronic (digital) signatures, electronic ID cards, facial biometrics, or customer authentication via video call.
Emphasis on the simplicity of the process
Why is the simplicity of the whole process important in onboarding? Nearly 40% of customers abandon onboarding processes on digital channels. Deloitte has found that people abort and don’t complete the process:
- when onboarding takes too long,
- when it requires more information than people will provide.
However, in the customer onboarding process, financial institutions must follow the rules known as KYC – Know Your Customer/Know Your Client. This standard business practice is followed by financial institutions all over the world. It is a customer identification process designed to answer these basic questions:
- Who is your client?
- Is he whom he claims to be?
- Are the sources of its funds legitimate?
This process is not straightforward and requires the customer to provide a lot of information as part of the onboarding process. The user-friendly digital solution influences the ratio of successfully and unsuccessfully completed client registrations. KYC is part of AML (Anti-Money Laundering) measures used by financial institutions and governments to prevent and combat financial crimes, including terrorist financing and money laundering.
Did you know that people stay at their financial institution for an average of 17 years? For financial institutions, this means acquiring a new customer is of tremendous value, as every customer that signs up is likely to become a loyal account holder for years to come.
What is part of digital onboarding?
Request for onboarding
By leveraging digital channels, a financial institution can acquire more customers in less time, significantly reducing the cost of a process that can be automated. This saves institutions time, money and makes the process more secure and less error-prone. The result is, ideally, 100% “compliance” – compliance with regulations and laws. This is happening by improving the customer experience for the new client and making financial institutions more competitive in a rapidly evolving industry.
Basic data collection
Whether the customer starts the account opening process via a computer or mobile device, the financial institution should provide a simple user interface for uploading all required data and documents.
Thanks to well-designed system architecture and the logical use of the data obtained from this interface, a company never has to request the same data twice. A well-designed process also allows for the possibility of interruptions and later data completion. Native features of the mobile device are used to document personal data. Using the camera, users can easily take a picture of their ID and other documents or use the webcam to verify their identity.
Client identification
After obtaining the basic data, digital onboarding will allow the next processes to continue smoothly – KYC analysis, i.e. verification and authentication of documents to determine whether the person presenting the documents is depicted on the documents. Besides the most advanced, but also the most costly solution – biometric facial recognition – other methods can be relied on for identity verification, such as:
- video call with the operator,
- uploading a still video containing the authenticated person and his/her identity document.
Legislative obligations
If a financial institution providing investment services onboards a client, it is important from a legislative viewpoint to know not only the client’s expectations related to the investment itself but also his overall financial situation and, where applicable, his education. For example, the State also ‘supervises’ the customer through an investment questionnaire—it regulates the portfolio of products offered to the customer by the financial institution. The investment questionnaire is a standard part of the onboarding processes of securities traders, for example.
Different types of financial institutions are subject to different regulatory requirements, which are reflected in different questionnaires. However, the results of each questionnaire determine the product offering that an institution can develop after onboarding.
Marketing intermediate step
In this step, the institution has room for collecting additional information (interests, consumer behaviour, service objective for the customer, etc.). Based on this information, the institution can demonstrate its services (teaser), such as predicting the investment curve.
Benefits of digital onboarding
Quick login
What used to take an average of three weeks can now be done in three minutes. By integrating digital onboarding, a bank can register a person with all the necessary requirements and additional documentation they may require for their own needs.
Easy to use
Anyone with an electronic device with internet access and, ideally, an integrated camera or webcam can perform digital onboarding.
Contactless system
Attracting new customers is also a challenge for the financial sector during pandemics and various anti-epidemic measures. The combination of sophisticated technologies, such as the aforementioned facial biometrics or virtual ID card validation, increases the security of the onboarding process and meets legislative requirements.
Thanks to these technologies, the customer saves a trip to the bank, does not need to stand in a long queue, and can complete all the steps from the comfort of home. Automation, such as extracting personal information from a customer’s ID card to automatically fill out the rest of their form, saves customers time, leading to higher satisfaction and a higher likelihood of conversion—successful completion of onboarding.
Real-time efficiency
Security measures, verification of biometric facial patterns, and verification of persons’ lives are carried out in real time (within a few seconds at most).
An exponential increase in conversion of new customers
According to the study, the conversion rate increases by over 60%. We consider the improvement in user experience, the positive reviews offered and the subsequent recommendation.
Using digital onboarding in the financial sector
Digital transformation is affecting businesses in every sector. Thanks to new technologies and the rise of security threats, traditional business models and processes are changing rapidly. Therefore, the financial sector is looking to capture and leverage each wave of digital change, which includes digital onboarding. Which companies stand to benefit the most from this?
- Securities dealers (OCPs) as providers of investment services – e.g. for identity verification, completion of an investment questionnaire and an overall client assessment.
- Financial institutions – banks, insurance companies or pension funds.
- Management companies – providers of mutual funds.
- Fintech companies – e.g. operators of mobile apps providing financial services.
Dreams of a better customer experience in the financial sector
For marketers, onboarding remains an often complicated and time-consuming process. This insight seriously affects conversion rates and client acquisition costs. Manual processes, paperwork, the need to visit the branch to complete processes launched online, waiting for approvals, and passing information through systems all contribute to delays, inconvenience, and the increased risk of onboarding interruption by prospective clients.
Many financial institutions miss the opportunity presented by implementing digital onboarding. They overwhelm potential customers with bulk data requests and lengthy waits. Consumers have to repeatedly enter information, and employees have to enter data into other systems manually. Unnecessary repetition leads to wasted human resources and time for the new customer but also for internal staff.
Nor does the fact that banking is a highly regulated industry excuse a bad customer experience. The rules are strict, and documents are often required to be signed in person or sent by post. Further approval is awaited before any proceeding.
However, the acceptance of e-signatures across private and public institutions is soaring, and regulators worldwide are shifting rules to suit the new digital era. According to Eurostat, more than half of Europeans have switched to digital banking.
Up to 38% of customers consider user experience as the most important factor when choosing a bank.
How to have a successful digital onboarding?
For banking and other financial industries, customer needs evolve with each new generation. Customers today demand convenience and speed. They have less time and less interest in building personal relationships for standard banking products and services. So the ideal onboarding experience should be:
- Fast – the whole process only needs to take a few minutes.
- Digital – no need to visit a branch.
- Multi-channel – can be done on mobile, tablet or laptop.
- Paperless – no paper forms or contracts to sign.
At least 26% of customers feel that ease of registration and login is the most important criterion on which they base their choice of financial institution.
Transform paperwork into an opportunity for digital interaction
Paperwork can be transformed into agile digital journeys created to improve interaction and drive revenue growth.
Make digital transformation of the customer experience the No. 1 priority
Digital media is becoming the main communication channel with customers. Therefore, banks and financial institutions must change the way they look at digital media and prioritise improving the customer experience over other aspects.
Use data for personalisation
Customer experience transformation depends on seamless multi-channel experiences. Don’t ask for information from a client that they have already provided to your institution at some point. Ensuring two-way integration between the front-end customer interface and back-office systems can help a bank achieve a high level of personalisation in the process.
Let the customer lead, not the technology
Your customers are not interested in new elegant technological solutions implemented in back-office systems. Customers demand a great user experience and the ability to easily and quickly request banking products.
In conclusion
More financial institutions, financial service providers or asset management companies are digitally verifying customer identities and creating accounts in real-time. With an increasing number of transactions on digital channels being heavily driven by smart devices, and equally in an era of global events such as the COVID-19 pandemic, the ability to securely and accurately prove identity is more important today than ever before.
Banks, financial institutions, and fintechs must also remember to balance security and user experience, which are closely linked to customer satisfaction. Digital banking – and the registration process in particular – will remain a hot topic in the coming years.
FAQ
Digital onboarding definition is the process of signing up new users remotely without the need for in-person interactions. It often includes identity verification, document submission, and account setup, all done through an app or website.
- Registration – The customer provides basic details like name, email, and phone number.
- Identity Verification — Involves uploading and verifying documents (such as an ID or passport), often using AI or biometric checks.
- Compliance Checks — Banks conduct security screenings, such as anti-money laundering (AML) and Know-Your-Customer (KYC) checks.
- Account Setup – The customer selects account preferences, sets up passwords, and links other financial accounts if needed.
- Activation & First Use – The account is approved, and the customer can start using banking services.
Some key risks include fraud, identity theft, and cybersecurity threats. Companies that don’t follow digital onboarding best practices could encounter issues, such as compliance issues or frustrate customers, causing them to abandon the process before completing it.
Virtual onboarding follows the same steps as digital onboarding but often includes live interaction. A representative may guide the customer through video calls or chat to assist with verification and setup.
Signing up for an online bank account is a common example. A customer downloads a banking app, submits their ID for verification, completes compliance checks, and sets up their account—all without visiting a branch.