Digitisation and the surge in online banks have changed the traditional retail banking space and the expectations of its users. No one wants to stand in queues at their nearest bank, laden with paperwork, to open an account or register for new services. Instead, they want every interaction to be convenient, seamless, immediate and also expect the associated security and trust.
Keeping pace with changing demands
To keep up with competition from online banks and meet consumer demands, banks have had to digitise their operations from start to finish. Opening an account digitally is often the only chance a bank will get to make a favourable first impression. If the onboarding process takes too long or a user has to enter too much information, one in three will abandon the process, which is another potential customer lost.
Currently, traditional banks struggle to offer the same streamlined experience as their competitors – which of course results in high drop-out rates – and it’s easy to understand why. It can take up to 30+ clicks and 14 screens to digitally open an account at a traditional bank, compared to 6 clicks and 3 screens at a digital only bank.
On top of competing with user-friendly fintechs and challenger digital banks that optimise convenience, product design, and customer service, an industry shift towards open banking – driven by regulations such as PSD2 and SCA – is adding to the pressure on banks to digitise their operations successfully. In these market conditions, it is easier than ever for users to change banks, and for those banks lagging behind, to lose their market share.
So, what’s the answer? How can banks rethink their digital systems to reduce costs and time, while optimising customer retention?
Keeping pace with technology
There’s not enough time for banks to reinvent the wheel; to squander valuable time trying to create a ground-breaking approach to onboard customers. Instead, they can learn valuable lessons from the viable and proven solutions demonstrated by fintechs and digital banks.
No one solution will suit all financial institutions, so as part of this process, banks need to assess each stage of the remote onboarding process to identify and bridge gaps in their own practices, resources and technologies, while also identifying points of abandonment.
Often, the biggest challenge for banks is identity verification. Universal, rigorous and yet inconsistent compliance checks requiring a cornucopia of personal criteria make the challenge of providing a secure and convenient enrolment process immeasurably more complex. There are, however, solutions.
New technology has greatly improved ID verification options that speed up the process and provide better security. Centralised electronic (eID) schemes are being used very successfully in the Nordics and explored by other countries across the globe, but a lack of a common legal basis means that widespread adoption has a long way to go. Many banks are using video to do short ID verification calls to reduce fraudulent applications. Some are now asking for an ID scan plus a “selfie,” allowing the banks to compare the two pictures to make sure the applicant is real. Others are using biometrics.
From our experience, an effective solution is using third-party providers borne from the demand for a solution to the “identity problem.” Many take advantage of the huge progress made in mobile technology over the past decade to solve the complex problem of accurately identifying and authenticating users on remote banking channels, while simultaneously minimising the impact on consumers’ experiences. From procuring paperwork and filling out forms, to the security and ease of biometric fingerprint sensors and built-in cameras to electronically gather data during registration, the mobile phone can hold the key to optimising user experience for remote onboarding. It’s safe and secure, quick, and can be done by anyone with a mobile device, saving them valuable time.
The bottom line
Remote digital account and product onboarding is the cornerstone of a successful relationship between a bank and its customers. The failure to securely and seamlessly open a new customer account is a failure to establish trust and instil confidence, causing a consumer to question a provider’s ability to keep pace with their needs in an evolving digital world.
The bottom line then, is that customers continue to expect more, and if they can’t meet these growing and changing expectations, banks run the risk of becoming obsolete in an industry full of rapid digitisation and competition.