Digital Onboarding: How much does it matter for banks?

Soniya Khanna

06 Jul, 2023

With the advancement of technology, customers’ expectations have grown like never before. They expect their banks to provide improved customer experience. Digital Onboarding is an area where banks can significantly improve and deliver a great customer experience.

What is Digital Onboarding?

Onboarding is the process of acquiring new customers. It seeks to ensure that the customers access all the services and products in a simple and fast manner.

The term Digital Onboarding is used in online marketing. When it comes to banking, the term denotes signing up with a bank to create a bank account and access its banking services digitally.

What is the significance of Digital Onboarding (DO) for banks?

Every customer expects their banks to provide a great user experience. Many customers leave their bank account due to the long onboarding process or complicated onboarding. The initial impression is very critical and stays with the user. In today’s world, digitalization is inevitable, and in case the customer onboarding is not digitalized, customers may not stick around with you for long.

How a bank onboard its new customers sets the tone for its long term ongoing banking relationship with them. It is significant because if the process is set right, it can increase Customer Lifetime Value and also turn customers into brand ambassadors.

Most banks realize the importance of operational efficiencies and cost savings of automated digital processes over in-branch paperwork. However, providing a DO experience that is satisfactory will add more value than simple cost savings.

All the efforts put in by the bank in the DO process will pay them back if the process is smooth and optimized. Customers will reward you for your effort in providing them a great user experience; therefore, it has intrinsic worth.

What are the key areas where banks must improve to provide an improved onboarding process?

A Digital Onboarding (DO) process is an essential process that requires more than just digitization. There are certain areas where banks face challenges with respect to DO.

Some of the challenges are mentioned below:

• Too much friction

People may give up the process if it is time-consuming or if it asks for too much information. Banks must consider minimizing on these aspects and keep things as simple as possible. In case where customers are required to fill lengthy, complicated, and unfriendly online forms, they may give up on the process.

• Security

With DO, customers are guaranteed convenience and excellent customer experience, but security is as essential as anything. The digital banking platform must have high-end encryption and compliance with KYC (Know Your Customer). The platforms can also consider using two-factor authentications to ensure authorized access. Due to identity and new account frauds, banks must be cautious and agile.

• Lack of personal touch

Without the personal touch, the process of onboarding for digital banks may seem detached. Lack of personalization of products and services has also caused customers to switch banks. Therefore the process must not feel like robotic, and a touch of personalization may improve the onboarding process significantly.

• Keeping up with the modern trends

A DO process or such an app for banking can’t be left unattended. It means that banks must look to keep up with the trends and understand what type of features can help their customers. Banks can ask for customer feedback and know the areas where they abandon it.

• Data management

It’s vital that banks may collect enough information to serve their customers better. They should not annoy the customers by bombarding them with too many questions. It is also essential that banks, during the onboarding process, inform the customers regarding the kind of data that they require and the reason for the same.

What are the benefits of Digital Onboarding (DO) in banks?

There are some crucial benefits with DO as it helps banks to tackle many challenges. The benefits are laid down below:

• With DO, many repetitive tasks such as data entry, verification, and credit checks can be automated. It will result in improving employee efficiency and increase their field time.
• Bank onboarding usually consumes a lot of time. It used to take weeks for the entire process, but now with DO, the same can be achieved in a matter of a few minutes.
• The DO process has increased the conversion rate and has also significantly improved the user experience.
• It helps in delivering unified customer views across the organization, improving the speed of service delivery, which has resulted in a faster lock-in and higher retention.
• The DO process meets the strictest regulation and reduces costs drastically, thereby boosting productivity and eliminating barriers and waiting times.
• The DO process is known for its real-time effectiveness. The security measures are taken in real-time, and the biometrics can also be analyzed. All of those in absolutely no time.

How can banks ensure a perfect Digital Onboarding process?

The secret to providing a perfect DO process include the following points:

• Make it an interactive sign up

Banks must look to make the DO process an interactive one rather than asking the customers to fill lengthy forms. They can take measures to personalize their experiences. These meaningful changes will transpire into building long term relationships with customers.

In case of customers leaving out in the middle of the process, their information must be saved, which will allow the customers to restart from where they left.

• Provide an Omnichannel experience

Banks can share information across channels like mobile, PC, laptop, etc. a seamless and fully integrated experience can help in reducing abandonment rates and ensure faster customer responses.

• Adopt a platform that integrates with various systems

e-KYC, and other regulatory compliance processes could be expensive as well as time-consuming for banks. Adopting a platform that integrates with various systems can allow banks to avoid high penalties for non-compliance.

• Implementation of robust rules management

Banks can improve the DO process by implementing robust rules management that will allow it to make real-time decisions and instant approval by way of automation.

• Provide a holistic customer experience

They should provide a holistic customer experience that will redefine the customer journey. Providing a seamless customer experience with well-connected channels and backend processes should be the priority. The applications must be processed in a timely manner.

• Real-time monitoring

A monitoring system must be in place that will measure certain crucial aspects such as the number of applications initiated, number of applications abandoned, etc.

What does the future hold for DO for banks?

Adopting digital user experience is fast becoming a necessity. Banks have realized this fact and especially traditional banks that have been threatened by digital banking. Digitization of the onboarding process could become the new normal as systems are modernizing and also to keep up with the fast-paced needs of the customers.

Conclusion

Read our article:Maintaining a balance between Digital Banking and Physical Banking amid Crisis