You never get a second chance at making a first impression


As competition increase in a digital world, fast and frictionless onboarding becomes crucial for customer acquisition.

Under current regulatory schemes, on-boarding of banking customers is complex and painful. Banks must follow time consuming Know Your Customer (KYC) and Anti Money Laundering (AML) requirements in order to be compliant. Of the unbanked population of the world, 1,5 billion people are unbanked due to their inability to prove their identity through a valid birth certificate, passport, proof of residence through utility bill or some other means to fulfil traditional KYC-procedures.

But even in countries where digital identity schemes exist, new customers that have not yet obtained their electronic ID must present a physical proof of identity either in a bank branch or a post office. No matter how many times you have proven your identity in the past, a new institution means starting over. That means filling out new forms, finding and providing the necessary documents (often paper-based) and repeating a process you may have already gone through many times before.

It is the challenger banks that are leading the way for efficient customer onboarding. This is a crucial success factor for challenger attempting to enter the competitive banking space. These companies need to comply to all the regulations, but at the same time prove that they can deliver an unprecedented user experience. This became evident when I judged the European Fintech Awards earlier this year, and the nominees in the challenger bank category instigated an  on-stage battle for who had the fastest customer onboarding process after Monese claimed that they would complete the customer onboarding process with a photo of the passport and a selfie in just three minutes (you really need to be interested in fintech to enjoy this).

For incumbents on the other hand, the onboarding process has often been a neglect part of the customer lifecycle. Banks are spending vast amounts on marketing in order to attract the customer’s attention, while at the same time turning them away by placing obstacles at the final sprint. On-boarding is one of the last strongholds for antiquated paper processes for an industry hell-bent on being digital. This must be addressed if banks are going to remain competitive.

Norwegian fintech company, Signicat conducted a survey earlier this year that drew several conclusions supporting the disconnect between customer expectations and digital onboarding processes provided by the banks.  According to the survey, 40% of the customers have abandoned a bank application process, and more than 1 in 3 left the process due to the time it took to complete the application. What acts as an obvious call to action for incumbents was the fact that abandonment rate is increasing with the number of abandoned applications has increased from 26% on average to 45% in the last year.

Banking software provider Backbase promise that onboarding will be gone in 60 seconds with their new platform that was presented at FinovateFall this year. HSBC also recently unveiled their new onboarding process for business customers, that uses facial recognition to allow new customers to open an account with a selfie. Even though biometrics is showing great potential, providing and validating a unique digital identity is a complex issue. If not done right, trust is broken immediately and attrition is immediate and inevitable.

Many of today’s banking customers have experienced the transition from a branch-based model to digital banking, and got onboarded over the counter many years ago, and going digital was a gradual transition. For future customers, the first touchpoint they will experience with their bank will be the digital onboarding process. Customer expectations are shaped by internet companies like Facebook and Google, and the next generation of customers expect the same level of simplicity from their bank. If you are unable to provide this, they will simply do their banking somewhere else.

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