ABSTRACT

The ways that customers shop for banks and financial services providers have changed. So, therefore, have the methods and strategies for customer acquisition in banking. Client onboarding is the process of financial institutions for acquiring new customers.

What does it take for a bank to acquire and retain new customers What can bankers do to influence customers'' decision-making process How can banks ensure they don’t run out of business? 

A 2017 "ReviewTrackers" study shed light on customers'' online search trends including aspects like what are they searching When do they buy How do they search and What they care about The ReviewTrackers Local Search Report study concluded that 53 percent of users typically visit a business within 48 hours of search. 

If banks and financial institutions build a quality social media presence, they can achieve greater visibility in the eyes of those searching for new financial service providers. A strong social media presence can boost banks or financial institutions new customer acquisition strategy by simplifying the process for potential customers and making it easier for existing customers to refer their family and friends. All the digitalization efforts invested in can only pay you back if the onboarding process is smooth and optimized.

 

 

INTRODUCTION

What is client onboarding in the banking sector?

Client onboarding is the process a bank undertakes when bringing a new business customer onboard. Onboarding new clients involves gathering vital information of the customer and conducting identity checks to comply with KYC regulations.

Only when the bank has all the necessary documentation on the client can the customer open an account or begin a business relationship with the bank.

The key challenge of client onboarding for banking is providing a good customer experience whilst meeting compliance requirements and operating efficiently.

What is the client onboarding process?

Traditionally, the client onboarding process for banking involves multiple forms, paper files, manual compliance checks and in-person identification checks.

However, this process has long been considered archaic, time-consuming and a poor user experience. Meeting compliance and legal regulation is often the most time-consuming stage due to the vast number of documents and volume of data that needs to be collected and analyzed.

In recent years, many banks have introduced new technology to significantly modernize and optimized their client onboarding process, creating greater efficiencies and a superior customer experience.

What are the benefits of improving customer onboarding for banking?

Digitizing customer onboarding processes enables banks to future proof their operations and remain competitive in a crowded market.

Adopting a transparent and customer-centric client onboarding process provides an enhanced user experience which helps to boost customer satisfaction and ensure that customers do not switch to another bank.

Streamlining KYC onboarding improves efficiency and helps to speed up the process, which implies banks can successfully onboard more customers in a shorter span of time.

Updating customer onboarding processes reduces costs by digitizing slow paper-based processes.

 

Background

Why are banks still unable to open accounts digitally? Research from Javelin Research shows that only 8% of successful account applications were completed start to finish on a mobile device. 

According to Jim Marous, publisher of the Digital Banking Report “The abandonment rate for online account opening is 19%. Abandonment rates increase significantly as the time required to complete an application increases. In 2017, research revealed that one in five financial institutions have an online account opening process that exceeds ten minutes.”

The importance of digital onboarding for banks.

Every third customer abandons their account due to the onboarding process being too long or too complicated. It’s the initial impression that stays with the user, and your bank has to stick the landing. In the modern world, digitalization is inevitable. And if customer onboarding is not digitized, they won’t be around long enough to see what you did further along in your pipeline.

The most current and the biggest challenge for traditional financial institutions are the more agile, digital-native alternative lenders and online-only banks. Without a legacy solution, they can put together and roll out sophisticated systems that serve customers better and are cheaper to manage.

Five years ago, it was mostly the alternative lenders that offered efficient digital onboarding. Now, traditional banks deploy automated onboarding solutions every day. So we could go on and list dozens of benefits of an efficient digital onboarding for the business but in the end, what counts are these two factors:

• Competitive edge in the marketplace
• And as a result, happier clients
• Better profitability

With Competition as fierce as today’s, meeting and exceeding user expectations is vital.

If you can provide your customers with a simple, frictionless experience while reducing operational costs and improving the bottom line. All the digitalization efforts invested in can only pay you back if the onboarding process is smooth and optimized. Only then will the users see the great job you did by automating lending or banking operations (such as turn-key lending).

 

MANUSCRIPT

How can financial institutions improve the client onboarding process?

1. Replace slow manual paper-based processes: Adopt automated and integrated systems to speed up data collection and access relevant documents with ease. Improve efficiency with a single view of a counterparty across multiple teams.
2. Deploy specialist teams: Assign new customers to specialist teams, creating one point of contact for efficiency and transparency. Specialist teams will ensure the onboarding process remains focused and doesn’t encounter timely delays.
3. Identifying the bottlenecks and learn where the stumbling block is in your client onboarding process and optimize: Review your current customer onboarding process to assess where the main weaknesses are and learn at what stage most customers drop out of the onboarding process.
4. Give customers visibility of the process so they can track their progress: It is imperative that customers are not kept in the dark during the client onboarding for banking. Provide frequent updates during the customer onboarding process to keep clients engaged and ensure the corporate business is not lost.

The ways to build a streamlined onboarding process for financial institutions:

1. Research user behavior to reach them when they need a service.
2. Identify the biggest churn drivers that increase the cost of business. Work towards satisfying your customers better through intelligent automation.
3. Reduce friction every step of the way (e.g., collect user data by letting them take a picture of the driver’s license instead of forcing manual data entry).
4. Optimize conversion funnel to forward users from different platforms into a landing page with a personalized offer.
5. Having warned the users, collect all the data you can about their interactions with your brand for ongoing analysis and further automation.

Clients demand compliance and with the latest industry standards in exchange for the privilege of doing business with them. Having taken care of these enables continuous analysis and improvement of the customer onboarding process. And it doesn’t end when version 1.0 of a new onboarding workflow is created. Due to the fast pace at which technology moves, users must always get used to the new features and updates.

How to create a winning digital onboarding for a financial institution?

So we’ve established that digitalizing onboarding is unavoidable. The only question is if you’re going to play catch-up or will be among the pioneers who get to claim a large part of the market. And to get the most out of the onboarding process, the following things are in order:

• Keep iterating. Your onboarding process isn’t something you can set up and let be. If you’re operating on an outdated and clumsy legacy banking system, your first iteration won’t be perfect. Simply because you don’t know what will work before you test it. But to improve, you need the first iteration to have decent analytics tools implemented. An analytics tool will help you see the steps that challenge your customers, and from there, you’ll need to work out ways of fixing those issues. It may sound daunting, but moving even a fraction a percent, then by a fraction of a percent again, you will see the growth of the conversion rate and reduction of churn.
• The need to have an SSL certificate on your website is non-negotiable. But the security repercussions don’t end there. It’s highly recommended to have a security audit carried out every once in awhile, and if any issues are located, they should be addressed at once. There are few things more damaging to your brand image and the trust of the new users than a personal data leak. A personal data leak is especially serious at any financial institution because of the sensitive information collected.
• To make sure your customers don’t feel like they’re dealing with yet another soulless corporation, you got to take measures to personalize their experience. If you’re just starting your journey of onboarding process optimization, you may want to begin with the little things like changing the copy on system messages to more human-like. So not “The user data is being processed,” but “Thanks for waiting! We’re checking your info, it won’t be long!” These small touches go a long way when building long-lasting, meaningful relationships with customers.
• While you take care of the user experience and CTRs, you got to keep an eye on regulatory compliance. Depending on your jurisdiction, authorities may have different requirements for the business. So it may be a good idea to take care of a new or updated compliance blueprint to build your onboarding strategy based on the AML and KYC laws your government has.
• No amount of bells and whistles will convert your customers if the system your company relies on is error-ridden, not integrated, and slow. That’s why it’s extremely important to approach the selection of the automation solution with extreme attention. You want an end-to-end automation platform that addresses all the needs of a single place. An end-to-end platform helps ensure effortless communication and data transfers between departments as well as reduces risk and improves the speed of your operation.
• Digitizing onboarding using just in-house resources isn’t sustainable. It will need constant improvements, and that leads to added overhead in the form of salaries of additional managers, coders, analytics, and designers. 

Conclusion

It should be a part of a more extensive thought-through system that automates customers’ every interaction with your company. Nonetheless, onboarding is a great spot to start the digitalization process. Because if you do it right and promote your new system to the right crowd, your business can see the following benefits almost immediately:

• Higher conversion rate
• Faster credit decisions
• More accurate credit decisions
• Improved security of the system
• Data accessible to the front and backend users anytime from anywhere
• Advanced analytics creates upsell and cross-sell opportunities

 

Operational benefits financial institutions stand to gain from automated onboarding.

Most businesses already use online banking to work with financial products. No one’s going to the bank’s branch unless there’s an emergency. Yet 60% of businesses admit that the onboarding process of their bank needs to be better. The onboarding process of a bank is a large target audience that sits there and waits for the right bank to come along and save them.

REFERENCES

ReviewTrackers Survey, 2017, 1, https://www.reviewtrackers.com/reports/local-search/Links to an external site. , 2017, 20/01/2020

Ron Shevlin, Observations from the Fintech Snark Tank, Online, Forbes, Oct 7, 2019, https://www.forbes.com/sites/ronshevlin/2019/10/07/why-cant-banks-get-digital-account-opening-right/#484979733bfdLinks to an external site., 20/01/2020

Javelin Research, Digital Account Opening Still Has A Long Road to Reality, San Francisco, CA, Javelin, February 23, 2017, https://www.javelinstrategy.com/press-release/digital-account-opening-still-has-long-road-realityLinks to an external site., 21/01/2020

Jim Marous, DIGITAL BANKING CUSTOMER ENGAGEMENT, Harland Clarke, July 2019,  Oct 7, 2019, https://www.digitalbankingreport.com/trends/digital-banking-customer-engagement/Links to an external site., 21/01/2020