#Digital Banking

7 ways banks can improve the customer onboarding experience

May 31, 2024 - 6 min read
Faseeha Taj, Product Marketing Manager for Digital Banking at Sopra Banking Software
  • Customers who frequently use their banks’ mobile or web apps have a higher satisfaction rate.
  • Consumers are likely to abandon new bank account applications if they are too cumbersome, while speed, security, and conciseness are essential CX elements.
  • Banks also need to provide real-time customer support, adhere to cybersecurity regulations, and comply with perpetual KYC (Know Your Customer) rules.

Banks are increasingly recognizing the importance of exceptional customer experience (CX) amid global economic uncertainty, as consumers continue to grapple with the cost-of-living crisis and high interest rate environment.

According to research by McKinsey & Company, more than 65 % of bank customers are pessimistic about the economic outlook. This has led to a change in financial behaviors such as increased household spending, faster credit card debt repayments, and reduced savings for retirement and emergencies.

This has resulted in a surge in new bank account openings, more customers changing banks, and an increase in consumers considering new banking relationships – and are directly linked to customer satisfaction rates.

However, a recent report by Arkwright Consulting found that abandonment at different stages in the banking sales funnel ranges is on the rise.

Effective onboarding is crucial, as it is often the first touchpoint that shapes a customer’s initial impressions of a bank. Arkwright Consulting says this can potentially influence their long-term satisfaction and loyalty, as well as impact a bank’s future cross-selling opportunities and bottom line.

Here, we look at seven key factors banks should consider when enhancing their digital onboarding capabilities.

1. Overall CX

Only 10% of banks globally have become digital champions after making significant progress in offering seamless end-to-end account openings through mobile channels and website platforms, according to Deloitte’s Digital Banking Maturity report.

However, many lenders are playing catch-up in the race to enhance the digital onboarding experience, while 70% of customers consider an omnichannel experience crucial when selecting their primary bank and 37% have abandoned new bank account applications because they were too cumbersome.

Speed and conciseness are other crucial CX elements that can impact so-called mental fatigue and user drop-off, making it vital for banks to provide smoother user experiences.

According to Deloitte, an optimized flow for the end-to-end digital opening of a current account requires only 41 taps, compared with 70 to 144 taps in other banks it reviewed.

While clicks are a good way for banks to measure the simplicity of a customer’s experience, other metrics are just as important, The Financial Brand notes in a report on financial institutions that continue to make banking difficult.

These include a seamless multichannel experience, a mobile-first design, immediate customer support, the personalization stage of the process, which leverages data, machine learning, and AI to deliver a highly personalized experience. Also, clarity of communication and simplicity of disclosures.

Infographic: According to Deloitte, an optimized flow for the end-to-end digital opening of a current account requires only 41 taps, compared with 70 to 144 taps in other banks it reviewed.

2. Keeping the process simple

The Financial Brand’s Digital Banking Report highlights several challenges that hinder effective digital onboarding, with the most frequently cited challenge being the complexity of developing an onboarding process (58%).

According to the report, this is despite the availability of numerous solution providers that can offer support for new digital onboarding processes.

Meanwhile, Deloitte advises banks to keep automated onboarding as simple as possible. It says it is essential to have low documentation requirements, online uploading options, precise explanations during the onboarding process, detailed information in the FAQ section, and interactive assistance through a chatbot. There should also be a progress tracker to check the status of applications.

To reduce drop-off rates, the consulting firm recommends that banks adopt the following practices:

  • Allow users to pause the process and resume it later.
  • Keep the process as short as possible.
  • Ensure that users always know where there are within their process.
  • Allow users to accept terms and conditions after reading a summary of the most important points instead of opening the full T&C page.
  • Consider allowing users to skip steps that can be completed after creating an account.

3. Cybersecurity

While customers prioritize security when opening a new bank account, regulatory compliance already requires banks to implement robust cybersecurity features, including the protection of client information and data to prevent fraud.

However, bank customers are also willing to share information in return for convenient and secure experiences, which include using new tools and technologies such as biometrics for identity verification.

A secure, straightforward, and streamlined experience during account opening can also set traditional and digital banks apart from the competition. In its report, Deloitte recommends several best practices for improving security during the account opening process.

These include ensuring error-proof ID verification, informing users if the document has been correctly scanned, allowing users to retake pictures if errors occur, providing important security information, requiring phone number verification, enabling biometric authentication, guiding users to create strong passwords. They also include implementing additional security measures for users who repeatedly fail to enter the correct passcode.

4. Customer support

According to the Arkwright Consulting report quoted above, customer support is one area that has the highest potential for improvement in the banking sector.

Deloitte echoes this point, but adds that banks can significantly reduce abandonment rates by providing real-time support to customers during the account opening process.

This could include allowing customers to share their screens with a bank employee to describe their issues more effectively, or providing support via an AI chatbot throughout the onboarding stage.

5. Increase account opening balances

According to The Financial Brand’s Digital Banking Report, 70% of customers who open an account at a physical branch begin with a balance of $100 or more. In contrast, only 29% of digital onboarded customers have a similar opening balance.

The media also says this reflects customer experience gaps between the two methods – not because less valuable customers are opening digital accounts.

To address the issue, banks should enable users to top up their accounts from other internal or external accounts. Instant deposits can be achieved through open banking-enabled account aggregation, which allows money transfers from an external account.

Additionally, banks can prompt users through notifications and emails to make a deposit through their existing external banking apps.

Picture: Banks must enable users to top up their accounts from other internal or external accounts. © Getty Images
Banks must enable users to top up their accounts from other internal or external accounts. © Getty Images

6. Subscriptions to other products and services

Digital banking champions are leading the way in offering end-to-end opening processes for all products. While banks already offer remote processes for transactional or saving products, mortgage and car loan products are not as widely available, according to Deloitte.

Only 18% of digital champions offer end-to-end mortgage openings and 30% for car loans. These banks are setting the bar high for customer experience and functionality, allowing them to boost profits and making them a great example to learn from, Deloitte says.

7. Perpetual KYC

According to research by PwC, Know Your Customer (KYC) compliance costs are a significant operational expense for banks, comprising about 3% of their total cost base.

KYC banking compliance regulations vary from country to country, but one expectation remains constant: periodic customer relationship reviews. Failure to comply with this requirement can lead to hefty fines and damaged reputations for banks.

One solution is perpetual KYC (pKYC), which offers a streamlined, automated approval process for simple cases, such as updating a customer’s ID.

This approach reduces manual efforts and creates capacity for additional risk-reducing trigger-based reviews, potentially leading to the replacement of periodic reviews in certain customer segments, PwC says.

Additionally, banks must have a mechanism to automate the KYC updating process for better compliance, notifying customers to update their KYC documents on their digital banking app and allowing for easy uploading and review by back-office employees.

By adopting these streamlined processes, banks can reduce costs and improve the overall customer experience.

How Sopra Banking Software can help

Boost customer acquisition and drive deposit growth. Shift your focus to more significant areas, from manual onboarding to revenue generation, with DBS Customer Onboarding. Get in touch now with our experts.

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