Digital account opening: A user-centric approach
Today, new customers, more and more, expect to open a new checking or savings account online using their laptop or mobile. More precisely, three-quarters of millennials and two-thirds of Gen Xers are favouring digital channels for opening deposit accounts.
Adapting to current customer preferences, financial institutions (FIs) invest in digital onboarding through online and mobile channels.
According to Forbes, digital account opening (DAO) is the most popular technology in banking for the third consecutive year. Close to 80% of all financial institutions add new DAO systems or enhance their existing ones in 2020.
But there are many FIs that cannot provide this service today.
- Some may have parts of the onboarding online but still request their customer to sign a final document at the branch. This step can be a significant obstacle for new customers and lead to increased abandonment.
- In other cases, where they may offer a fully online experience, the process for online onboarding is too complex or lengthy to be completed, which also leads to abandonment. A 2019 Lightco research showed that 40% of millennials gave up the onboarding process because of too laborious processes – from tedious authentication to cumbersome form-filling.
Needless to say, that the customer experience is critical for a successful KYC onboarding process.
So how can FIs meet customer expectations?
The challenge is to pair the best digital identity verification and fraud prevention mechanisms to streamline the onboarding process. Both are essential, and one should not prevail over the other.
Because 64% of primary checking account openings were done online in Q2 2020 ( and 36% in branch) in the United States alone. The pandemic has accelerated this emerging dynamic, and many branches are temporarily closed.
Besides, increased mobile usage urges businesses to have a mobile-first focus and develop fully mobile user-friendly onboarding experiences.
With a successful end-to-end digitalization digitalisation of their customer onboarding process, FIs can adapt to change, avoid a high abandonment rate, ensure a secure and convenient onboarding, and better serve their customers.
In other words, investing in improvements to the online account opening experience, at this point, is well-founded.
So how do we start?
6 areas of focus for efficient digital account opening
To provide a frictionless user experience while avoiding identity fraud, FIs need to focus on following these six key pillars to enable their digital services:
- Strong identity verification technologies and mechanisms
- Robust biometric verification
- Provide additional verification services on scoring, reputation, or fraud prevention
- Orchestrate business rules associated with the onboarding process (acceptance, rejection, step-up verifications, AML sanctions lists…)
- Provide frictionless digital user experience applications and services
- Ensure that state of the art security checks is performed in accordance with regulations.