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Taking the friction out of Digital On-boarding

Almost every bank is trying to put together the digital onboarding transformation jigsaw in bits and pieces. This is no longer an item for the wish list, but a necessity. Many banks such as Barclays and DBS have made significant investments in their digital onboarding processes. Some banks are leading the curve, while others are yet to catch up.

While almost every bank provides digital application options, large numbers of retail customers are still more comfortable in opening new products at physical branches. Inefficient digital onboarding processes are creating friction for customers – and that encourages inertia and continued use of branches.

An article I recently came across also raises concerns as to why digital onboarding is yet to become the customer's preference.

“55% of respondents said they would be more likely to apply for new products or services if they could complete the entire application online” –

To overcome process friction, it is crucial that banks design the process keeping in mind the following two factors as fundamental expectations customers have from digital onboarding:

a)     applications should be less time consuming and

b)     the process should be less complex.

By failing to deliver better experiences, banks risk customers dropping out, reverting to the more expensive branch channel or moving to a competitor. On the contrary, banks can significantly increase digital onboarding if the process is streamlined involving a few simple steps

Leveraging modern digital technologies is crucial. Here are few examples:  

1) Unique Customer Identity (by using cookies, ad identifiers & 3rd party data) – used to create a single customer view by bringing together data of an individual across channels and devices throughout the total customer journey. Connecting different online & offline data sources whether it is CRM, marketing and ad platforms, or e-commerce software into a single customer profile allows banks better understand and target customers. 

2) Gamification – applying game principles and mechanics to engage and motivate customers to perform specified activities or change the behavior of a target group. For example, Emirates NBD (a bank with $122 billion in assets) created a feature where customers had to open a special fitness account with the bank’s mobile app, synchronize it to compatible fitness devices and achieve daily goals in number of steps. With 12,000 steps per day, customers could earn a 2% interest rate. This managed to bring $4.37Mn in savings. 

3) Artificial Intelligence (AI) can help provide seamless customer experience especially in the concluding steps by analyzing the inputs and proactively providing appropriate information and recommendations. It can help prevent dropouts by pre-emptively identifying the appropriate support channel when needed. AI can even provide predictive analytics to trigger early warning in targeting customers in need of activation help after fulfilment. 

4) Identity Document Validation Technologies (IDVT) for identity authentication – using smart devices like card readers, smartphones, webcams etc. It typically involves a four step process:

a) obtaining picture of the id proof document

b) obtaining a picture of the applicant

c) matching the applicant with their id document

d) ensuring  information on the document is authentic and not fraudulent 

5) Optical Character Recognition (OCR) and Natural Language Processing (NLP) integrated document-reading apps – helps reading printed and handwritten texts, symbols, barcodes, machine readable zone (MRZ) codes, signatures etc. from multiple sources  (like an ID-card, bankcard or driving license ) with a smart device (like mobile phone, digicam) and then capturing the data digitally. This well-established technology is continuously finding new uses and adding new features with recent innovations. 

6) Dynamic Knowledge Based Authentication (Dynamic KBA) – provides a high degree of assurance in identity proofing that new and otherwise unknown individuals are who they claim to be. Here "out-of-wallet" questions are compiled real time from public and private data sources (like a customer data agency) such as marketing data, social media, credit reports, transaction history etc. This typically helps in case of applicants with limited credit histories such as younger customers. 

7) Virtual / Augmented Reality (VR/AR) – a virtual bank or virtual banking officer with the ability to interact like a real branch. Employees can assist in account openings, loan application processes or investment advisory services presented through digitized visuals and simulations, personalized with AI to fit the customer’s specific needs. For example, an AR app from Australia’s Commonwealth Bank uses real estate data to enable potential homebuyers view detailed properties for sale profiles as they pass by them in a street. An added loan calculator can help connect the potential buyer immediately and help onboard him digitally.

The relevance, ease and simplicity of the initial experience drives application completion rate significantly and help banks build a digital relationship with new customers. To stay ahead in driving digital adoption and save customers from the need to visit physical branches, marrying the right technology with the right strategy is crucial.  

What do you think? 

the digital customer

Comments: (8)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 23 July, 2018, 15:57Be the first to give this comment the thumbs up 0 likes

Nice post. Do you know of any research around the persona of the customer who prefers to open a new bank account 100% digitally? More than demographics, I'm interested in usage pattern viz. (1) Is it their first ever bank account? (2) Does their paycheck go into that account? (3) How far is the nearest branch from their home / office?  

A Finextra member
A Finextra member 23 July, 2018, 19:07Be the first to give this comment the thumbs up 0 likes

Nice article, on of things i have seen is in some digital/mobile apps based on some basic information of the customer, lot of information gets prefilled, is some type of deep learning techniques involved here.  For example: given the name and some type of ID (based on the country), they are techniques available to pull other information related to CC and other loans. This helps with less of documents needed and move the process forward quickly.

Thank you for the post

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 24 July, 2018, 11:13Be the first to give this comment the thumbs up 0 likes

As long as a Bank even uses a 20 year old CBS, it's technically possible to get a Single Customer View and fetch and prefill details of all products from that bank owned by a given customer. If that's not happening today, the reasons are as much about technology as business. Due to customer preference, privacy, politics and other business reasons, customer info - and a lot of other info - are not shared across different SBUs of any large company, including a Bank. Deep Learning won't help.

A Finextra member
A Finextra member 24 July, 2018, 21:34Be the first to give this comment the thumbs up 0 likes

Thanks @Ketharaman for your comments, agree with the points you mentioned about privacy and others.

Souvik Das
Souvik Das - Genpact - Kolkata 25 July, 2018, 11:311 like 1 like

Thanks @Ketharaman for your thoughtful comments. There are quite a few neobanks in Europe and USA that have no branches. By necessity, all of their customers are opening accounts digitally end to end – Monzo in the UK is a good example of this. Using what is publically known about Monzo customers as an example, they are younger, often opening their first account after university. These customers do not go to bank branches any more. 20% of Monzo customers use their new account as a primary account. (This is Money, 2 July 2018) That percentage is growing.

Souvik Das
Souvik Das - Genpact - Kolkata 25 July, 2018, 11:37Be the first to give this comment the thumbs up 0 likes

Thanks @Ramdas for your comments and inputs, totally agree with you. I think we will see more examples of this approach as banks focus on smoothing out the journey even more for new customers. Lemonade in the US, has been a good example of this in the insurance market.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 25 July, 2018, 11:52Be the first to give this comment the thumbs up 0 likes

@Souvik Das: 

TY for your reply.

In a recent interview with SLATE, the exiting CEO of Simple, arguably the most successful neobank, noted, "There’s a lot more competition out there, but the reality is that most millennials, like most Americans, bank at the top four banks."

Now, according to you, an overwhelming majority (80%) of Monzo customers uses a traditional bank for its primary banking needs. 

Any idea why the performance of neobanks has been so underwhelming? Is it because 100% digital onboarding has been overrated OR because customers do want brick-and-mortar presence of an institution they trust their money with OR something else? 

A Finextra member
A Finextra member 26 July, 2018, 13:02Be the first to give this comment the thumbs up 0 likes

Thank you for this good article that focuses on the most important issues and principles. Safety is the most important thing. Therefore, looking at the example of the Polish bank BZ WBK (Santander Poland), which very quickly adapts the technological novelties of digital banking, it can be observed that novelties are introduced primarily for greater user comfort. You can read more about this here:

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