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Why onboarding is the key to fintech success

The challenge faced by every financial provider, including fintechs, is how to onboard customers as smoothly as possible. But what does best practice look like? 

In my experience, signing up for a new account can be an exercise in friction and frustration, not least because identity verification has been poorly implemented as an afterthought. A digital identification and verification process is central to a smooth and simple onboarding process and imperative for a digital bank or a fintech.

Capturing the address accurately is a vital step in ensuring you can match your new customer to their location. Using predictive address capture makes it simple for them to find their address and ensures the address is in the correct format for matching against the local address file.

If your identity verification process includes digital identity document capture, then there’s no need to ask the customer for their personal details; these can be retrieved from the document itself and presented to the customer for confirmation. Digital document capture also removes the need for customers to send in copies of identity documents; a process that irritates consumers, delays verification and is a costly overhead for businesses.

Creating a layered approach to verification via the active checks of identity documents and biometric facial images, combined with the passive checks of data, increases the referenceable datapoints; thereby raising the level of assurance for the identity.

No customer wants to spend ages signing-up for a new account and no business wants to lose a new customer just before they’ve completed their account opening. By providing a progress indicator the customer can see how close they are to completion.

Additionally, checking that the personal data captured matches the data required for a successful identity check, in terms of both content and format, increases the likelihood of a positive match and therefore the completion of a successful identity check.

Whilst friction can be a barrier to successfully onboarding customers, ‘friendly’ friction can give customers confidence and create trust. Plus, friction in the form of a ‘selfie’ can stop a fraudster who doesn’t want his face captured on camera.

Transparency with customers is also key. Always make it clear to a prospective customer what you are doing with their data, why they are being asked for their personal information and ensure they provide consent before they enter their personal data. For example, when undertaking an identity check, explain that by providing consent for their identity to be checked they are helping to protect the business and its customers from financial crime.

Ultimately, optimising your customer onboarding journey can make all the difference between acquiring new customers ready to use their new account and losing frustrated customers to your competitors because they found your sign-up process too painful. Plus, a successful identity check is an essential step in anti-money laundering compliance and the fight against fraud. 

 

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Comments: (5)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 30 July, 2020, 13:30Be the first to give this comment the thumbs up 0 likes

I know this is the party line and I myself believed it a few years ago. But, despite supporting a significantly more frictionless onboarding journey than traditional banks, neobanks have not made any dent on traditional banks despite being around for 10+ years. And, when a pandemic strikes, $2T of money flows to megabanks. 

I'm really beginning to question if customers really bother so much about sending documents for verification during account opening. What's a few more days for a lifelong relationship. If they did, fintechs won't be facing the kind of threat to their survival as many of them seem to be these days.

Jonathan Jensen
Jonathan Jensen - GBG - London 30 July, 2020, 13:51Be the first to give this comment the thumbs up 0 likes

In the UK digital banks have signed significant numbers of customers and also forced traditional banks to improve their digital services. Unfortunately there is still a reluctance to switch banks, despite the considerably better digital experience offered by new digital banks. This is likely down to consumer inertia and lack of understanding of alternatives.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 August, 2020, 15:11Be the first to give this comment the thumbs up 0 likes

Reluctance to switch banks is down to customers not caring as much for the better digital experience (purportedly) offered by new digital banks as the new digital banks assumed. Which resonates well with what I suggested in my previous comment.

Jonathan Jensen
Jonathan Jensen - GBG - London 03 August, 2020, 15:23Be the first to give this comment the thumbs up 0 likes

It's interesting here in the UK that when consumers actually see how superior the digital bank experience is, they then realise how much they've been missing by using their old bank. I hear that time and again when speaking to people. I use apps from old and new and the difference is significant on every level.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 August, 2020, 16:16Be the first to give this comment the thumbs up 0 likes

It's not just UK. It's not just Digital Bank. This is a common marketing challenge for virtually all products in almost every geography in the world. The standard response of most product suppliers is "buy me, you'll understand what you've been missing". Sadly it doesn't work because the standard customer response is "tell me one good reason why I should change from my existing product without having to buy the new product".

Ergo the "10X better than incumbent" theory in product management. Certainly no Digital Bank app is 10X better than traditional bank app. Besides, there are many other advantages of staying with traditional bank (such as safety of money). Not surprisingly, neobanks have barely made a dent on traditional banks - and I am talking about UK only.

In fact, one of them recently reported that its continuing operations is at doubt. It nicely made Covid-19 the fall guy for fundamental flaws in its business model.

Jonathan Jensen

Jonathan Jensen

Director of Identity Verification

GBG

Member since

05 Jul 2019

Location

London

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This post is from a series of posts in the group:

Digital Identity Management

Discuss upcoming trends in digital proofing, authentication, fraud and digital identity management.


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