Results of new research shows that 40% of consumers abandon retail bank on-boarding process when applying for a new product or service.
The report The Battle to On-Board commissioned by Signicat, the first and largest identity assurance provider in the world, also found that more than 1 in 3 (39%) of abandonments were due to the length of time taken and just over a third (34%) were because too much personal information is required. The number of abandoned applications has increased from 26% on average to 45% in the last year.
When banks on-board new customers they must comply with Know Your Customer and Anti Money Laundering requirements which requires them to verify the identity of potential customers. This process is largely administrative and requires personal information to be shared, as well as several proofs of identity. While much of the process can be completed online, proofs of identity (passport, driving license, etc.) must be presented in person or sent through the post.
To understand the impact of this process on application abandonment, Signicat commissioned Red Bricks research in March 2016 to survey 2019 UK based respondents, all of whom had a UK bank account, on their experience and expectations of on-boarding.
On-boarding is frustrating and time consuming
The research found that, on average, respondents submitted 1.7 financial applications in the last 12 months. 84% of all applications were for bank accounts, credit card, insurance or savings accounts. The average time taken by all respondents was 18.45 minutes.
Respondents with positive experiences had a far quicker on-boarding journey than those with negative experiences. In fact the average time for the negative proportion was almost twice the overall average at 34.71 minutes.
Critically, the on-boarding process here only covers the time taken to complete the online portion of an application. It does not include time needed to submit physical documents at a branch or via the post, which could extend to several days.
Consumers do not want to be forced offline
When asked if a 100% online process, including identity verification for KYC, would encourage more applications, 55% of all respondents said they would be more likely to apply. Over half (52%) would buy additional services if paper-based identity was not needed.
Consumers want to move to digital and they want to be able to verify their identity online. The data shows that 97% of consumers have access to either a driving license, passport or utility bill that could form the basis of a digital identity, reducing the requirement to present personal information physically, accelerating the on-boarding process.
“Banking is digital but on-boarding is still analog. Old-fashioned paper processes equal unhappy consumers, high abandonment rates and lost business for financial institutions. With millions of marketing dollars spent on attracting new customers, the on-boarding process is turning them away at the final hurdle. As financial institutions look to increase revenue and market share, underpinned by a massive investment in digital, why is it so difficult for consumers to become customers?” said Gunnar Nordseth, CEO Signicat. “Consumers want to move to a 100% digital process and they want to be able to verify their identity online. Banks must harness existing consumer credentials to instantly on-board and establish a digital relationship for the outset.”