In the increasingly digital age, customers expect more and more from their banking institutions. When they have the option of taking time out of their day to sit at the bank and open an account or spending a few minutes online doing the same thing, it’s easy to guess which one they’ll choose. Client onboarding for financial institutions can be an area for significant improvement to the customer experience.
Creating a convenient and enjoyable digital onboarding process is vital for keeping up with the changing financial landscape. It offers solid returns on investment and creates a more enjoyable experience for your clients. Plus, if implemented efficiently, it makes data collection easier or even fully automated.
Client Onboarding in Banking
Client onboarding encompasses several components of reaching your customers and can vary from business to business. It generally includes each step from marketing and showing the customer the value of your service to them becoming well-versed in using it.
A significant part involves collecting data, and with regulations like AML and KYC, this can become a lengthy process, if you don’t take proper precautions. Though onboarding can be meticulous and tedious, many financial institutions are learning how to optimize the process. They can make it faster and, with the help of digital onboarding, include automation to speed things along.
A smooth onboarding process can be the difference between someone choosing your institution and going to the competition. Plenty of consumers will drop your service the minute it becomes too cumbersome or inconvenient for them, which is why improving it can be so beneficial. In the UK, nearly 40 percent of customers abandon the onboarding process due to the time it takes or the level of information required.
If you take the time to improve your onboarding, you may find a significant reduction in customer churn rates and happier clients. Plus, it helps you gather the kind of information that can offer better Customer Lifecycle Management (CLM) with a holistic view of the client’s needs.
Moving to Digital Onboarding
So, what is digital onboarding? Digital customer onboarding offers clients a process that is fast, convenient, and simple. They don’t have to go to the bank in the first place, which is especially difficult if they work during bank hours, and they can input all of their information with ease.
It also shows the customer your commitment to convenience as a whole. A smooth onboarding experience reveals you likely have an easy-to-use mobile banking app with features that make their experience better. It can also help them get to know your business.
Digital customer onboarding is growing quickly and can greatly improve the customer experience — but there are a few pitfalls to look out for.
Challenges Banks Face in Onboarding and Customer Life Cycle Management
While a digital onboarding process is a significant improvement, it’s not enough just to digitize it. This process also needs to address the areas where onboarding approaches tend to struggle:
1. Too Much Friction
People will give up on the process if it is too time-consuming or asks for too much information. Minimizing these aspects is key to keeping things simple. Features that eliminate manual entry are helpful. For example, you can offer clients the option to scan a photo of their ID instead of manually entering the information. Enabling autofill fields and pulling any information you’ve already captured are other ways to reduce the time the client spends entering data.
2. Security and Regulation
While digital onboarding emphasizes convenience and customer experience, safety and security cannot lose priority. You’ll need to ensure your platform has high-end encryption and compliance with KYC and AML. Also, consider using two-factor authentication to ensure authorized access.
Additional ways to address security through onboarding include using video identification technology. These methods use live chats to verify a client’s ID.
Without the personal touch of interacting with someone, digital onboarding for banking can run the risk of seeming detached. Add text that matches the tone of your marketing. Instead of a generic message like “Processing payment,” consider one with a little more personality, such as, “We’re working on your payment now. Hang tight!” This kind of communication can help make your application feel less robotic and will help drive home the character of your institution.
Technology moves fast. You can’t launch a digital onboarding app for banking and expect it to work, untouched, for years. You’ll need to keep up with trends and understand what features can help you and your clients. You can further improve the onboarding process by analyzing how customers feel about it and identifying areas where they tend to abandon it. Fixing pain points and bottlenecks can go a long way.
5. In-House Development
Developing these products from scratch with only in-house resources can be expensive and time-consuming. To minimize the costs of creating the app and the staff it takes to do so, many financial institutions choose to outsource their onboarding development to companies who specialize in fintech products and solutions. Some, like our Hydrogen Atom API, are built in a modular fashion, so you can mix and match elements to find the right solution for your institution.
6. Data Management
You may need to walk a fine line between collecting so much data that the customer gets annoyed and not collecting enough to serve them or stay compliant. Be upfront with your clients about the kind of data you’ll be collecting and why you’re doing so. This kind of warning may help them be more patient with inputting data.
The information you collect should also integrate well with your backend systems. For some legacy companies, this can be a difficult task, but it is necessary for a solution that is accurate and easy for both clients and employees to use.
Future of Client Onboarding
Digital user experiences are inevitable. Adopting this approach is a necessity to keep pace with all the growing digital options that are out there now, like online-only banks. These digital-native businesses threaten traditional banks if they can’t adapt to the times. Digitizing the onboarding process is a way of modernizing your system and meeting the fast-paced needs of an increasingly digital world.
Digital client onboarding in financial institutions also helps you reach a global approach to CLM. The digital format helps you reach their needs, while the information you gather in the onboarding process helps you more accurately keep up with them in the future.
Use Hydrogen Atom for a Seamless Onboarding Process
When it comes to developing a digital customer onboarding process for banking and financial applications, using powerful APIs from Hydrogen is the way to go. Our Atom API is a sophisticated platform that enables companies to build a wide variety of fintech applications. From advanced authentication to goal tracking and portfolio management, you can offer your clients a wide array of solutions that give them the convenience and features they need for a great experience.
Within the Nucleus API is a host of onboarding data collection capabilities that link the captured data with whatever solution you can come up with. This API is compatible with many leading KYC vendors and offers seamless integration.