Blogs > Digital onboarding: the new battleground for banks in 2022
31 January –

Digital onboarding: the new battleground for banks in 2022

Proving a seamless and effective customer onboarding experience is critical for financial institutions

3 mins read

As we begin 2022, every bank has a digitisation policy in mind pushed to the top of the priorities list by the effects of the ongoing Covid-19 pandemic. Customers are migrating to digital platforms, and their onboarding journey is now a crucial battleground among market participants.

The traditional methods for customer onboarding, prioritised by most banks in the pre-pandemic world, revolved around the branch and face-to-face meetings. Even with processes that didn’t require the branch, customers had to speak to agents on the phone. Both also relied on the mailing and completing of physical documents. These documents would then pass through a lengthy backend process of approvals.

In a world changed by Covid-19, this method no longer looks outdated but completely untenable. Both sides of the interaction – customer and banker – are now separated by legislation, rising digital preferences, and the number of people working from home, which doubled in 2021 alone.

Digital onboarding is the new normal

Digital onboarding itself is not a new concept. Challenger banks, built from the ground up and without branch networks of their own, have made seamless customer onboarding journeys their bread and butter. “Traditional” lenders haven’t fallen behind either, as 80% added or expanded digital onboarding functionality in 2020.

But this doesn’t mean an enterprising bank can simply install a new onboarding system and call it a day, far from it. Customers are just as likely to fall off an onboarding process as they are when shopping on e-commerce sites or ordering takeaway food. 40% of millennials give up applying for a new account due to laborious or time-consuming onboarding requirements. According to Sapio Research, one in three applications at banks took longer than 20 minutes in 2019.

As more customers shift to an online-first world, providing a practical and seamless onboarding experience is set to become a crucial weapon in an institution’s arsenal for acquiring and retaining new users.

Deployment with security and scalability

At the same time, banks must always ensure compliance with local anti-money laundering (AML) rules and regulations. Providing both needn’t be a headache. Seamless customer experience and adequate digital security and identity management can often go hand-in-hand. The deployment of a reliable, automated, digital authentication system able to identify, extract and analyse security elements in a document can cut down onboarding times significantly.

Forward-thinking financial institutions need a multi-layered approach to verification during the onboarding process. What’s more, they need a minimal impact on their existing infrastructure. Cloud-based services can provide ample security mechanisms to comply with various regulatory requirements.

A cloud-based approach can result in near-instantaneous benefits and be scaled up over time as requirements evolve. Users can configure verification flows, assign loads, and prioritise times when there may be a rush of applications – after a prominent marketing campaign, for example.

Today’s customers expect their account to be fully digital, and that extends to how they open it. Banks, neobanks, and other financial institutions must provide a system that can not only deliver a customer-centric experience but ensure the tightest security under variable load. In a post-Covid world, the remote account opening is crucial to growth, and banks can’t miss out.

To learn more about the state of the industry in 2022 and where it might evolve post-Covid, take a look at Pismo’s latest report:

The brave new world of post-pandemic payments

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