Softjourn

How Digital Onboarding Can Help FIs Survive the Coronavirus

With low transaction volumes, financial institutions can align their organizations with what is necessary now and will continue to be in the future

May 18, 2020 by Softjourn

Even before the pandemic, mobile phones and the internet have been changing many day-to-day processes. Banking has not escaped this trend, though the industry has been slow to adapt. 

With the virus preventing the in-person visits often required by traditional onboarding procedures, now is the time to create a completely end-to-end digital onboarding process. Even the Financial Action Task Force released a statement encouraging the use of “responsible digital customer onboarding” to fight the COVID-19 pandemic. 

Traditional banks and credit unions are lagging in this area; 60% of Asian Pacific banks have no digital onboarding at all, while many European banks still require an in-person meeting. Financial institutions without digital processes have been caught off guard by events created by the novel coronavirus. 

Digital user experiences are changing consumer’s expectations. Research shows that consumers abandon up to 90% of new account applications prior to completion, doing so due to frustrations with paper applications or the volume of information required.1

However, with overall transaction volume low, financial institutions can align their organization and processes with what is necessary now and will continue to be in the future.

COVID-19’s Impact on Digital Onboarding

As with other industries, the pandemic will likely result in a faster adoption of new technologies like biometrics and blockchain. The addition of these technologies could potentially further improve what digital onboarding already offers in the way of security, compliance, and customer service.

One example is the Department of Economic Development in Dubai launching a KYC blockchain platform to enhance the speed and ease of access to crucial information financial institutions and need for accurate and more secure onboarding. The Dubai government wants to eliminate paper-based processes by 2021.

Biometrics are another technology that have already seen widespread acceptance in other industries, and now may see higher adoption rates within the banking industry. 

Two Canadian banks have announced the addition of biometric identification into their mobile onboarding processes. Customers can also scan their passports for quicker identification, which could be even more helpful during the pandemic.

Challenges in Realizing Digital Onboarding

Even with all the benefits digitization brings, it’s not enough to simply go digital. Updating any process should involve a deep assessment to discover pain points and resolve them, ultimately creating a better experience for customers and a streamlined process for employees.

Some challenges financial institutions have faced when incorporating digital onboarding include:

  • Unclear Goals: Consider needs on both ends of the system. What will your customers want, what do your employees need, and how are each resolved? Information systems should be seamless, communication easily achieved, and data sharing frictionless to create a fluid progression for the customer throughout their journey.
  • Security and Regulation: Ensure your platform has high-end encryption and compliance with KYC and AML. Using two-factor authentication ensures authorized access. Another way to add additional security includes video or voice authentication technology to verify a client’s ID.
  • Data Management: It’s tricky to balance not asking for too much information, but still gathering enough to remain compliant. Be transparent with customers; explain why you’re asking and how the information will be used. Any data collected should also integrate with backend systems, which can be difficult for legacy systems. APIs are one solution to this challenge, and can offset the cost of either buying or creating new software.
  • In-house Development: Creating a product from scratch with just in-house resources can be costly and time-consuming. To minimize the expense of creating an application and the personnel needed to do so, financial institutions often choose to outsource onboarding development to companies who specialize in fintech products and solutions. 

Softjourn’s POC for digital onboarding helps find the right fit for each client.

Conclusion

Adopting digital onboarding is important for our current environment, and potentially for the future. 

For banks, credit unions, and other financial institutions to compete with online-only financial providers, evolution is necessary. 

Digitizing the onboarding system is one way to modernize and meet the fast-paced needs of an increasingly digital world.

 

1Marous, J., & Digital Banking Report. (2018, April 14). 7 Steps to Improve Customer Onboarding.

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