A lot of banks recognize that customers want more digital access, not just to manage accounts, but also to shop for and buy financial products. Digital-only customers now approach half of all US retail banking customers, compared to one third before the pandemic. Legacy banks need to reconsider their current offerings and processes to keep pace with fintech banking services, which they can do through seamless digital onboarding.
But many banks see the digital onboarding process as an expense center, rather than an ROI enhancer. As a result they find many reasons to avoid setting an onboarding project in motion, unwittingly giving up the golden opportunities for improved ROI that digital account opening brings. Once you learn how to overcome those objections, and where the golden nuggets lie, you’ll be ready to map out your own onboarding venture. Which isn’t as hard as you might think.
I Object!
Digital onboarding is a leadership mission, not one that can be driven from below. Everyone in middle management naturally seeks to hold onto the status quo, and sees only risks and roadblocks. The first objection comes from the IT department: “We don’t have the talent, and we can’t afford to hire it.” IT is almost always suffering under the weight of project backlogs, and considers this objection obvious. Your answer is that you’ll be outsourcing most of the complexity of onboarding, and that once onboarding is complete, the backlog of IT projects will vanish, because you’ve selected an onboarding platform that meets all your near-term operational and marketing needs.
The next line of objections comes from Compliance. Traditionally compliance processes depend on a mountain of paperwork: policy documents, operational procedures, audit trails, and a massive security infrastructure. It’s true that legacy banking requires this “back-office” complexity. But quality onboarding platforms design compliance and security capabilities in at the start, with fully automated policy enforcement, procedural workflows, extensive audit controls, and multiple layers of security. Most risks are programmed out of processes, by dint of hard and fast algorithmic controls.
The last line of objections is the customer-facing marketing staff: “Our customers require a personal touch, along with guidance from our decades of financial expertise. They value that personal relationship, and won’t give it up.” But the facts don’t support that objection. Not only do customers not rely on local banker expertise, they would prefer to have their hands directly on the levers of financial power. A 2021 Forbes survey reports that 76% of Americans prefer banking via mobile app over branch visits or even phone calls. Online is expanding across sectors — a fact that fintech companies have exploited to capture low hanging profitable business from legacy banks.
The Gold
The entire objective of digital onboarding is to increase ROI. It does this by reducing customer and back-office friction in two ways:
By segmenting the onboarding process at the customer’s convenience, through regulatory “know your client” (KYC) identification checkpoints. As customers gradually increase their “KYC level,” new products become available to them automatically.
Reducing manual data input errors, through instant validation, which lets customers onboard within minutes.
The customer can’t buy anything until they’re digitally “on board”, making onboarding the first step to revenue generation. But just having customers doesn’t make them profitable. You also need the means to engage customers in various marketing activities.
Onboarding streamlines that engagement through in-app messaging and transaction alerts, SMS notifications, and incremental “bite sized” learning dialogs. The best platforms use Machine Learning (ML) to adapt to customer preferences, dispensing helpful product recommendations, and addressing common support questions.
On top of that, security automatically gets a boost through end-to-end encryption, two-factor authentication, AI-based fraud detection, and geo-location tracking. Typically users already have an authentication layer just to access their mobile device, and biometric authentication – in the form of fingerprint- or face-ID – gives them instant launching of your app. App-based, secure-channel 2FA quickly completes login, so that customers get highly secure access in a matter of seconds.
Once fully digitized, the gold starts accumulating, as labor costs plummet, and gross profits increase.
Getting Your
Gold
The start of a digital onboarding project begins with a defined goal: do you want to digitize a single product, specific customer groups, or your entire operation? This establishes the lower bound on time and cost of implementation. It may well be useful, for example, to onboard existing high-ROI customers, and then onboard all future new customers with the new platform. By saving lower-margin legacy customers for later transition, you reduce deployment complexity and workload.
Also decide if you’re willing to launch with “hands-off” onboarding, or if you need to insert a conditional review step into the process. You lose some responsiveness with conditional review, but when you’re new to digital onboarding, that cautionary step may be warranted.
With these decisions behind you, you’re ready to go platform shopping. Keep in mind that you don’t need to limit your choices to platforms that replicate your current business operations. Also ensure that a platform has growth capabilities beyond your initial deployment, especially for limited product or customer rollouts. Don’t be afraid to exploit vendor expertise. They want your business, and should be willing to give you decision-making assistance up front.
Banks don’t have to digital onboard. But they’ll be missing out on a lot of gold!Vice President of Worldwide Marketing for FICO, Nikhil Behl leads the company’s corporate branding and identity, customer engagement & advocacy, integrated marketing, global campaigns, pipeline development, channel & business development, web properties, digital marketing, public relations, analyst relations, government relations, social media, channel/ partner & developer marketing, corporate events & conferences, global field marketing & inside sales. Nikhil has over 15 years of e-commerce and technology experience and has worked at large established tech companies such as Hewlett Packard as well as numerous Silicon Valley startups.
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