Great customer onboarding in financial services

The pandemic has accelerated changes in the way people access financial services, moving more people, more quickly into digital engagement with finance. As David Malpass, President of the World Bank Group, says, “The digital revolution has catalyzed increases in the access and use of financial services across the world, transforming ways in which people make and receive payments, borrow, and save”

These changes are accompanied by a generational shift in consumer expectations as more digital natives enter the market for financial services.  Gen Z and millennials are driving 75% of the digital boom in Buy Now, Pay Later products while an astonishing 94% of cryptocurrency customers are 18-40 years old.  These same consumers are more likely to see digital engagement as standard and expect the customer onboarding process for financial services to be simple and fast.

Customer expectations of onboarding experience  

The BAI reports that 75% of millennials surveyed would switch banks for a better mobile experience, while even non-native Gen X is opening more banking, saving and loan accounts online.  A recent Salesforce survey of customer expectations found that 80% of customers now consider the experience a company provides to be as important as its products and services.  While our own recent survey revealed 28% of consumers abandoned signing up for a new online account in the past 12 months because it took too long.

This presents a dilemma for regulated financial services that need to balance delivering a low-friction customer onboarding experience while simultaneously providing customer due diligence and preventing fraud.  However, a great approach to customer onboarding in financial service should place identity at the centre of the customer experience, signalling a brand’s reputation as a trusted financial service, and building longer-lasting customer relationships based on trust, rather than managing a regulatory requirement.   

Best practices for customer onboarding

Know your customer in financial services

Know your customer (KYC) checks are carried out by regulated businesses to verify customer identity and establish a legitimate relationship that poses no risk to the business. Checks are carried out at customer onboarding and then at key moments in the customer lifecycle. The types of financial services that must comply include, banking, credit, payments, money transfer and increasingly cryptocurrency but this varies between jurisdictions.

Compliance contributes to the fight against financial crime by preventing money laundering, avoiding doing business with sanctioned entities or politically exposed persons (PEPs), and early-stage detection and prevention of potential fraud.  It also avoids the many risks that come with a failure to comply, including, financial penalties, and brand and reputation damage.

Building trust and reputation with identity

In the digital market for financial services where trust has brand value, thinking of KYC checks and identity as a feature of your customer experience makes good business sense.  

The right balance of personal identifiers, identity documents, biometrics, behaviours and signals, at the right touchpoints, is an opportunity to establish reciprocal trust between the customer and financial service provider instilling a greater degree of consumer confidence from onboarding onwards.  For the customer themselves, well-designed KYC checks and great customer onboarding remove barriers and deliver access to financial services, while reducing access to those who wish to abuse the system. 

“In the digital market for financial services where trust has brand value, thinking of KYC checks and identity as a feature of your customer experience makes good business sense.” 

Matching the risk profile of financial services

The best KYC onboarding and identity verification solutions for financial services are tailored to business needs, configured to match the risk profile of the service and built to automatically accept, decline, or refer applications, speeding up the onboarding process for legitimate customers who represent low risk.

Great customer onboarding for some financial services may involve data-driven KYC checks against a trusted data source, for others, identity proofing involving government-issued identity documents and biometrics will be the  best match. For global financial services, any customer onboarding process needs to meet international regulatory requirements and adapt to changing standards and compliance needs without creating unnecessary complications or delays in customer onboarding. 

Risk assessment and multi-layered KYC solutions

Taking a risk-based approach to KYC is an important part of ensuring customer onboarding meets global compliance standards and protects financial services from ‘bad’ customer relationships.  A risk framework, including geography, financial, demographic and other key risk factors needs to be in place to drive onboarding decisions. Good KYC rarely involves binary Yes/No decisions but a level of risk assessment that informs decision-making.

Great customer onboarding solutions build in automated risk assessment, reflecting the fact that prospective customers give off low- or high-risk signals.  The best KYC solutions for financial services are multi-layered, combining risk management engines that search customer risk parameters for fraud signals with accurate trust scoring algorithms, and a variety of identity data verification and identity document proofing and authenticating technologies. These solutions take visitors on customer onboarding journeys that dynamically adjust at key decisioning points based on inputs to offer greater speed and lower friction or higher security as required.

Speed and convenience matter as much as security

Speed and convenience matter as much as security for successful financial services building customer onboarding processes that inspire trust.  Consumer tolerance for poor digital experience is low; we all choose whoever gives us what we want with the least hassle and the least delay. To avoid losing business, KYC customer onboarding checks must be done in a matter of minutes, without compromising compliance.

While we are all in a hurry, however, well-designed KYC checks or ‘good friction’ help to build trust and brand reputation as part of a great customer onboarding experience for financial services. Indeed, as consumer awareness of identity fraud grows, research shows that biometric identity-proofing technologies can be popular with prospective customers who receive a strong signal that their identity and money are being well protected.

“Well-designed KYC checks and great customer onboarding remove barriers and deliver access to financial services, while reducing access to those who wish to abuse the system.”

Consistent multi-platform onboarding experience

Customers mix and match devices to access digital services, so digital access that varies by device is not a good look or a great experience. A great customer onboarding experience needs to be consistent across desktop, tablet and mobile, with KYC solutions that work across all platforms, giving prospective customers multiple options for onboarding as well as the ability to begin sign-up on one platform, and continue seamlessly in another.  

First impressions count for digital customers of financial services. Consistent design and branding are the digital shop front for a great experience, so brands building trust and reputation do well to brand great customer onboarding their own and prefer ‘white label’ third-party KYC solutions that give them that control. Consistent performance across platforms will ensure customers feel secure submitting personal information and are satisfied with the service.

Great customer onboarding experiences should also be accessible to all, adjusting for visual impairments and other disabilities. Just as it would be wrong to exclude someone from a physical building because they are in a wheelchair, we shouldn’t exclude someone from a website or app because they have a visual or motor impairment now that we do our banking online. So, experiences should be easy-to-use and as inclusive as they can be.