The path of least resistance: why a digital onboarding experience is vital to a bank’s success

Editor's Note: This article was originally published by MEDICI on December 12th, 2018

Making payments and managing bank accounts is no longer a task associated with wallets and purses. For the modern consumer that demands everything at a push of the button, phones are increasingly replacing the wallet.

A recent survey found that 40% of Americans use their bank’s online portal more than any other channel to manage their accounts, while 25% use a mobile device to conduct their banking business. And why shouldn’t they? Consumers are using mobile apps to order groceries, book flights, and apply for jobs — no wonder expectations for instantaneous and seamless services have extended to their financial institution of choice.

Many banks have made strides to meet these now ubiquitous expectations for service on their mobile screens. It’s now a baseline expectation of customers that banking apps offer mobile check deposits, automated bill payment, and around-the-clock customer service. But no matter how many services and digital bells & whistles a bank might offer, these efforts won’t amount to much if they can’t get customers onboard in the first place.

Onboarding customers can be a bank’s very first interaction with customers, or a new opportunity to get existing customers to begin using new services. You never get a second chance to ace the first impression, and for banks, a bad experience can cause customers to abandon the financial institution — before they even complete the onboarding process in some cases. A report by front/back-office operations automation solutions supplier Kofax called 2017 Digital Banking Report: Account Opening and Onboarding Benchmarking Study’ found that in 2016, 27% of banks indicated that about one out of five customers abandoned the process of opening accounts while using the institution’s website. What’s perhaps more disconcerting about this report is the apparent lack of intel banks have about their abandonment rates. In the same survey, more than 50% of institutions either did not know or said they don’t track users who do not complete the digital onboarding process.

In order to ensure a seamless customer experience while onboarding customers, banks need to change the way they think. There isn’t a customer in the world that wakes up and adds “digitally onboard to a new bank” to their list of things-to-do.

Instead, like everything else in their life, they expect a seamless, quick sign-up process that gets them the services they desire. Digital onboarding for financial institutions needs to be a holistic strategy — one that is developed with the most careful considerations. After all, a customer’s access and control of his or her finances is a far more critical service than grocery delivery or hailing a ride across town.

For small businesses, the stakes are even higher — hiccups or outright failures during the onboarding process can impact their livelihood. The most common method for applying for a small-business credit card or line of credit is a desktop or laptop computer, yet 60% of small businesses rate their bank as average or needing improvement during the digital onboarding process. This lack of confidence in their bank’s service experience for critical needs, like access to capital, should be a major concern for banks.

With any digital-first approach, banks should aim to guide customers through the onboarding process across multiple digital channels with only the most relevant information on each page. Capital One, for example, has built a completely digital experience walking new bankers through the registration process with large icons and easy-to-digest content. Customers seamlessly move from one step to the next and don’t have to re-enter personally identifiable information (PII) they provided at the start of the application. Regardless of where they begin the onboarding process — be it on their phone, a desktop, or tablet — customers can finish applications at their own convenience and, most importantly, have a consistent experience regardless of what channel they choose.

Beyond creating a customer-centric experience, digital onboarding strategies can help a bank’s brand be seen as an innovator, and help create efficiencies. For example, automating activities like applicant background checks frees up time for employees to focus on higher-value tasks.

Additionally, digital methods of onboarding customers have another big advantage — iteration. Making tweaks to the process based on customer feedback is far easier on an app than the effort necessary to make similar changes in a branch.

The traditional ledger is becoming obsolete and banks are realizing the increasingly decentralized nature of how consumers keep track of their finances — Mint, Venmo, Prosper, Acorns, and a host of other platforms offer different pictures of their finances and where they allocate their funds.

As banks recognize how crucial it is to get their own onboarding experience right, it’s likely they are planning to overhaul their processes and systems. In doing so, they need to keep the following concepts in mind to create a truly seamless experience for their customers:

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1. Get to know customers and their expectations

The best onboarding experiences understand client goals and are empathetic to pain points found in manual processes. To build a great product, banks need to gather direct feedback from their customers at every step of the onboarding process.

Neglecting to do so risks allowing the frustrating (and perhaps unnecessary) parts of the onboarding process to go unchecked and unfixed, leading to customers abandoning the process and going to a competitor that promises a better experience. Estimates suggest one in three consumers is abandoning the process of opening a new account because it is too difficult or takes too long.

2. Always be iterating

One of the biggest mistakes a bank can make is treating updates to their digital onboarding processes and strategy as “one and done.” Smart financial institutions should be iterative and agile when developing new features and should make changes that create a better experience. Are customers jumping ship when onboarding because it is too difficult to confirm their identity? Is it too difficult to find contact information in case a customer wants to speak with a human during the process? These are easy fixes and don’t have to be implemented as part of a sweeping overhaul.\ \ Banks can make sure they stay ahead by constantly making improvements influenced by how customers behave during onboarding. But improvements should not just be limited to the onboarding experience itself — new and improved digital banking offers can attract more customers overall. New Dominion Bank, for example, saw a 45% increase in new accounts when they introduced a mobile deposit feature.

3. Make sure the customer is prepared

Whether it is via mobile, desktop or phone, the customer should always know what to expect from the process upfront. There’s no more sure path to losing trust than when a bank fails to meet expectations, and this can almost always be avoided by being proactive about the process.

It should be clear to customers that they can begin onboarding online and pick it up seamlessly at a local branch. The entire process should be so simple that it is nearly impossible for them to derail themselves.

Technology like AI-powered chatbots is making this even easier by stepping in and prompting the customer if they linger on a page for too long, or seem to be having trouble on any given step. This is essential, considering the fact that the data referenced earlier shows a sharp increase in abandonment the longer onboarding takes. On top of happier customers and better onboarding rates, there is a clear incentive for banks to implement the technology. According to an Oracle estimate, $174 billion could be saved across insurance, financial services, sales, and customer service with the use of chatbots.

Automation can even periodically reach out to customers who didn’t complete the process and find out if they need assistance. Even if they have chosen to bank elsewhere, this technology can help solicit feedback for improvements in the future.

As banks modernize their financial services, digitizing the onboarding process is imperative to creating the best customer experience possible. By putting bankers first and building tools that satisfy their on-demand expectations, banks are poised to jump ahead of their competitors and improve client retention.