Customer onboarding is the process a user goes through to start a relationship with your company, such as creating an account. It helps determine the relationship your customers will have with your product or service. This process plays a key role in the customer journey.
For banks and financial institutions, the account creation process is even more important. Financial institutions must follow Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations during customer sign up. This must be done to prevent financial crime and terrorist financing.
Steps must be taken to simplify this process though. Meeting regulation requirements should be equally as important as creating a frictionless experience for customers. This is extremely important because complicated onboarding processes can cause customer abandonment. This affects revenue and affects brand perception. A well thought out account creation process is critical for banks and financial institutions. In this article, we will share tips on ways to streamline the process while also maintaining regulatory compliance.
Set Clear Expectations for the Sign-Up Process
It is easier to start a journey when you know exactly what it takes to complete the process. Showing potential customers what your financial institution needs to onboard them is a simple and effective way to motivate them to complete the process. Make each small and simple to complete for the user. This will prevent them from getting overwhelmed with the sign-up process. Creating a clear line of communication from the start of your relationship can be the difference from creating brand loyalty or brand distrust.
Create Omnichannel Account Opening Processes
Today, consumers use a variety of devices throughout the day. They can switch from using a smartphone, tablet, browser or call center in real time. Because the use of multiple devices is so common, consumers expect businesses to seamlessly integrate their services to a variety of different platforms.
This is a huge problem for financial institutions. Only 23% of banks state that they have omnichannel account opening processes in place. Another 40% of banks state that they do not have KYC compliance solutions embedded within their digital applications. This means a huge percentage of financial institutions have no capacity to allow their customers to apply for products digitally. As we continue to move to a more digital world, it is critical that traditional banks adapt and create these online application channels for their potential customers. Otherwise, customers are likely to use financial services that support that make onboarding easy for them.
Use Biometric Technology during Customer Onboarding
Incorporating biometric technology during customer account creation is both simple and effective. It takes information about a user—a fingerprint, an iris scan, a facial scan, behavioral monitoring, etc.—and uses it to identify a person. This helps financial institutions know who they are doing business with prior to entering a relationship with them and stay compliant with KYC standards. This process is relatively easy, straightforward and faster than other forms of identity verification. Plus, 67% of customers already trust biometrics for identification purposes.
Perform Instant Identity Verification
For financial institutions, robust identification procedures must be put in place as a part of an effective KYC compliance solution. This helps them meet KYC and AML compliance standards. Nevertheless, the processes must be quick for customers to complete. Otherwise, they may take their business elsewhere.
Over 45% of banks report that it takes around two weeks to onboard new customers. Plus, another 44% state they do not know how long account sign up takes. This is a huge shortcoming for banks. Technology now exists that offers instant identity verification for banks. The technologies are automated, secure and global.
These technologies should be incorporated into the account sign up process to ensure that it is quick and easy. Identity verification tools can be used in both digital and non-digital environments. This will help banks stay relevant at a time where traditional financial institutions are facing competition from new fintech start-ups.
Introduce Device Detection Technology
Another way to meet KYC and AML standards is with device detection technology. This technology scans the device software being used by a customer to determine their risk for committing fraud. Device detection technology is a way to identify potential criminals without the use of personal information. It analyzes particular device characteristics to evaluate if a device pattern suggests fraud. This technology usually runs in the background and does not affect the customer experience. This is a high-value solution at a low cost for customer-not-present scenarios.
Customer onboarding can be a tricky process to master, especially for financial institutions. Measures must be taken to simplify the process while also maintaining its integrity. KYC and AML regulations must be complied with while also making it easy for the potential customer to complete. Financial institutions can effectively create digital sign-up processes by incorporating new technologies into the process, making it easy to verify users in a customer not present environment.