First Impressions Count: Delight AND Know Your Customers
Balance the need for personalization and convenience while reducing fraud.
Why do consumers continue to abandon over 70% of online banking applications?
Many times, the answer is that financial institutions simply didn’t entice consumers early enough in the application process to encourage them to complete the onboarding journey.
“Financial institutions must ensure applications are complete and compliant, but for applicants, convenience – particularly the time to apply – is key,” says Rodrigo Silva, President, Americas at Temenos. “A modern onboarding experience must balance the three.”
Timing is Everything
Here are some onboarding questions financial institutions often ask:
• What’s your mobile phone number?
• What’s your Social Security Number?
• What’s your driver’s license number?
• What’s your adjusted gross income reported on your last three years of tax returns?
Rodrigo Silva, President, Americas, Temenos:
“A modern onboarding experience must balance completion, compliance and convenience.”
While all four questions may be pertinent when onboarding a new customer or member, when you ask these questions in the process is a key factor in whether the consumer completes the application.
Mobile phone number: Easy to answer. SSN: Also easy, though consumers may feel uneasy providing that information until they are confident. Driver’s license number: Probably requires grabbing their wallet. Tax returns: A considerably bigger ask.
Silva recommends enticing consumers and gaining buy in by asking for easier-to- provide information up-front, moving to more mid-level requests such as uploading a photo of their driver’s license. Applicants will opt out early if the application process is confronting. Better to save the more complex information gathering for about three- quarters into the onboarding process.
When it comes to lead capture, the key is to focus on those who are closest to the finish line. Even if the consumer does abandon the onboarding process, you’ve already
captured enough information early in the process to allow you to follow up with a phone call or email to ask if you can answer any questions or help them complete the process.
Friction Vs. Fraud
Consumer expectations for a fast, seamless, personalized experience are higher than ever. “Amazon has truly revolutionized the way consumers engage in commerce, in part by making it easy to sign up and start shopping,” says Silva.
However, since siloed legacy systems lack the integration and information exchange flexibility available in modern technology solutions, achieving seamlessness in a legacy environment requires a high degree of effort and can be expensive.
Advanced technologies like generative AI and data analytics can deliver the hyper personalization consumers crave. In fact, 90% of U.S. banking executives say that digital technologies like generative AI, cloud, and microservices will have the biggest impact on banks in the next five years.1
However, you can’t make onboarding so easy for consumers that it’s also easy for criminals. First party fraud—in which a person misrepresents their identity or gives false information– is up a staggering 92%.2
The answer, says Silva, is to integrate advanced technologies from fintechs and other third parties to combat fraud and security risks while reducing consumer friction as much as possible. These partnerships are seen by bankers as growth drivers, with 79% of banks and 80% of credit unions looking to partners to drive growth.3
“Instead of relying on traditional validation message methods such as personal identifiable information (PII) or knowledge-based authentication (KBA), leverage fintech providers that use mobile phone data and other non-traditional ways to authenticate users and balance fraud risk with a good consumer experience,” he recommends.
Plenty of fintech solutions on the market offer features including pre-fill services, know your customer (KYC), anti-money laundering (AML), fraud detection, photo ID and liveness processing, address validation, eSignatures and document authentication.
“These products are frictionless to the consumer and should add zero overhead to the onboarding journey but provide financial institutions with valuable data intelligence in the fight against fraud,” says Silva. “You can’t just bolt on an onboarding solution to an existing process,” he adds. “You need to think through the optimal process to get as many people through the process with the lowest risk as possible.”
10 Tips for Increasing Onboarding Success
- Ask for minimum information such as contact information first.
- Put the Apply Now button on the Home Page but also where the decision point may happen.
- Reiterate key product features to assure consumers they are in the right place.
- Follow up abandoned applications with a phone call or email.
- Pre-fill information whenever possible.
- Ask tough questions like tax return details later in the process.
- Design for mobile first and scale design for larger screens.
- Leverage third-party fintech solutions for identity verification to help de-risk.
- Analyze abandonment hotspots to continually improve conversions.
- Drive momentum with quick implementation and refinement.
Delivering an Omnichannel Consumer Experience
A consumer may start an application for a personal loan on their mobile device while waiting in the doctor’s office and then complete the application on their laptop when they get home. Or, they may have a question about the loan terms and call into the contact center. The experience between these different channels must be seamless.
Notes Silva, “When it comes to digital onboarding, you truly must be omnichannel.”
The Temenos digital onboarding solution natively supports cross channel activities and provides flexibility to design a frictionless consumer experience efficiently. This ensures a higher completion rate.
Purpose-built ‘Journey Analytics’ capture behavioral and completion analytics for all onboarding journeys, tracking the performance of consumer applications and identifying abandonment hotspots.
“Multiple analytic views allow you to understand consumer engagement with the experience, the effort it takes to apply, and where users are abandoning their application,” says Silva.
To continually improve, you need analytics. “You must evolve your digital onboarding strategy every single day – don’t just finish when the form is live. Consumers are very demanding. There are new regulatory demands. There are new competitors and new tools,” explains Silva. “You have to adjust to close that abandonment rate and the highest conversion possible.”
Getting Started
While many financial institutions start their digital onboarding transformation journey with deposits, others begin with lending. Either is correct, says Silva. “It really depends on each financial institution and its business strategy. But whichever functional area they chose to start with, a quick implementation is key to success.”
Temenos’ Springboard, a digital onboarding solution, provides that fast implementation. Silva describes Springboard as a bundle of ready-made accelerators designed to rapidly deliver an outstanding digital experience. Delivered in an extensible platform, they require minimal configuration and integration with external systems and easily scale.
“Springboard is a starting point, so financial institutions don’t have to create onboarding journeys from a blank slate,” says Silva. “We’ve done all the work, analyzed the market, and taken the best of breed. It provides a recipe for continuous optimization.”
Conclusion
How consumers interact with your application and onboarding process has a huge impact on whether they complete the journey to become customers or members, or whether they abandon the process. It’s where the rubber meets the road.
Of course, banks and credit unions must balance the need for speed and convenience with fraud detection guardrails – it’s a constant balancing act. A cloud-native digital banking platform that uses advanced technologies like generative AI and data analytics can create fast, frictionless consumer experiences. All the while ensuring that consumers really are who they say are, with advanced authentication and verification which is paramount for any financial institution.
1 https://www.temenos.com/engage/2023-nam-economist-report/
2 https://solutions.transunion.com/global-digital-fraud-trends/
3 https://www.crnrstone.com/hubfs/WGOIB%202024/2024-Whats-Going-On-In-Banking_Cornerstone-Advisors.pdf
Article published on American Banker website here.