This is a crucial time for digital transformation in banking. The dwindling of bank branch networks on the high street has only served to illustrate how the adoption of digital technologies and remote devices has accelerated in a trend accelerated by the COVID pandemic.
And yet there is still a pressing need for improved digital performance and in particular better onboarding processes with recent surveys revealing that two-thirds of consumers have abandoned financial service applications. The most common mistakes banks make in digital transformation include:
| Mistake | Impact | Result |
|---|---|---|
| Failure to Understand Customer Expectations | Customers expect smoother onboarding as digital identity schemes mature | Abandonment rates rise |
| Lack of Local Expertise | Unable to navigate diverse regulations and customer preferences across markets | Ineffective regional implementation |
| Ineffective Communication | Customers don't understand why extensive information is needed | Mistrust and abandonment; over a third of consumers abandon applications due to identity credential issues |
And the stakes are high with poor digital transformation seeing potential customers and market share slip away from banks as customers are more willing than ever to shop around for the best customer service.
Which is exactly why the most critical aspect to get right in banking digital transformation is that first interaction: the onboarding experience.
Banks must prioritise a smooth, user-friendly onboarding process that meets consumer expectations and complies with regulatory requirements. This includes effective communication, reducing abandonment rates, and ensuring that the process is efficient and straightforward for customers. Integration with existing electronic identification methods and offering customers choices for identification are also essential components of success. It's critical to address the service element of the customer once onboarding and it must be done entirely online without the need to visit a branch.
Indeed, the most significant mistake banks make when converting to digital onboarding is underestimating the importance of user experience. Lengthy, complex, or confusing onboarding processes can lead to high abandonment rates and customer frustration. Banks must ensure that the digital onboarding process is user-friendly, efficient, and effectively communicates the necessity of data collection. In recent surveys, the average time for an application process was perceived to be around 15 minutes, indicating room for improvement.
There are three key rules to get digital onboarding right:
| Rule | What it means | Key evidence |
|---|---|---|
| Meet Customer Expectations | Understand and meet the rising expectations of customers for a smooth and user-friendly onboarding experience | Over two-thirds of consumers have abandoned financial service applications in the last year |
| Effective Communication | Clearly explain the reasons for collecting customer information to build trust and reduce abandonment rates | Over a third of consumers have abandoned an application because they did not have the right identity credentials |
| Local Expertise | Collaborate with partners who possess local knowledge to navigate unique regulatory landscapes effectively | Critical to address the diversity of consumer attitudes and behaviours across markets |
Oscar Wilde famously said 'you never get a second chance to make a first impression' and never has this quote been more aptly applied than to modern banking.
It's time to get onboarding right and there's no second chances.
