In the wake of the COVID-19 pandemic, evolved customer behaviours and expectations have triggered sweeping digital transformation for the financial services industry. Banks and financial institutions are creatively restructuring themselves around customer experience, and customer convenience across the entire product lifecycle, including the onboarding journey, is emerging as a crucial first step in the customer-bank relationship.
Amidst this, fintechs have taken the centre stage as key enablers of technology infrastructure to simplify the onboarding process and complement the digital banking agenda of financial institutions. This reliance on new-age processes has also enabled the industry to complete the entire end-to-end customer acquisition flow within 4-10 and in most cases via a smartphone, with almost no human interaction.
However, even though digital onboarding streamlines a collection of actions, including introducing new customers to the products, keeping customers informed of product developments, and leading them through all phases of membership, setup, and registration, what a lot of us fail to understand is that onboarding customers is a multi-stage process rather than a simple single-step one. Each phase of the customer onboarding process needs to be a personalised experience, designed and executed to engage and offer support to customers at all times.
Decoding digital onboarding
Onboarding is the process of registering customers and giving them access to the products the financial institution has to offer. It is the formal start of a mutually beneficial connection with a customer. As a result, the customer will be officially registered, submitting information that enables them to be identified and have access to the platform’s products and services.
This entire approach, which used to be an in-person process, has now been digitised and can be completed entirely online, using any device and from anywhere, thanks to specialised, comprehensive technological and security controls.
As they say, necessity is the mother of invention, digital onboarding as a process was brought into play to help to reduce ‘wait time’, which is always a painful experience for customers. On the other side, a completely digital process makes it easier for the financial institution to monitor and detect any obstacles or interruptions early on. A process that involves electronic-only documents, also allows a financial institution to take a uniform, all-digital approach to administration.
It should not be mistaken that the process would not just benefit new customers, it can be progressively rolled out to existing customers as well to provide a uniform, high-quality experience. A good example of this would be when existing customers wish to avail additional products or services that require further checks, like credit options, this would simplify the process and make it seamless.
The Growing Move: Key Drivers for Increased Adoption of Digital Onboarding
Digital identification has radically transformed the industry. Banks, NBFCs as well as other financial institutions have recognised customer demands, thus transforming their procedures to provide a seamless and transparent experience while onboarding them. This not only saves time, but money as well; with remote onboarding being possible with the same assurance and safety as the physical process. Moreover, the Covid-19 pandemic was a major catalyst that helped give a much-needed push to the onboarding process.
Additionally, the regulator has also recognised the merits of digital onboarding, as the RBI allowed banks to accept a Video-based Customer Identification Process (V-CIP), to help onboard customers remotely, in January 2020. This was followed by another forward-looking decision by the RBI last month, where it allowed NBFCs as well to apply for an e-KYC authentication license, to further promote digitisation.
The bigger question: Why are businesses inclining towards digital onboarding?
# Improved customer experience
A satisfied customer can become a brand ambassador for a financial institution; the importance of customer experience in reputation building and management cannot be overstated. For a country like ours, where financial inclusion is a major concern, with a very low digital maturity rate, it reaffirms that digitisation provides faster and safer access to financial services via simple procedures.
# Reduced fraudulent activity
Digital onboarding easily confirms a customer’s identification,
thus helping financial institutions enhance security and thereby decrease fraud. By utilising trustworthy technological solutions to engage with customers, financial institutions conduct liveness checks and more, using a digital onboarding process.
# Improved operational efficiency
Several time-consuming activities can be streamlined by using digital onboarding services; it eliminates the need for branches, saves on operating costs, and helps in reaching and penetrating a broader audience.
What the future holds
As a financial institution, it is crucial to embrace technological advancements to create a seamless customer experience. It’s time to examine business more closely, determine what needs to be altered, and focus on the best and most intuitive ways to engage with consumers, help financial inclusion and improve their experience at every level of the process.
(By Kumar Shekhar, VP, Member Operations, Tide (IN)