2020 has been one hell of a year from the pandemic to technological advancements, to an economic standpoint towards an influx of AI in every aspect of the industry, it has been nothing short of an eventful year. Owing to the havoc caused by the Coronavirus today, new era dawn’s on the digital world, having an immense impact on consumer behaviors. Now, a customer does not choose a brand by just watching a TVC. They research and look for reviews while choosing a business. Banking customers, in particular, are more careful these days – they choose a bank that provides digital services. They do not want to visit an office, thus internet banking has become a suitable option. Digital onboarding of customers is one thing that makes internet banking stand tall. Onboarding refers to the initial process where a customer interacts with the business. Initially, the manual verifications were a tedious process that discouraged masses from having a traceable monetary collection, which further led to tax evasion and other economic perils. Therefore, no company wants to ruin the customer experience by providing traditional, tedious procedures.
Digital Customer Onboarding
As explained in the predicament mentioned above, a need for a seamless solution cannot be ignored especially in these trying times. For the sake of a seamless customer experience, digital onboarding is an online process through which companies acquire new customers’ information and in return provide them with defined access to their products or services. A simple example includes the opening of bank accounts through a mobile app or website. Digital platforms have streamlined the onboarding process. Today, businesses can attract potential customers or new employees with the least amount of face-to-face interaction.
A tedious or irritating onboarding process results in poor customer satisfaction, and most users abandon the process in the middle. Businesses have realized the significance of digital onboarding. In the financial sector, the onboarding process includes mandatory KYC (Know Your Customer) checks, which are completely automated and require zero manual intrusion.
Another aspect of onboarding is the fact that it is a whole lot easier and convenient for organizations to perform an enhanced KYC. The latest KYC/AML directives are not only stringent but also nontolerant over background checks. The KYC process, which was done manually in the past, is performed by artificially intelligent software in real-time. Customers are required to upload images of their ID documents, and the solution extracts the required details using Optical Character Recognition technology. This procedure is simple and requires minimum user-side effort.
Evolution of Onboarding Process
In a traditional setup, customers have to visit a bank branch. The bank’s staff manually verifies their ID documents and other information. The process involves paperwork and usually takes more than one day to complete. Manual checks were easy to bypass, as fraudsters can verify themselves as legitimate customers by presenting counterfeit IDs. Since the manual process is carried out by humans, it became very difficult to differentiate between authentic and fake documents. Also with the advent of the pandemic performing a manual KYC check or verifications has become out of question, as human contact or close personal contact has been defined as one of the reasons for the spread of the virus.
Initially, the process was partially digitized where customers could file applications at home through e-form. But this too required moving to the office for verification.
Ultimately, the whole process went online with no requirement for one-on-one meetings. The trend is taking up pace now and the customers’ have also adapted to it. In an absolute orbid way the pandemic pushed the financial industry into a fully automated and digital paradigm thanks to these automated solutions, banks, insurance corporations, and brokerage firms are verifying their customers through digital means.
Challenges While Onboarding Customers Digitally
Some businesses opt for the digital onboarding processes but still experience customer dissatisfaction and abandonment. In this case, the problem is in their onboarding module, and below are the reasons behind this:
- Not appropriately identifying perfect customers while processing their applications. Businesses need to target appropriate market, non-relevant people don’t benefit them but take wastes the resources instead
- The process taking extra time having multiple pages, the requirement of manually typing data into the system, these complicated steps irritate the users
- Slow processing because the business is not using updated database systems and servers. Furthermore, the limited availability of the service without global coverage
- Requirement of physical signature
Overcoming the Challenges of Digital Onboarding
- Use AI-based solutions to enhance fraud detection
- AI-based solutions can detect fraud and unusual behaviors within some seconds
- Use OCR technology for document extraction, as it removes the need to manually type in data
- Use face verification to add an extra layer of security and to streamline identity verification during KYC checks
The conclusion is pretty clear for the entire predicament as it only reiterates what has been told above. Digital customer onboarding is not only the future but one also cannot ignore the fact that it is also one of the reasons to flatten the curve. Digital customer onboarding has also had a descriptive and visible impact on consumer behavior as it not only provides a sense of safety but also puts customers in charge of their decisions. The other aspect of this is the threat physical store owners feel. In the banking sector, digital customer services are not only delightful but also the need of the hour. There are however speculations when it comes to stores and shopping malls. As e-commerce is growing rapidly the space for physical stores is somewhat shrinking. There is genuine concern regarding the impact it would have on the employment sector. However even though to the eyes it might feel like a bad deal, the truth is for financial institutes and banks it is imperative to adopt digital customer onboarding not only due to the pandemic but also for the sake of safe and secure economic operations. The directives and regulations demand verifiable data of the customer that could be used to perform background checks that can only be done through the provision of digital customer onboarding coupled with KYC and OCR services.