Increased competition from each other, from challengers and new FinTech players, is threatening their dominant position in the value chain. Many are undergoing digital transformation with the aim of both increasing customer engagement through convenience and simplicity, and reducing costs.
In the effort to digitize, an area consistently overlooked is the start of the customer journey: on-boarding. Banks must comply with Know Your Customer (KYC) and anti-money laundering (AML) requirements which mandates that personal information must be acquired, as well as several proofs of identity.
While much of the process can be completed online, throughout the majority of Europe these proofs of identity need to be originals presented at a branch or sent in the post, extending an already lengthy on-boarding process. On-boarding is one of the last strongholds for antiquated paper processes for an industry hell-bent on being digital, and needs to be addressed if banks are going to remain competitive let alone dominate.
From analog to digital
To understand where and why consumers are abandoning and what could be done to increase conversion, we surveyed 2,000 UK bank account holders and analyzed their responses in the report “The Battle to On-Board”.
The report found that a staggering 40% of consumers have abandoned the on-boarding process when applying for a banking product or service. 39% of abandonments were due to the length of time the process took, and over a third were due to having to supply too much personal information.
Unsurprisingly 55% of respondents said they would be more likely to apply for new products or services if they could complete the application online. And 52% would be more likely to apply if physical identity documents did not need to be presented.
Fundamentally, consumers want to move to purely digital on-boarding where they can verify their identity online without the hassle of presenting a physical form of ID to the bank.
A federated ID model
The major barrier to a 100% online application process is identity verification and the in-branch experience is hugely frustrating for customers with almost three out of every four customers unhappy with the service.
The solution, unsurprisingly, is in turning a physical process into a digital one.
While ID scanning can help, it makes more sense for customers to provide digital versions of their existing ID credentials – passport, driving license, utility bill, etc. - to banks in order to verify their identity and accelerate KYC. In the UK consumers could use their GOV.UK Verify ID for example. This would circumvent the need for consumers to present a physical proof of identity and reduce the amount of personal information required.
Such a process would address the 97% of consumers that have access to either a driving license, a passport or a utility bill, providing near total coverage.
Banks spend a massive amount of money attracting new customers, and encouraging existing customers to apply for additional services. Poor on-boarding is undermining the work they are doing to attract customers at the last hurdle, impacting the sales of new products and ultimately reducing revenues.
Put simply, if banks continue to make it difficult for consumers to apply for services, they will not.
About Gunnar Nordseth
Gunnar, the CEO of Signicat, is a veteran of the software industry and a founder of three software companies all based in Trondheim. Since 2007 he has been involved in establishing Signicat as a global leader of cloud-based services for electronic identity and electronic signature.
About Signicat
Based in Norway and founded in 2007, Signicat is the first and largest Identity Assurance Provider in the world, providing regulated markets with the technology to create mutual trust between organizations and their potential customers.
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