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Expert opinion

Go online or go home: how tech is transforming UX in the age of online banking

Thursday 30 August 2018 | 12:39 PM CET

Onfido’s CEO, Husayn Kassai has a clear message to incumbent banks that want to stay competitive against the rising tide of challengers: go online, or go home.

Let’s see some reasoning behind his statement. 59% of customers looking to open a bank account have walked away from online applications in the last 12 months.

That’s because many application processes aren’t really designed for the digital age. Many just replicate traditional processes, only pushing some parts of it online. Up to half of digital applicants can’t actually complete an application digitally: instead, they have to go into a branch to verify their identities, or submit additional documentation. Clearly, that’s a problem – so it’s no surprise that most simply drop their applications.

Digital customers need digital processes. If they don’t get them, they walk away.

It’s not a risk banks can afford to take. Digital customers are becoming more of a priority for banks of all sizes: over the past 10 years, the number of people using online banking has more than doubled, from 30% to 63%.

Research shows that these changes in consumer behaviour will have the biggest impact on retail banks between now and 2020. The impact of new technologies such as AI, machine learning and blockchain comes in a close second.

One fifth of global banks believe that AI will improve customer experience. And of those, 22% think AI’s greatest potential is to provide better personalization, which can improve the customer experience. So how can banks harness new technologies to solve their users’ pain points?

The incumbents: using bots for better customer service

  • Make customer interactions quick, easy - and scalable

While we’ve all been frustrated by clunky automated attendants, having human teams doesn’t always help. China Merchant Bank, one of the largest credit card companies in China, recently created an AI WeChat bot for customer conversations. By implementing AI, they’ve been able to handle up to 2 million queries per day, especially with common questions about card balances and payments. Achieving the same results with a manual team would have required a very large team and cost. Instead, customers find the AI bot helps them get the information they want quickly and conveniently. It’s a win-win.

  • Talk to customers where they already are

Wells Fargo has also driven change with an AI chatbot: this time, using Facebook Messenger. Currently in pilot, their virtual assistant helps with account information and password resets, with broader roll-out plans in the pipeline. Wells Fargo has used Facebook to communicate with customers for a while, for the simple reason that it’s where customers already spend their time. Since customers use Messenger frequently, the new service will be “a huge time-saving convenience”; according to the Head of Wells Fargo Innovation Group Steve Ellis: “AI technology allows us to take an experience that would have required our customers to navigate through several pages on our website, and turn it into a simple conversation in a chat environment.”

  • 24/7 support means 24/7 opportunities to build loyalty

The Bank of America’s ‘Erica’ chatbot was designed to maximize the opportunities of the growing demand for mobile banking. But ‘Erica’ also allows the Bank of America to build customer relationships in meaningful ways at the same time. The unique AI technology can anticipate the financial needs of each individual customer and send them personal smart recommendations to help them achieve their financial goals.

The challengers: creating a better experience from the outset

That's what the big banks are doing. But what about the challengers?

  • Begin at onboarding

Waiting until after customers are onboarded to improve their experience is no longer good enough. Challenger banks like Monzo and Revolut are rapidly closing the gap on incumbent financial institutions by prioritising the user experience from their very first interaction. Traditional banks need to work harder than ever before in order to win market share, and stay competitive in a market of increasingly fickle consumers. Delivering better UX at onboarding has an instant and measurable effect on customer acquisition. And if a digital application can be completed entirely online - with no trade-off on security - that 59% customer drop-off reduces significantly.

  • Automate identity verification

That’s where RegTech can help. Meeting regulatory requirements is a must for all financial businesses – but it’s frictional for customers, who have to take a physical identity document in-branch to complete the verification process. At Onfido, our AI-based identity verification tech helped one digital banking client increase onboarding by 39% in the first month. Another saw an 1,000% increase in year-on-year customer onboarding results: and far from compromising on security, their fraud rates decreased by 72% in 6 months. A third cut onboarding times from 48 hours to 45 seconds.

  • Get ready for growth

Clearly, AI has a huge role in the future of customer acquisition and retention. But it’s set to have an even more profound impact on the sector. Rather than reducing employment levels, most predictions indicate that AI will swell the ranks of banking employees as well as customers. According to Accenture, “Between 2018 and 2022, banks that invest in AI and human-machine collaboration at the same rate as top-performing businesses could boost their revenue by an average of 34% and their employment levels by 14%.”

So for traditional banks to stay competitive against the rising tide of challengers, the message is clear: go online, or go home.

About Husayn Kassai

Husayn Kassai is CEO and co-founder of Onfido. Husayn has been named as one of Forbes' “30 Under 30”, and as the World Economic Forum’s ‘Technology Pioneers’. Husayn sits on the Advisory Committee of the Oxford Seed Fund and the All Party Parliamentary Group on AI.

 

About Onfido

Onfido helps businesses digitally onboard new users by verifying their government IDs and comparing them with their facial biometrics using machine learning. Founded in 2012, Onfido is now a team of 210, has received USD 60 million in funding, and works with over 1,500 fintech, banking and sharing economy clients globally – helping them onboard more users while cutting costs and risk.

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