Sign up for The Paypers newsletter Follow The Paypers on LinkedIn Follow The Paypers on Twitter Follow The Paypers on Facebook
The Paypers, paypers, Insight in payments, News, Reports, Events

The Battle to On-Board II: Do you know what European consumers want from their banks?

Thursday 13 September 2018 | 09:41 AM CET

Gunnar Nordseth, Signicat: The most frustrating aspect of applying for a financial product is “the amount of personal information required” (40%)

Two years after their first “Battle to On-Board” report, which focused on the entry of challenger banks into the market in the UK, Signicat has published the report “Battle to On-Board II: 2018”. The new report, as well as deepening the questions asked in the first report, broadens the scope, including more insights on how banks are on-boarding consumers, the opinions of consumers on these processes, and if the changes in the financial services market have had an effect on consumer sentiment. The report also widens their angle to include Germany, The Netherlands, and Sweden, and compares the different markets. We discuss this research with Gunnar Nordseth, the CEO of Signicat.

In what ways do the different countries in the survey differ from each other regarding consumer onboarding?

Each of the four countries we looked at had a different level of maturity when it came to digital identity. Sweden has almost universal usage of its existing BankID scheme, while the UK is way behind, with its little-adopted public sector-focused Gov.UK Verify scheme. Other differences are down to the amount of time schemes have been in use. In Sweden, BankID is used by consumers pretty much on a daily basis and is part of everyday life, whereas newer schemes like IDIN in the Netherlands are quickly gaining adoption by financial services customers.

The failure of public sector-led schemes in Germany and the UK to gain traction in the private sector is a pattern we have seen in many countries. Success is far more likely when the private and public sectors collaborate – then there is far more likely to be a success in driving adoption and frequency of use.

What are the reasons for consumer abandonment? Are these different for the different countries?

The most frustrating aspect of applying for a financial product was “the amount of personal information required” (40%), followed by the “length of time it took to fill in forms” (34%).

In the UK, an application taking too long is by far the biggest reason for abandonment, with 43% of respondents citing this as the reason. The UK, not coincidentally, also has the most time-consuming on-boarding process of the countries surveyed – five minutes on average, and 31% longer than an application in Sweden.

In Sweden, the reasons for abandonment were customers changing their minds (30%) or simply finding the language confusing (20%). The Swedes were not willing to persevere through an application and felt they had more choice, so withdrawing an application was more common. Less time spent meant less commitment, however high levels of engagement and usage of digital identity also meant far more applications overall. So digital identity can be seen as an enabler of choice, and a key driver for Open Banking success.

In Germany, the story is not so clear cut as in the UK. Only 43% of consumers would be more likely to complete an application if the process was entirely online. Germans are also least likely to abandon an application at 40%. With large numbers of people applying for new services (61%) or adopting three or more products (34%), this suggests that German consumers will persevere through an application, despite similar reasons for abandonment as other consumers outside the UK.

In the Netherlands, the country with the highest number of eIDs, consumers found the application process either easy or very easy, but there were still concerns regarding the amount of personal information being required and the length of time it took to complete the application process.

What did your survey reveal in terms of consumers that wanted to switch their current accounts, but were put off by the amount of paperwork?

Opinion is split on whether paperwork means people are less likely to switch bank accounts. Most interestingly, in the last two years, the UK has seen the number of people likely to be put off switching increasing from 20% to 46% - despite a government scheme that makes bank account switching possible in just five days. Banks may see this statistic and assume that their customer base is safe. In reality, the first bank to remove the barriers to better onboarding will benefit greatly, whether it’s an established bank or a challenger bank.

With Open Banking attempting to re-engineer how financial services work, we could see this stat change dramatically in a very short time. But this clear reluctance to switch is also a threat to the success of Open Banking – it needs to be addressed if it’s to be a success.

Do you think consumers are more likely to apply for a financial product if they could complete the entire process online?

Overall, across all four nations, 52% of respondents said that they would be more likely to complete an application if the entire process was online. The UK, the laggard when it comes to eID, is the keenest with over 60% of respondents more likely to complete online applications.

Where online on-boarding really shines, however, is in the impression it leaves on new consumers. Banks that are relying on their stature in the market to protect them from disruption are in for a rude awakening. Consumers are demanding digital on-boarding – and will reward those that offer this with their loyalty and custom.

A challenger bank that offers a friendly, simple, and fully-digital on-boarding process is likely to steal away the rest of that customer’s business, purely by virtue of that process being fully digital. These banks may struggle to offer the same suite of services as their bigger rivals, but they will be able to partner with other fintech providers to give customers what they want. A challenger bank making use of an eID scheme and a solid partner programme would be a formidable rival.

Put simply, consumers want digital on-boarding, and the banks that don’t meet this expectation will lose out.

In the growing sector of identity services, both governments and the private sector are issuing E-IDs. Which do consumers prefer? Does this differ per country?

Consumers overwhelmingly voted for banks to provide their eIDs. In the UK, 49% of respondents would prefer their bank to provide eID, rather than the government, which scores just 31%. This effect is extreme in Germany, with only 14% preferring government-issued ID.

The Netherlands bucks the trend, though this is probably thanks to the success of the government’s DigiD scheme. The Dutch prefer the government only because the government has shown that they can provide an effective scheme, while elsewhere people would prefer the banks to provide this service.

Alternatives such as retailers and social media platforms did not fare well. While the likes of Google, Facebook and Twitter have been making their login credentials available to use on other sites, this hasn’t been translated into trust in these platforms, with only 5% of respondents preferring social media for eID. Asked if social media could be trusted to speed up the on-boarding, 52% said no – even before the recent news headlines saying that it may reduce consumer trust in social media giants.

Consumers want eID, and they want banks to lead the effort in providing it.

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.