We’re now in a market, post-Covid, where digital expectations have been pushed to new heights.
Digital customer acquisition strategies are more important than ever, but financial institutions (FIs) are still seeing too many application dropouts. The solution lies in streamlining onboarding – and that requires integration with third parties and backend systems, automation at crucial points in the process, and omni-channel synchronicity.
Consumers expect to be able to do everything online or on mobile. They want hassle-free, engaging and rewarding experiences on the path to realising their financial goals. In the last decade, they’ve been spoiled by big tech and service companies whose sophisticated, data-driven experiences are seamless, fast and secure.
The expectation is that banking services should offer that same level of user-friendly sophistication, which is often not the case, especially with smaller-scale FIs.
Streamlining the onboarding process today depends on five essential steps.
Different FIs offer different services and target different customer bases. So, in the first instance, the FI must understand their own customers’ needs and design onboarding around them.
To do that, the FI needs to put themselves in their customers’ shoes. Instead of looking at each step in the process in terms of how it works for the business, (i.e. how it improves the commercials) focus on how it will feel for the customer. This will vary according to age and life stage of customer segments.
This initial exercise should include analysing the major drop-off points in an application – are you asking too many questions, are they too confusing?
This is also a good time to analyse customer data and market research to identify what the key drivers are for customers to adopt digital channels, and shape strategy accordingly.
In Australia, bank branches have been closing en masse with 1600 branches shutting their doors between 2017 and 2022. That trend is mirrored in the UK where closures rocketed to 2,241 in the five years to 2023.
This comes as no surprise given 98.9% of customer interactions are now taking place via apps or online, and as the Australian Banking Association reports, cash is only used for 13% of payments.
In the UK, an estimated 93% respondents surveyed used some form of online banking in 2022. Additionally, 90% of transactions are now being made digitally.
No customer or prospect should need to leave an app or a website and talk to a staff member, as part of onboarding. It should be an easy, self-service process, with automation smoothing out trouble spots. It should feel guided and intuitive, with instant support when required, through live chat if necessary. And response times should be fast.
The experience also needs to be omnichannel, with online, mobile, and physical branches all able to access the same complete set of customer data. If someone is applying online and they’re an existing customer, the bank should have relevant information to hand so the customer doesn’t have to repeat themselves.
One of the biggest headaches for FIs trying to achieve streamlined, end-to-end journeys is integrating with their existing backend system. Often, there are multiple components of legacy software associated with different processes.
On top of that, FIs need to add capability through third-party solutions. That might include digital identification software such as facial recognition, which enables customers to do face-to-face authentication online. Tighter integration of identity onboarding and ongoing authentication can improve security, reduce risk and set the bank up for a more flexible authentication approach. In the end, it reduces friction and gains customer trust.
Digital signatures are another example of third-party integrations that improve the customer experience. Applicants can sign all their documents online instead of manually downloading, signing and scanning, before emailing or posting.
There’s also open banking integration to consider. Instead of the customer needing to gather statements from various financial providers, or pay slips from employers, open banking systems collect it automatically from their existing FIs and supply to the new bank. All the customer needs to do when onboarding is provide their bank details and their consent.
Overall, automation and integration are key to streamlining processes, from data collection and verification to decision making. They improve efficiencies, reduce manual work and expedite onboarding.
Seamless integration is not just about the software – it depends on business units across the organisation being aligned along the whole customer journey, viewing it as an end-to-end service.
Often team structures and KPIs are fragmented. You have one team responsible for acquiring new customers, so their goal is to get as many leads as possible, chasing email addresses and phone numbers. They’re not thinking about what happens once you get the lead.
The customer is then handed over to a different business unit and it becomes their job to lead the customer through the digital journey. And they have their own set of KPIs – securing completed applications, getting accounts opened, or loans approved.
Business units need to work together on how the channels and systems can be synchronised, so they’re not just focusing on their own set of objectives.
When an FI’s acquisition strategy is digital, they’re automatically receiving more customer data and insights, which they can use to upsell products and services. Data analytics help FIs understand customer behaviours and preferences and tailor product recommendations and offers.
There’s also more opportunity to personalise customer interactions throughout the digital acquisition journey. Delivering relevant and targeted marketing messages and content enhances engagement and conversion rates.
For example, if a bank can see their customer’s finances are in good shape, they may offer them a better rate for a personal loan or a mortgage. If a customer frequently makes international transactions, the bank can suggest a credit card with low foreign transaction fees.
Of course, data must be kept secure and used in accordance with privacy regulations. And with open banking, FIs need to be transparent. When they’re presenting options for the customer to share data, they must be sure the customer understands they have control over which data they share.
That whole process must be led by a data strategy which addresses the types of data that need to be collected and the purpose for each.
With digital acquisition solved, FIs can reach new markets outside of the traditional branch channel, including younger generations. They can increase their customer base and make existing customers happier and more loyal. They can reach people online who don’t live near a branch; they might even live overseas.
FIs can generate new revenue and save costs, through automation. Bank staff can spend more time dealing with more complex customer enquiries in their day-to-day work. As they’re dealing with those enquiries, they can use their third-party integrations to gather information, instead of having to manually input data received from the customer during the interaction.
And the accuracy benefits are huge. When staff are getting automatic feeds of information direct from third-party sources, they’re not manually inputting data, which avoids human error.
For a bank or other FI willing to put their focus and investment in end-to-end digital solutions, there is opportunity to be an early adopter and a leader in the space. It can be an important part of a bank’s brand strategy, and growth strategy, for customer acquisition and retention.