Why is digital onboarding imperative for banking today?

Digital onboarding is the process of allowing customers to open bank accounts, access and apply for new financial products, such as loans, mortgages, cards, and services online or on mobile - from start to finish. It is about providing a fully digitalized customer journey, from the first interaction to account activation.

In a traditional, offline model it can be laborious and time-consuming, requiring extensive documentation and verification across departments, running into days. Moreso, if it's small to mid-size, local financial institutions. As a result, banks incur huge costs. However, solutions like those from Bankingly can help banks, cooperatives, MFIs, lenders, and financial entities reduce onboarding costs and improve customer acquisition.

Besides, customer acquisition costs can add up to hundreds of dollars per customer, which includes marketing, pre-sales, lead gen, administrative effort, support, verification, retention, churn and attrition i.e. customers not using a product or leaving.

Juniper Research estimates that 26% of digital onboarding in banking will use AI systems by 2026, compared to just 8% in 2022.

Let's look at some ways which digital onboarding can make a huge difference.

1. Convenience and Speed

It substantially improves convenience and speed compared to traditional methods. For example, with digital onboarding, customers can open bank accounts in minutes, from their homes, anywhere, anytime, without visiting a branch. As a result, customers find it much more convenient and hassle-free.

2. Savings

It saves time and money on both ends. The banks save time on manual data entry, physical paperwork, and mailing, and customers do not have to fill up, sign, scan, mail documents, and wait for lengthy approval cycles. Banks can verify customers' identities through digital know-your-customer (KYC) checks. Bankingly's identity verification speeds up onboarding and reduces operational costs in real-time.

Customers can upload their identification, location or prove it with a selfie, live video, fingerprint, and others to complete the process. Integrating the digital platform with automated verification tools that use AI can reduce manual labor costs. They also save hours of time and money for banks and their customers by reducing the need for manual labor. This can lead to cost savings over time.

'It’s estimated offline or traditional retail client acquisition in a physical, siloed world costs an average of $280. Shifting to digital onboarding can reduce that $120 and, in subsequent years, for additional clients to $19; for corporate banking, it can reduce from $4,000 to $1,200.' - American Bankers Association.

3. Security, Compliance, and Legal

Every new customer requires due diligence, which can mean rigorous compliance and legal procedures that require time, resources, and money. Hyperion Consult estimates a single KYC check can cost between $13 to $130 and costs the average bank millions per year. In addition, regulators mandate banks and financial institutions to comply with legal and regulatory requirements, such as Know Your Customer (KYC), Anti-Money Laundering (AML), and Counter-Terrorism Financing (CTF). Digital onboarding enables banks to capture and store customer data securely and comply with data protection regulations.

Using feature subsets like biometric verification, legal ID processing, photo/OCR capture, proof of life, photo validation, anti-money laundering checks, international list validation, and custom list option in seconds by Bankingly.

4. Automation

Automated eKYC (Know Your Customer), AML (Anti-money laundering) checks, and other verification processes can save countless hours, increase efficiency, and reduce the costs associated with manual labor. In addition, integrating this technology with digital onboarding platforms can lead to significant savings, eliminating data entry errors and improving compliance.

5. Implement a self-service platform

Providing self-service options for customers is a great way to reduce costs and give them more control and flexibility. It enables customers to complete account openings, update personal information, and perform routine tasks without interacting with staff on mobile and computers, while on the go. When customers can handle these transactions themselves, it reduces the workload on employees.

6. Simplify the process

Simplification can help banks reduce time and costs. By decreasing the documentation, banks can streamline the process and reduce wait times. Additionally, it can improve the customer experience, and increase their satisfaction. Banks must assess their process and identify areas of high documentation, redundancies, and inefficiencies to streamline the process.

7. Leverage data analytics

They can use data analytics provided by digital onboarding to track the customer journey and identify areas of dropout rates to make changes and improve.

Digital onboarding is the future of banking. Banks can gain a competitive advantage by providing customers with convenient, fast, personalized experiences. With the changing landscape, it's vital to stay competitive, improve customer retention, and increase market share.

To ensure long-term success and emerge as market leaders, banks must invest in these strategies. If you haven't already embraced digital onboarding, it's time to take action. Contact Bankingly today and let us help you transform this vision into a reality.