Picture Sarah, a young professional eager to open a new bank account after moving to a new city. Excited about starting fresh, she steps into her local branch, only to be met with long queues, heaps of paperwork, and a frustratingly slow process.
Despite her enthusiasm, the traditional onboarding experience leaves her feeling drained and disheartened. But then, she discovers a bank offering digital onboarding. From the comfort of her home, Sarah swiftly uploads her documents, completes identity verification through facial recognition, and sets up her account in minutes.
Her experience was transformed from a tiresome ordeal to a seamless and efficient process. This was made possible through digital banking and its advanced onboarding procedures. The advent of digital banking has simplified the overall onboarding journey for customers like Sarah.
Understanding digital onboarding in banks
Digital banking encompasses a wide range of online services that allow customers to manage their finances without stepping into a physical branch. These services include:
- Online account opening
- Digital wallets
- Mobile banking apps
- Remote customer support
The goal is to provide customers with a convenient, accessible, and secure banking experience that fits into their digital lifestyle.
Digital onboarding specifically refers to the process of bringing new customers into the bank’s ecosystem through digital channels. It leverages technologies such as;
- Biometric verification,
- Optical Character Recognition (OCR),
- Artificial Intelligence (AI), and
- Machine learning to streamline various steps.
Through these technologies, banks ensure error-free identity verification, document submission, compliance checks, and account setup, all performed quickly and securely online.
The customer onboarding process
Step 1: Initial interaction
Customers access the onboarding platform via the bank’s website or mobile app.
Step 2: Identity verification
Customers upload necessary documents (e.g., ID, proof of address). They use facial recognition or fingerprint scanning for biometric verification. Here, OCR APIs and biometric SDKs prove to be helpful for document scanning and identity verification.
Step 3: Data collection
Customers fill out digital forms with personal information. Furthermore, auto-fill capabilities help reduce the time and effort taken to enter data manually.
Step 4: Risk assessment and fraud detection
At this stage, credit checks, AML screening, and other compliance checks are performed. AI and machine learning algorithms are utilized for fraud detection.
Step 5: Account setup
Customers open the accounts through digital agreements and terms of service which are reviewed and signed upon selecting an account of their choosing. To make sure all the protocols are followed without visiting the office, E-signature solutions are used for secure digital signatures.
Step 6: Confirmation and account activation
Here, the completion of the digital onboarding process is confirmed and the account is activated. A digital welcome kit with account details and usage instructions is sent. Lastly, confirmation emails and secure account activation procedures are automated.
Step 7: Post-onboarding support
Ongoing support is offered through chatbots, live chat, and customer service hotlines. Feedback is gathered to improve the onboarding process.
Implementing digital onboarding in banking – best practices and possible challenges
While digital bank onboarding is crucial today, its implementation requires a thorough understanding of the best practices and possible challenges.
What kind of challenges stand in the way of digital onboarding? Let’s explore.
Best practices
To curb the above-listed challenges, banks and financial institutions (BFSIs) can adopt the following practices:
Create user-friendly interfaces
Use responsive design frameworks (e.g., React Native) to ensure a seamless experience across devices. Implement user experience (UX) best practices to guide users through the process smoothly.
Apply advanced identity verification
Integrate biometric SDKs (e.g., FaceTec, iProov) and ensure compliance with standards like FIDO2 for secure authentication.
Automate document processing
Utilize APIs for Optical Character Recognition (OCR) (e.g., Google Cloud Vision, ABBYY) to automate data extraction, reduce errors in data entry, and speed up the process.
Seamlessly integrate with core banking systems
Use middleware and API gateways (e.g., Mulesoft, Apigee) to enable seamless data flow and application integration with existing banking infrastructure.
Implement robust security measures
Implement Multi-Factor Authentication solutions (e.g., Authy, Duo) and ensure all data transmissions are encrypted using TLS/SSL protocols. Store sensitive information securely using encryption standards like AES-256.
Ensure compliance with regulatory standards
Integrate Know your Customer/Anti-Money Laundering (KYC/AML) compliance tools (e.g., Jumio, Trulioo) to automate compliance checks and maintain audit trails. Regularly update systems to comply with changing regulations.
Provide personalized customer experiences
Use data analytics platforms (e.g., Tableau, Power BI) to analyze customer data and create personalized onboarding journeys. Implement artificial intelligence and machine learning algorithms to predict customer needs and offer relevant services.
Offer real-time support and assistance
Integrate AI-powered chatbots (e.g., IBM Watson, Dialogflow) and live chat solutions (e.g., Zendesk, Intercom) to provide instant support and address customer queries in real time.
Work on a feedback mechanism
Use survey tools (e.g., SurveyMonkey, Typeform) to collect feedback and implement analytics to identify areas for improvement in the onboarding process.
Keep an eye out for regular updates and maintenance
Employ agile development and testing methodologies and continuous integration/continuous deployment (CI/CD) pipelines (e.g., Jenkins, GitLab CI) to ensure the platform is regularly updated and improved based on user feedback.
Fostering personalized experiences by streamlining the onboarding process
While digital onboarding in banks has existed for quite some time, many have not yet adopted or completely transformed their procedures. Moreover, with the rising data volumes, banks face challenges in maintaining data quality while ensuring data privacy and compliance with ever-changing regulations. On top of that, banks with legacy systems still struggle with fraud prevention techniques, which makes it difficult to transition to digital from physical onboarding.
With the digitization of banking services, digital onboarding has become a norm in major parts of the world. Banks considering moving towards the digital from the physical, or developing financial technologies should consult with a technology services provider having ample expertise in the financial services domain. VentureDive is one such firm boasting an extensive portfolio in developing fintech products. Connect with our experts today to get started.