Why digital consumer expectations are demanding a new approach to onboarding

Why digital consumer expectations are demanding a new approach to onboarding
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September 19, 2022

Companies in sectors such as banking, telecommunications or the insurance industry with high customer onboarding volumes are challenged to move from obsolete and time-consuming physical processes, many of which made them lose ground to their competitors, to investing in technology in order to catch up with the pace of digitization and the current demands of customer experience. 

Thus, in this scenario in which customers demand faster, more flexible and secure processes, trends point to the fact that customer onboarding is increasingly done through multifactor biometrics (voice recognition and face detection) or integrated electronic forms, which allow organizations to improve the user experience and get to know the user better by collecting key information through a fully automated process. 

Preventor, a platform specialized in digital identity and fraud prevention, emphasizes that digital onboarding is also being rethought in organizations with other solutions such as electronic signatures that allow users to perform these processes remotely with the support offered by technological tools such as cryptography and biometrics.

The new generation of customer onboarding also integrates other tools that are facilitating the process, among which stand out those related to proof of address, one of the most common data to be verified in onboarding in situations ranging from the opening of a new bank account or any other financial product. 

Preventor points out that the new era of digital onboarding aims to automate all these types of processes -in this case by verifying the proof of address of the user's device-, reducing what until some time ago could take days or weeks to just about 60 seconds.

The paradigm shift  

A report by professional services firm Deloitte, entitled Automation in Onboarding and Ongoing Servicing of Commercial Banking Clients, explains that client onboarding processes have long been characterized as not only lengthy but also very costly, involving at least eight distinct steps ranging from application initiation, validation of client data, ongoing reporting and analysis, among others.  

On average, these processes can take as long as 16 weeks to complete, but the backdrop to all of this has to do with the associated costs. Faced with these antiquated onboarding methods, entities invest as much as US$20,000 to US$30,000 in onboarding a new client. 

At the end of these long and costly processes, companies find themselves with a worn-out customer after having to go through too many filters, which in most cases can affect their perception of the service and they may not recommend it to other users.

As customer experience becomes an increasingly decisive factor, companies are up against the clock to offer quality products and services from the onboarding stage. Proof of this is that in a scenario as competitive as the current one, not even fintechs, which are supposed to be closer to the digital experience sought by the new generations, are saved from high dropout rates in onboarding processes and these reached 68%, according to figures disclosed in a Forbes report. 

Moreover, according to the same article, since the arrival of the pandemic, users are less and less patient with onboarding services, probably as a result of the high digitalization that was promoted in the months of strict confinement. Thus, while in 2020 they could allocate 26 minutes in the onboarding process in a fintech, today they are less tolerant to a long wait and the maximum time they would tolerate would be 18 minutes and 53 seconds, according to a survey conducted in Europe and cited by Forbes. 

Digital onboarding now is the way to go

Despite the challenges that still exist in terms of access in many regions, 63% of the global population or the equivalent of 4.65 billion people in the world already have access to the Internet, making digital onboarding services particularly relevant in this context for companies in their fight against fraud. 

For example, it is estimated that in just one minute on the Internet, online sales can move some US$1.6 million worldwide, but all this would not be possible if the users performing these operations did not trust the infrastructure and the validation of those who mediate these transactions.

Therefore, the companies that support this activity are challenged to guarantee not only the speed of these transactions, but also their traceability and reliability, which begins at the very moment of customer onboarding, a challenge shared by many industries.

In this highly digitized environment, companies are constantly exposed to fraud attempts such as user impersonation with increasingly novel techniques such as deep fake, which uses artificial intelligence to trick the algorithm. 

In this sense, it becomes essential to adopt and strengthen digital onboarding processes, since the expectation of users in front of digital services is increasing and the penetration of these channels will continue to increase.

In this regard, a global survey by U.S. on-demand software firm Salesforce shows that 56% of retail leaders surveyed expect the majority of their revenue to come from digital channels in the next three years, which could mean a great opportunity to move forward on the path of digital onboarding and customer experience. 

For now, this seems to be echoed across different activities in the economy, as figures from global information company TransUnion show that the overall fraud attempt rate fell by 14% worldwide during the second quarter of this year compared to the previous period (January-March), mainly in industries such as retail (-27.6%), travel and leisure (-28.5%) and gaming (-63.5%).

Digital onboarding is no longer the future, but should be the present trend for many organizations in this race in order to acquire new customers and gain operational efficiencies, taking into account that the automation of these processes could represent a saving of up to 50% in time and money for sectors such as commercial banking, with which not only win the organizations but also all users who are demanding today a fully digitized and more secure experience.

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