Designing Client-Centric Digital Customer Onboarding Solutions for the Banking Sector

The digital transformation has been setting new rules for customer service across a large fraction of banking functionalities. Even in the recent past, customer onboarding largely remained as traditional face-to-face interactions. One of the key reasons was to build stronger emotional attachments, gain trust and nurture long-standing relationships with the customers.

The emergence of digital transformation and end-to-end digital services in banking has put pressure on financial institutions to do more for the sake of convenience for today’s banking customers. Replicating an interpersonal yet seamless customer experience with a focus on speed, standardization and simplicity is no easy feat in a digital environment.

As the banks were caught in the conundrum of whether to digitize customer onboarding or not, the COVID 19 pandemic acted as a catalyst thrusting the banks towards the inevitable. Banks could no longer procrastinate from embracing full-scale digitalization.

The Current Status of Digital Customer Onboarding in the Banking Sector

The digital customer onboarding in the banking sector was mainly driven by two factors; the pandemic and anti-money laundering (AML) policies. Depending on where you live, both factors may not have had any positive effects on the way you bank. Despite threats of penalties and demands from customers, banks are still slowly adopting digital customer onboarding practices.

The reasons behind the slow change may have to do with three main factors:

The potential loss of customer loyalty
Lack of knowledge and experience in designing a client-centric digital customer onboarding process
Retaining access and control of cybersecurity systems and protection of customer data

In some companies or countries, there is also the added concern in the reduction of labor needs. And for these banks, putting more people unemployed doesn’t seem like the best way to improve and retain customer relations. Sadly, the result of this philanthropy is continued archaic manual processes and almost non-existent global ID verification.

As much as banks have embraced automated ID verification, document verification is still a burning issue and a key area of focus in the new Bank Secrecy Act (BSA). Along with the focus on Ultimate Beneficial Owners (UBO’s) and international accounts, the banking sector needs to do more with global

ID verification and digital identity management. Though some banks have made strides into digital onboarding, unfortunately, their efforts weren’t very effective. However, we can use their setbacks as the learning curve for the banking industry.

Complex online process
Partial digitalization makes customer visits to branches necessary
A paper-based ID validation system
Failing to adhere to legal/regulatory AML compliance
Lengthy navigation platforms that may lead to a higher abandonment rate
Lack of multi-channels

If you have ever been to a bank recently, you can attest that there are banks still making these same mistakes today. And if you wait long enough, you’ll probably witness an employee skipping elements of Know Your Customer (KYC) to speed up the process. As much as banks don’t want to admit that dirty secret, it happens because we are human.

Humans get tired, hungry, and have problems and needs. We may not want to face the reality that the human element is a threat to digital customer onboarding, but we have to address it. Because it is in the human factor most of these setbacks arise.

Banks may not have provided sufficient KYC training or oversight.
HR was ill-equipped to hire cybersecurity, marketing, and digital experience professionals.
Bank executive management didn’t make proper use of consumer data for customer onboarding solutions.
Or it can simply be Johnny Teller just not doing their job as they are supposed to.

Whatever the deep cause behind these early failures, as a whole the banking industry must take these lessons to heart. Instead of treating them as failed customer onboarding solutions, pinpoint where the client onboarding process failed and address potential gaps in the process and its implementation. Note, the client onboarding process can be fixed one hundred times and be the most advanced ID validation system on the planet, but if the implementation is the real issue then those deep-seated concerns need to be addressed first in the house.

Benefits of Improving Digital Onboarding Solutions

All customers will thank you

Though there still are the rare birds who love visiting their favorite bank representative to chat. Most of the banking community wants that home delivery service treatment from their banks that they could get everywhere else. After all, the customer gives you money, why shouldn’t they get the service they deserve.

In all seriousness, improvements in customer onboarding as a whole should have been made before digitalization. Even when performing in-house tasks, the client onboarding process wasn’t completely standardized. Yes, you need extra confirmation when dealing with high-risk clients, but what exactly were some banks’ criteria for determining high risk? Again, we go back to human error and biases which opened the door for fraud and money laundering.

Digital onboarding reduces the potential for human error, bias and improves customer safety and service. Despite the potential outcome of a smaller workforce, it also means better accountability. Supporting actors of criminal elements will now have fewer people and untraceable actions to hide behind. More benefits of improved digital customer onboarding solutions are:-

Reduced Operating Costs

Going paperless for years has the theme of being environmentally conscious, but most businesses adopted it because of lower operating costs. It’s the biggest win for both customers and the banks. Aside from the obvious environmental protection bonus, it also reduces the need for customers to walk around with files of documents for every major transaction.

Transparency in Operations

Digitalization will automatically standardize key aspects of online KYC verification and reduce incidents of human bias and errors. A reduced paper trail doesn’t mean complex online procedures. Machine learning-powered by human-guided AI would still have the final say in processes like online KYC verification and each change to these operations is recorded. Therefore, there are fewer chances for chicanery.

Stricter Adherence to AML Compliance Regulations

As of late 2020, there were banks and financial institutions that were still not AML compliant and facing hefty fines. Repeat offenders seem to have disregarded any interest in AML compliance. Standardized digital customer onboarding with stringent oversight can put a dent in their unsafe and illegal practices while improving customer data security and employee protection.

Better Digital Identity Security and Management

Cyberthreats are a major concern for not only the financial industry but the global economy as well. Data protection in the banking sector is a matter of importance to all banking and non-banking citizens. Priority must be given in creating secure digital identity security systems and restricted databases that require verified identity passes to grant access.

Improved Customer Onboarding

Imagine 24-hour banking without limits! It is possible and though some banks offer 24-hour access, it still requires a lot of in-house visits to finish your transaction. Also, some of these online processes are longer than visiting the branch! Creating better digital customer onboarding solutions should cut back on lengthy sign-ups, meet online KYC verification requirements and improve customers’ control over their account access.

Designing Client-Centric Digital Customer Onboarding Solutions

Keeping the focus on a frictionless customer experience is a smart start in designing client-centric digital customer onboarding solutions. Walking a mile in the customers’ shoes allows banks to better understand what the customer goes through when using their services.

Yet in early adaptations, banks eschewed this idea and designed the digital onboarding process with their organizational operations in mind. Thereby creating the incomplete and inefficient client onboarding processes we see today.

To fully correct these issues in digital onboarding, banks have to be prepared to make drastic changes in both their operations, human resources, digital identity management systems, and what’s considered real-time identity verification.

There must be an open-minded approach to technology, education, and making organizational changes. Designing client-centric digital customer onboarding solutions is easy with the right technical expertise and implementation can be just as easy with an ID validation system from IDMERIT.

Here is how IDMERIT’s IDMkyX platform can be a part of your client-centric digital customer onboarding solutions:

Automated ID Verification in Digital Onboarding

Going digital does not mean emulating the traditional onboarding processes in a digital platform. It is not transferring the lengthy, complicated paper-based forms in a web or mobile interface. To apply a customer-centric design approach keep everything short, simple, and easy to use.

Keep the whole client onboarding process under 5 minutes.
Limit questions to a minimum and avoid repetition
Inform customers why data is required and how it is used to gain their confidence
Introduce Smart e-Forms with guided-snippet based flow, supported by automation of IDMautofill API to reduce data entry
Automated information saving functionality to give customers the option to drop out in the middle of filling a form and restart at their convenience.

Standardized AML Compliance for B2B Client Onboarding Process

The basics of digital customer onboarding in the banking sector need to be overhauled. In this gig economy, all new client onboarding checklists should account for enhanced due diligence as part of B2B KYC requirements. Mis-steps in B2B client onboarding can be harder to correct and address once the damage is done.

Naturally, B2B clients have a longer onboarding cycle which leads to greater frustration for all parties. Unclear leadership roles, AML compliance requirements, and laissez-faire attitudes towards UBO’s always make banks the losers when it comes to B2B client onboarding. Start with a conversation using IDMlive to discuss the first three steps with your B2B client.

Start with a financial advisor for business development. New or old, discuss future goals
Understand the business organizational structure and be prepared for signee changes
Discuss the legalities of the business structure and AML compliance requirements
Use independent oversight in all document verification and global ID verification
Take the necessary steps to assess risk with IDMtrust which doesn’t need their Personally Identifiable Information (PII) to check their risk score.
Do regular financial check-ups to stay up-to-date on B2B client changes and reduce repeat requests

Mobile ID Verification With An Integrated Omni-channel Experience

Mobile phones aren’t the only tools banks need to use in their quest for a more multi-channel approach. Tablets and laptops make that list as well. Anything with a screen can be used by customers to access their accounts and engage with your service.
Neglecting mobile ID verification when at 55% mobile has the highest market share of digital devices is pretty counterproductive.
Introduce self-service models across multiple platforms to empower customers towards quick self-resolutions of specific problems
Mobile optimized ID validation and document verification for instant submission and automated approval
Validate ID anywhere by using IDMsocial for online ID verification through social media
Include smartphone biometrics into mobile ID verification
Increase Global Collaboration for Powerful Digital Identity Security

Cybersecurity cannot be overlooked in a discussion about online ID verification, global ID verification, and data management. Global collaboration between government regulators, corporations and the banking sector provides a solid support system for digital identity security systems. By increasing communication and shared concerns, all parties can have a stronger foothold on organized crime and money laundering.

Performing an automated global ID verification by online ID verification from any national ID database
Using modern technology such as IDMdevice to verify device used and validate ID
Access to all up-dated global watchlists
Improved AML compliance checks
Integration with the credit bureau for document verification and to validate an ID
Embrace the Power of Data and Analytics in Digital Identity Management

Maybe banking heads needed to do more robust research when it came to finding out exactly what their customer preferences are. Current systems reflect a certain disconnect with B2C customers and too much fluidity with B2B clients.

Paying attention to the data makes segmentation and engagement easier. It allows banks to understand where, when, and how their customers are interacting with them and should be the basis of which any client-centric digital customer onboarding process.

Require a verified identity pass for data access. It could be a biometric scan or any unique personal identifier

Include governmental or independent oversight in digital identity management

Adhere to BSA/AML compliance standards for personnel management which includes robust training, rotation, and oversight

Use consumer transaction records and behavior in the fight against fraud and money laundering

Closing

Though the pandemic and AML policies have accelerated the pace of digitalization pushing banks beyond their traditional boundaries, it doesn’t mean the industry was unprepared. Cyberthreats and the rise in digital fraud put the banking sector on high alert to potential threats and poised to make changes. However, banks concentrated on product innovation and financial service offerings that offered the same level of service in the traditional sense but in a digital environment.

As great as this step was for digital services, banks didn’t truly leap full digital onboarding solutions until 2020. And for many customers, it seems a little too late and not wholly customer-centric.

Major issues like mobile ID verification, global ID verification using watchlists, regulatory reporting, and simple employee online KYC verification training, were not embraced as necessary to an efficient client onboarding process.

Implementation seems to be the main culprit behind these onboarding failures and AML non-compliance fines. Therefore, for the good of the banking sector and its customers, perhaps it would be best if digital identity management and security were left to the professionals.

That way, banks can still provide a versatile customer onboarding experience, reduce the risk of fraud and validate ID anywhere with the backing of IDMERIT’s IDMkyX platform.