Four Challenges Banking Providers Face in the Customer Onboarding Process (…and how to solve them)

By Dasha Lukiniha,​​​ KAE Vice President

May, 2024

The ability to provide effective digital onboarding for banking products has been increasing in importance, especially since the pandemic with digital bank application drop off rates increasing to 63% in 2020, from 38% in 2019, as per Signicat (1). Further, adapting the customer experience to cater to younger generations is becoming an important task – for example, the Gen Z cohort will make up around one third of the working population in the UK by 2030 and will represent significant spending power with their needs differing from other generations (2). Offering advanced digital technology as well as swift and friendly customer service is amongst the top needs of this generation (3) - therefore, combining both high tech and advanced personable customer service is on the agenda for financial institutions.

Let’s look at four challenges customers encounter when onboarding for their banking products and the possible solutions.

1. The Process is Long and Ambiguous

Banking customers appreciate certainty across the onboarding process. These are some of the questions they may already have in mind:

  1. What is the criteria for applying for a product and how can I check if I am eligible without it negatively impacting my score?

  2. What will be expected of me during the process?

  3. What documentation will I need to provide?

  4. How long will the onboarding process take?

Often enough, eligibility criteria is not presented clearly and the applicant hesitates to apply for the product in the fears that a rejected application may impact their credit score negatively. Further, lack of understanding and clear guidance on which documents are needed to complete the onboarding may create a sense of frustration and encourage the applicant to exit and leave their application, especially if once the application / registration process starts, they are faced with multiple complex requests for documents. Lack of clear guidance on what to expect next, how many stages in the process there are and how many channels the applicant is expected to go through can create a sense of frustration and increase drop off rates.

Solution: Provide the applicant with a sense of clarity across the entire onboarding process.

  1. Provide the customer with a sense of clarity and peace of mind by giving them an option of utilising the eligibility checker before going through with the full application, to avoid hard searches against their credit file and a potential negative impact associated with it.  

  2. Educate and prepare the customer for the application process, so they know what to expect, what information / documents to have at hand and how much time they will need. 

  3. Keep the customer engaged throughout the process by providing an answer to the question of “how long will the whole process take” and continuously updating them on “how far along am I in the process” using a tool such as the progress bar. This feeds into several psychological aspects and gives the applicant a sense of “Perceived Control”, which improves user flow, reduces friction and can improve customer retention (4). 

  4. Minimise the number of different touchpoints and channels a customer needs to go through as much as possible, to reduce the time needed to go through the process, overall friction and the number of potential drop-off points. 

2. Too many channels and touchpoints

To build on the previous point, the customer now wants to complete the entire process here and now with a strong preference for the end-to-end digital channel that allows immediate access to the product. Common friction points can include:

  • A sudden switch in channel as the customer goes through the onboarding process, such as being asked to go into the branch to finalise the process.

  • The need to switch between multiple channels, such as mobile web, mobile app, desktop and phone – for example, during the ID&V process or document checks.

  • Inefficient switch between channels, where the customer is told they need to call into the bank or they are asked to converse over email with the bank operative, which creates the potential to elongate the process substantially and increase the number of drop offs.

Solution: Create a digital first onboarding process with advanced support made easily accessible. 

Zendesk’s CX Trends 2024 for the Financial Services report (6) found that the digital first process is now part of the standard customer expectation while the use of voice is becoming increasingly important in handling complex issues. Easy transition between channels needs to be made available in instances where the customer encounters a problem they are unable to solve efficiently on the spot. Further, agent training needs to include the ability to handle financially complex and at times emotionally charged matters at the same time.

Creating a digital end to end process that can be completed in one go with accessible support options can help you stand out.

3. Technology Does Not Always Function Properly

One of the key factors that have an adverse impact on the customer experience during onboarding is a poorly designed KYC process.  One of the things that customers now want from their onboarding experience is a fully digital end to end experience and biometrics can provide that option while significantly cutting down the time needed to onboard them. A well set up ID&V system using biometrics is also of significant benefit to the banking providers, moving them to the lower cost, singular channel onboarding experience, while allowing them to introduce new higher value services rapidly, cost-effectively and securely (5). 

Importantly, biometrics systems need to be perceived as secure by the customers, as they are becoming more and more conscious about online fraud. Zendesk’s CX Trends 2024 for the Financial Services report (6) found that 86% of CX financial leaders are confident that their customers trust their data protection efforts, but 60% of customers feel that most businesses are not doing enough to protect their data, leaving a large gap to be filled.

With that in mind, it is important not just to utilize the latest technology, but also for it to work seamlessly, instil a sense of trust and for comprehensive guidance to be included where necessary to avoid any confusion. 

While the availability of advanced ID&V with the use of biometrics can make the Customer Experience, a poorly functioning system can break it.

Some examples of a poorly functioning system include:

  • Confusion as to how to use the system stemming from the lack of guidance and instructions.

  • Bugs and glitches at the point of taking a selfie or uploading a document and no clear guidance on how to solve the problem quickly.

  • The need for the customer to flip between different software tools and channels to complete the check, making the process complex.

  • The need to upload a large number of documents, making it difficult for the customer to do via their channel of choice, for example, through their mobile.

  • Lack of clear guidance throughout the process.

Solution: Invest in technology and provide continuous support to ensure it functions well.

Ensure the ID&V system that is using the biometrics capabilities is running smoothly and securely with support and guidance available where needed. 

Two of the key facets that a well-functioning self-service biometrics solution offers for conversion are intuitive user guidance and contextual help, as per Regula, a KYC solutions provider (7). Providing accurate context-based help, with clear instructions when something is not clear or goes wrong, such as “adjust lighting conditions to remove glare” or “position the document correctly”, as opposed to “Something went wrong” – can improve customer experience significantly and reduce drop offs.  

4. Poor Customer Support

Customer support remains the cornerstone of customer experience and can have a significant impact on drop off rates. This holds true for all customers and can be particularly important for business customers who tend to have a higher sense of urgency when onboarding or servicing their accounts. 

It is not just about the number of channels provided for the customers but how well the support is provided across these. For example, inability to connect with a service representative when encountering a problem that a customer is unable to solve by themselves has an adverse impact, however having a phone channel as an option and for the customer to not be able to get through or for the representative to not be able to offer appropriate support might be equally as bad. 

Solution: Offer a number of well-functioning support channels to cater to customers with a variety of preferences

While many customers prefer an all digital process, it is important to have the right help at hand if the complex issue arises, including the ability to connect with the customer representative personally. 

Other customer support channels include: 

  • A comprehensive FAQ section

  • Extensive context – specific guidance using tooltips throughout the onboarding journey 

  • Chatbots and increasingly so, as chatbot technology is constantly evolving to utilize AI and becoming closer to digital agents, able to provide more advanced help