4 issues your customers are facing when onboarding for their banking products and how you can address them.

By Shona Sabah
Senior Manager - Strategic Growth Lead

The ability to provide effective digital onboarding for banking products has grown in importance, especially since the pandemic, with digital bank application drop-off rates increasing to 63% in 2020 from 38% in 2019, according to a Signicat report. Furthermore, adapting the customer experience to cater to younger generations is becoming increasingly critical. For example, by 2030, the Gen Z cohort will make up around one-third of the working population in the UK and will represent significant spending power, with needs that differ considerably from other generations. Offering advanced digital technology and swift, friendly customer service is among this generation's top priorities. Combining high-tech solutions with advanced, personalised customer service is high on the agenda for financial institutions.

Let’s explore four core issues that customers face when onboarding for banking products and the possible solutions.

1. Problem: The process is long and ambiguous

Customers appreciate certainty throughout the onboarding process:

• What is the eligibility criteria for applying for a product, and how can I check eligibility without negatively impacting my credit score?
• What will be expected of me during the process?
• What documentation will I need to provide?
• How long will the onboarding process take?

Eligibility criteria are often not clearly presented, leading applicants to hesitate in fear of a rejected application negatively impacting their credit score. Additionally, a lack of clear guidance on the necessary documents can cause frustration, particularly if applicants encounter complex documentation requests after starting their application. Unclear communication about the stages of the process and the number of required channels can further increase drop-off rates.

Solution: Provide clarity across the entire onboarding process

• Offer an eligibility checker to avoid hard searches and the potential negative impact on the applicant's credit file.
• Educate and prepare customers by outlining what to expect, what documents they will need, and how much time the process will take.
• Keep customers engaged by offering clear timelines and progress updates, such as a progress bar. This creates a sense of ‘perceived control’, improving user flow and reducing friction (4).
• Minimise the number of touchpoints and channels required to reduce friction, save time, and limit potential drop-off points.

2. Problem: Too many channels and touchpoints

Building on the previous point, customers increasingly expect to complete the entire process digitally, with a preference for a seamless, end-to-end digital experience that allows immediate access to the product.

Common friction points include:

• Sudden channel switches, such as being asked to visit a branch to finalise the process.
• Switching between multiple channels (e.g., mobile web, app, desktop, phone) during ID&V or document checks.
• Inefficient channel transitions, such as being asked to contact the bank by phone or email, which can elongate the process and increase drop-off rates.

Solution: Create a digital-first onboarding process with accessible support

Zendesk’s CX Trends 2024 for Financial Services highlights that digital-first processes are now standard expectations, while voice support is becoming crucial for resolving complex issues. Customers should be able to transition between channels effortlessly when encountering issues. Agent training should cover handling financially complex and emotionally charged matters.

A digital, end-to-end onboarding process with accessible support can help banks stand out.

3. Problem: Poorly functioning technology

One major issue impacting onboarding experiences is a poorly designed KYC process. Customers now expect fully digital, end-to-end experiences, and biometrics can help meet this demand by significantly reducing onboarding time. For banks, well-implemented biometric ID&V systems can reduce costs, streamline onboarding, and facilitate rapid, secure introductions of new services.

However, customers are increasingly conscious of online fraud. Zendesk’s CX Trends 2024 report notes that 86% of CX financial leaders believe their customers trust their data protection efforts, yet 60% of customers feel businesses are not doing enough to safeguard their data. This highlights a trust gap that must be addressed.

To succeed, banks must ensure that technology functions seamlessly, builds trust, and provides clear guidance to avoid confusion.

Examples of poorly functioning systems include:

• Lack of instructions on how to use the system.
• Bugs or glitches when taking a selfie or uploading documents, with no clear problem-solving guidance.
• Multiple software tools and channels required to complete checks.
• Excessive document requests that are difficult to handle on mobile devices.
• No clear guidance throughout the process.

Solution: Invest in technology and continuous support

Ensure biometric ID&V systems are reliable and secure, with support and guidance readily available.

Regula, a KYC solutions provider, emphasises the importance of intuitive user guidance and contextual help for conversion. Providing accurate, context-specific instructions - such as ‘adjust lighting to remove glare’ instead of generic messages like ‘something went wrong’ - can significantly enhance the customer experience and reduce drop-offs.

4. Problem: Poor customer support

Customer support remains a cornerstone of the onboarding experience and can significantly impact drop-off rates. This is particularly crucial for business customers, who often have a greater sense of urgency when onboarding or managing their accounts.

It’s not just about the number of support channels available but also the quality of support provided. For instance, customers encountering issues may become frustrated if they cannot connect with a service representative or if representatives fail to provide appropriate support.

Solution: Offer multiple, well-functioning support channels

While many customers prefer all-digital processes, it’s essential to offer support for complex issues, including personal connections with service representatives.

Additional customer support options include:

• A comprehensive FAQ section.
• Extensive context-specific guidance using tooltips throughout the onboarding journey.
• Chatbots, which are evolving to provide more advanced AI-driven assistance, mimicking digital agents and offering higher-quality support.

By addressing these core issues, banks can improve their digital onboarding processes, reduce drop-offs, and provide customers with a seamless, supportive, and secure experience.