Daniel Flowe
- Fintech continues to struggle with sub-optimal onboarding processes; discover four reasons why customers are likely to quit the onboarding process altogether.
- Explore how companies can overcome these persistent hurdles and reduce customer dropout rates.
Poor onboarding erodes your competitive advantage
Fintech continues to innovate and redefine the ways in which we transact, adding speed, agility and increased efficiency to many of our daily activities. Despite this, many have not been able to ensure that new customer onboarding processes are smooth and seamless.
Getting it right at the start is crucial – poor customer experiences during application processes frequently lead to high abandonment rates, and can quickly erode your competitive advantage.
Prospective customers are quick to leave if application processes are slow, demand too much information, or elevate friction levels – but at the same time, identity fraud is becoming an increasing concern across the globe.
Financial crime is highly sophisticated in today’s digitised economy, and it is therefore crucial that organisations verify the true identities of any customer, supplier or other entity before engaging with them.
Compliance with global AML regulations – which extends to verifying identities – is non-negotiable and failure to comply can lead to financial, regulatory, reputational and other consequences.
Technology has stepped up to solve this widespread challenge, with digital identity verification now a key tool for remaining compliant while streamlining and optimising onboarding processes.
Four reasons customers quit
Opening an account typically requires a potential client to complete a number of steps – but if the road from application to approval is too long, tedious or difficult, prospective customers are likely to quit the process altogether.
Four top reasons driving customer abandonment include:
1. Time:
Market research reveals that customer dropout rates increase with every additional click required during the process[1], and further, that 40% of users will abandon applications that take too long[2].
2. Too much information:
Customers may be prepared to upload a standard document, such as a passport, but are more likely to abandon an application if they are asked to provide copies of harder-to-find documentation, such as utility bills.
3. Privacy concerns:
Privacy concerns are a further stumbling block, especially for those who guard their privacy, such as crypto customers. If these customers are asked to supply too much information, they may feel exposed and abandon the process.
4. A lack of mobile access:
More and more customers now expect to be able to open accounts via their smartphones – and they expect the process to be quick and easy. A staggering 83 million American customers[3] have abandoned onboarding funnels for being too difficult to navigate, with some significant ripple effects – in 2018, fintech faced onboarding abandonment rates of nearly 80%[4].
| More than 80% of the world’s population has a smartphone, and they expect to open accounts with businesses that make it easy to do business on their phones.[5] |
|---|
Persistent hurdles
At first glance, these persistent hurdles seem easy to overcome, and yet many companies have not managed to achieve this.
The reasons for this appear to be many and varied, ranging from an apparent reluctance to abandon imperfect processes because they still make a profit, to difficulties in finding talented people who can manage funnels properly, as well as concerns that an upgraded approach may not be compliant with global AML regulations.
Regulators are indeed enforcing AML laws more stringently and the fear of negative fallout as a result of non-compliance has led many fintech to stick with imperfect onboarding funnels that they know to be compliant. This approach is shortsighted, since poor onboarding experiences drive customers away.
Flipping the switch
The good news is that flipping the switch and turning onboarding into a competitive advantage is highly possible.
Digital identity verification can significantly reduce customer dropout rates and help you comply with AML regulations – at the same time.
Digital verification offers a range of immediate benefits. Not only does it remove one of the most tedious onboarding steps – asking customers to provide additional documentation to prove their identities – but it is also substantially quicker than manual methods of identity verification, and therefore provides a streamlined experience that protects the all-important customer relationship.
Moreover, near-instant verification of identities and documents means that you can maintain optimal levels of compliance and satisfy identity verification requirements in line with the requirements of FinCEN, FINTRAC, EU AML/D, and many other regulations.
LSEG’s identity verification solution is supported by trusted global data sources across 200+ country specific sources and 55+ countries. Low-friction by design, our platform delivers streamlined identity verification that empowers you to onboard customers quickly and efficiently.
1. Source: Prove.com
2. Source: Lightico
3. Source: https://www.idology.com/blog/
4. Source: https://www.prove.com/blog/how-fintechs-can-reduce-their-customer-acquisition-costs
5. Source: https://www.bankmycell.com/blog/how-many-phones-are-in-the-world
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