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Fintech Disruption: Transforming Customer Onboarding in the Banking Sector
Customer onboarding is the first touch point that often leaves a lasting impression on customers about a financial institution. With lousy customer onboarding comes a bad experience, eventually leading to a high churn rate. Fintech is challenging the status quo of traditional banking by offering seamless, efficient, and customer-centric onboarding solutions.
The shift from conventional banking to a digital-first ecosystem has presented a multitude of opportunities for innovation and growth. Today, financial institutes are leaving behind paper-driven and people-dependent processes and shifting towards tech-led strategic processes to offer end-to-end digital journeys and reduce customer touch points for hassle-free onboarding experience.
Let’s delve deeper:
Faster Solutions for a Fast-Paced World
Everything needs to be fast-paced today. Engage and resolve customer queries quickly or see them go to the competition! As per research, 70% of potential customers drop out of the onboarding process if it is complex and time-consuming. Digital identity verification is a linchpin in the fintech-driven transformation of customer onboarding. Fintech companies employ sophisticated algorithms and biometric technologies to verify customer identities swiftly and securely.
Biometric authentication methods, such as facial recognition, fingerprint scanning, and voice recognition, are not only enhancing security but also contributing to faster TAT and a more user-friendly onboarding experience. Digital address verification (DAV) facilitates contactless KYC and quicker onboarding. These technologies reduce identity theft risk and enable a seamless onboarding process, eliminating the need for physical presence.
Mobile Banking: The Gateway to Seamless Onboarding
The ubiquity of smartphones has catalyzed a paradigm shift in customer onboarding through mobile applications. Fintech firms are developing user-friendly mobile apps allowing customers to complete the onboarding process from their smartphones. From document upload to identity verification, the entire onboarding journey is condensed into a few taps. Mobile applications not only make the onboarding process more accessible but also empower customers to have greater control over their interactions with banks.
Dynamic Customer Expectations
Gone are the days when the customer visits the branch and submits the same document again and again. The modern consumer demands a seamless, secure, and swift onboarding experience, and banks are under pressure to meet these expectations. Digital KYC, remote customer onboarding or digitized document collection is quickly becoming the norm. Digilocker is a practical example where users can access their digital documents anytime, anywhere and share them online. In addition to that, banks can leverage Digilocker’s digital signing feature to sign documents digitally using Aadhaar-based eSign. This is particularly useful in obtaining legally valid digital customer signatures for various purposes, such as loan agreements, account opening forms, or investment-related documents.
Real-Time View of the Financial Behavior
Needless to say, it is crucial to get the lowdown on a customer’s credit history, outstanding debts, and financial behaviour. Digital checks have revolutionized this process by allowing financial institutions to obtain critical information in real-time, facilitating swift decision-making during onboarding. Additionally, bankers are transcending traditional credit history by incorporating behavioural analysis and alternative data sources, including online spending patterns, rent payments, or utility bill payments, for a 360-degree view of financial behaviour.
Results? A faster approval process for specific services and financial products, delivering the best customer experience. It’s not just a change; it’s a leap into the future of banking.
Better Reach Beyond Geographical Boundaries
Central or regional offices can now efficiently cater to far-off locations and ensure standardised customer processes. Thanks to robust digital onboarding platforms, there is no need to be physically present to complete onboarding and verification formalities and access banking services. This shift also removes the dilution of services as the client moves further away, promoting consistency in customer experience across diverse locations.
Scalable and Future-Proof Banking
Conventional banking methods have historically grappled with the limitations of personal interactions bankers or credit managers provide. Technology adoption has made banks overcome these constraints and operate on a scale far beyond the standard. Today, with data analytics and AI, bankers can gain insights into patterns/behaviour and tailor their interactions accordingly. While the technology can be leveraged to automate routine tasks, bankers can focus on more complex and personalised interactions for higher customer satisfaction.
Availability Mismatch is No Longer a Barrier
Earlier, the availability mismatch between customers and bankers posed challenges regarding onboarding TAT and cost overruns. Today, customers can stay compliant with the procedures at their best time with Know Your Customer (VKYC and DKYC) and Digital Account Verification (DAV). The reduced dependency has made the processes faster and more efficient than before.
Efficient New Products Development
Increasing fintech integrations allows efficient product development. Given that the one-size-fits-approach methodology is becoming obsolete in this dynamic landscape, companies are more inclined to ideate and create innovative financial products that cater to evolving customers’ needs in the digital age. This benefits the institution’s bottom line and makes financial services more accessible to a broader demographic.
Final Thoughts
The success of financial technology has compelled banks to reevaluate their business strategies and enhance their digital capabilities. Bankers are now much more empowered to make meaningful, personalised interactions while automating routine tasks and providing customers with seamless and convenient experiences to new-age customers.
To cater to the present and future demands, fintech adoption is a transformative step towards a fully digitised and robust solution that requires minimal human engagement and comprehensive risk assessment.
Source: ET BFSI
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