How is Digital Onboarding in Banks Superior to Manual Onboarding?

The process of customer onboarding in banks is central to improving customer experience, and by going digital, banking firms can enjoy several benefits. 

FREMONT, CA: Digitalization has become the norm in banking. Banking companies have prioritized their transformation into digital-first entities and are leveraging technology at various levels. The process of onboarding is crucial for banks because it determines the quality of customer experience. To stay relevant and competitive in dynamic, customer-centric markets, banks are now making the onboarding process digital. By mainstreaming digital customer onboarding, banks not only enhance customer experience but also consolidate security and increase sales. According to a research report by Fenergo, manual onboarding processes in today’s time could lead to losses for banks, amounting up to $4.5 billion. Thus, the digitalization of the onboarding process is not just an option; banks have to prioritize it to stay profitable. 

Digital Over Manual

Digital onboarding processes help banks overcome recurring challenges that have affected the efficiency of banking services. Customer onboarding in banks, when done manually, is time-taking. It requires customers to fill forms, visit physical bank branches, and communicate with bank authorities through calls, emails and official letters. All of these make the process inconvenient for the millennial customers who expect frictionless services at all costs. Due to the drawbacks of the manual onboarding process, banks also have to face the issue to potential customers leaving the onboarding process midway. Furthermore, obsolete onboarding does nothing to boost security, which has become extremely important for banks in the times of rising financial frauds and tightening regulatory frameworks.

Boost to Customer Experience

Digital onboarding has proven to be an effective way for banks to ensure swift signing-up of customers, with minimum latency and maximum convenience. According to a report by Deloitte, as much as 38 percent of customers consider CX to be the most critical factor that they reflect on while opting for services from a particular bank. With digital onboarding, banks can provide customers with a glitch-free and fast experience, thus creating a satisfying experience. From engaging more people, to streamlining applications and verifications, digital solutions allow banking firms to pursue better onboarding.

Enhanced Security against Financial Frauds

When banks make onboarding process digital, banking security also gets a significant boost. While manual assessments of new customers have been the norm for a long time, it has proved to be inefficient. It is difficult to keep a tab on all the applications, and determining risks is also complicated. With digital onboarding, banks get a chance to filter applications and carry out authentication of identity documents using AI and ML-backed applications. This not only makes the process agile but also reduces the chances that anomalies and risks will be overlooked. Detection of suspicious applicant becomes easier, helping banks improve security. The digital process is less resource-intensive as well, making it cost-efficient. What adds to the security aspect is that, when a bank converts its manual onboarding into digital onboarding, it gets a chance to update the information of old customers as well. This helps in creating a comprehensive, digital database of old and new customers.

Digital Data, Increased Sales

Another direct benefit that banks get out of digitalizing onboarding process is that of increased sales. Simplifying the initial steps of onboarding makes banks attractive to customers. When users can sign up through apps, upload documents for verification through online channels, and get updates in real-time, banks get a better response. Besides, digital onboarding centralizes customer data, making it easier for banks to access vast data sets. Using analytics tools, banks are able to process the data and generate significant insights regarding customer behavior. Understanding customer behavior allows banks to optimize offerings by personalizing them to a great extent. With personalized products and services, banking firms have the advantage of offering individual customers precisely what they need. Thus, digital onboarding helps banks accumulate critical data that drives up sales.

Ensuring Compliance to Banking Regulations

 With the risk from hackers growing, regulatory bodies are formulating strict frameworks for banking companies. Today, most of the banks have to conduct KYC. When onboarding process is digital, banks have a chance to ensure regulatory compliance better. In the example of KYC, banks that have adopted digital onboarding have successfully overcome the challenge of guaranteeing KYC. On the contrary, the banks which have not digitalized onboarding, have struggled to fulfill KYC guidelines.  Other rigid regulatory requirements also become easy to achieve with the automated, intelligent capabilities that are deployed to ensure digital onboarding.

Apart from making services people-friendly and reducing the time and effort that go into onboarding a new customer, digital processes help banks achieve ambitious targets and fulfill compliance necessities with a high degree of effectiveness. Although banks need new resources when transforming manual onboarding into digital onboarding, the investment pays quickly in the form of better returns and loyal customers. With technology vendors offering turnkey solutions, and fintechs providing deep expertise, it has become easier for banks to transform legacy onboarding processes into modern, digital ones. Considering the advantages of digital onboarding, it is no surprise that customers, as well as banking service providers,  wish for it. It is high time for the banking sector to extend their digitalization efforts into the realm of onboarding, enriching customer experience in the process.

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