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Digital onboarding drives customer acquisition in banking

As countries around the world go into lockdown, increasing the number of online working processes is paramount. This is especially important in the banking sector.
Digital onboarding is expected to drive customer acquisition in the banking sector now and going forward. Image: Shutterstock

As technology evolves and plays an increasing role in business interactions, clients expect efficiency and convenience during every step of their interaction. Lisa Adams, director of product marketing at Temenos, says customers today have high expectations and are used to their digital transactions being simple and fast. “Outdated or poor customer experiences lead to abandonment and missed revenue opportunity. If the process isn’t quick and easy from any device, customers are likely to take their business to a bank that offers a more customer-friendly experience,” she says.

Temenos’s research on digital banking shows the following rates:

▪ 89% abandonment of current account applications
▪ 93% abandonment of credit card applications
▪ 85% abandonment of loan applications

A complex or outdated process increases these already extremely high numbers. Yet, regardless of where a bank’s customer experience ranges on the scale of great to poor, there are always actions that can be taken to improve customer experience. One of the first steps is in improving the digital customer onboarding processes. With new digital banks and fintech launching financial services, banks must improve the ways that customers can open accounts or join a bank online if they want to compete in a growing competitive market. Often, the best way to achieve this is by choosing a trusted partner with financial industry expertise.

For example, a financial services organisation in North America introduced a digital student loan application. They partnered with Temenos, using the Temenos Infinity platform to build their digital acquisition experience. By leveraging the Temenos Infinity solution, they were able to get to market faster than building internally.

“Within the first week of launching, they received 2 379 applications. In just the initial weeks after launch, they achieved an overall completion rate of 65%, far surpassing industry norms in the range of 15%. Also, they saw a 53% reduction in call centre handling time and found 75% of fields were being pre-filled, saving applicants significant time. The bank went on to digitise 47 different product applications, including deposit accounts, home loans, vehicle loans, personal loans, credit cards, and insurance inquiries, in just 18 months,” Adams says.

In Africa, financial services organisations are leveraging the omnichannel capabilities of the Temenos Infinity platform to first address manual and lengthy branch-based customer onboarding processes and then bringing onboarding capabilities to customers wherever they are.

Benefits of a digital customer onboarding process

While digital onboarding is not that new, there are significant benefits that banks are starting to see in the industry. These include:

  • Increased customer acquisition – banks can reach a wider range of customers, including those who may not live close to a branch or prefer to do their banking online.
  • Increased productivity and efficiency – a reduced manual workload and paperwork means staff can be more productive and focus on activities that carry a higher value.
  • Straight-through processing (STP) – customers’ information is taken from the online application and placed directly into existing core banking systems. Adams says there is no need to re-engineer the entire onboarding process to do this, and it offers multiple advantages. “It saves time, improves data quality, and reduces errors. When you implement STP, you eliminate the need for paper forms, manual processing, and re-keying of information, all of which can slow processing and introduce errors; and a faster onboarding process means accelerated new revenue recognition,” she says.

Connecting campaigns with the digital process

Connecting campaigns and digital channels can be a great method of increasing customer acquisition. However, Adams cautions that things to consider would include the treatment of offer codes. “For example, Temenos worked with a large global bank building its credit card and deposit account applications. We found that promotional invitation codes were resulting in abandonment. The team realised that not all applicants would have an invitation code, and this was creating a stumbling block. The bank followed the recommendation to display or hide the invitation box based on how the applicant enters the application page. Once these changes were made, the bank increased credit card acquisition volume by 650%. Within six to nine months, 80% of all credit card acquisition was being completed through the digital channel and 30% of all new deposit customer acquisition was completed through the digital channel,” she says.

Common mistakes for banks to avoid

Adams says banks should avoid the following common mistakes when implementing digital onboarding processes:

  1. Rebuild, don’t redecorate: Don’t try to build a digital version of a traditional banking model. Adams says one of the biggest mistakes made in early digital transformation efforts has been simply automating legacy, paper-based internal processes. “Digital services should deliver significant improvements because they are not tightly mapped to the back-office silos and separate product workflows of the past,” she says.
  2. Put the customer experience first: Designing a new digital bank, whether a challenger entrant or a new brand from an existing player, should start with the customer experience. Start by ignoring the old banking rules and engagement models, and instead think like a prospective customer.
  3. Beware the iceberg: Adams compares a digital banking platform to an iceberg, shining visibly above the surface but with the bulk of it hidden underwater. “If you only pay attention to the visible part of the iceberg, your ship can run into the big piece underneath, inviting disaster. Similarly, attention needs to be placed on the platform that clients never see, but which supports the weight of their user experience. This underlying infrastructure is where rapidly changing product catalogues, flexible decision engines, automatic document generation, integration to new fintech services and the ability to start, save and resume an onboarding transaction are managed,” she elaborates.
  4. Don’t reinvent the wheel: The most important mistake to avoid when launching a digital bank is using your technology investment and precious time on the wrong parts of the project – things that are already commercially available and don’t differentiate you in the market. A 2018 Forrester study found that the most successful digital banking projects were those that applied a ‘build, buy, extend and assemble’ methodology. “In other words, for basic infrastructure and core functionality, banks should make use of proven commercial platforms – where the software vendor spreads the cost of maintenance and enhancement across hundreds of customers, instead of the bank being burdened with development and maintenance internally,” Adams notes.

Taking the right steps will drive your long-term growth. Technology choices – whether to build versus buy, how to drive agility in the process and most importantly how to create a customer-centric experience – are critical today in a way that was never previously the case for traditional banks. Temenos has helped more than 3 000 banks globally to solve their growth challenges with flexible technology.

Brought to you by Temenos.

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