For decades, many businesses have been struggling to become digital leaders in the global market. With the rise of digital services and products, consumers also demand seamless, innovative, and digital customer experiences, especially in the banking sector. However, as per a report, approximately 55% of users claim that they prefer getting involved in a digital business.
Well, for digital banking services, customer onboarding is also conducted digitally, which is one of the crucial steps of the procedure. Since users seek more convenient and hassle-free approaches to get access to numerous financial services; therefore, banks must provide an exceptional digital experience to meet customers’ expectations.
In this blog, let’s explore the digital onboarding process in banks and its benefits to financial institutions to streamline their operations.
What is the Digital Onboarding Process?
The digital client onboarding process refers to the process of making a new customer or employee introduce and integrate it into a digital business or platform. This procedure generally involves verifying the customer’s identity through the digital method. However, the customer’s identity is verified by collecting data from the new user such as personal information, security details, contact information etc.
The digital onboarding process can be wholly done online by submitting documents electronically and through e-signatures. This process is often used in numerous digital businesses such as e-commerce, banking and finance, and human resource departments, where digital systems are used to onboard new customers.
The purpose of digital onboarding is to provide customers with a convenient, smooth, and more reliable user experience, especially for the new ones. While the financial institution ensures that it is getting all the necessary information from the customer in order to provide them with the services and meet their needs. Not only this but by integrating digital onboarding within their firms, businesses can reduce the time and cut the costs that are spent on resources, while improving the accuracy and effectiveness of data collection.
How Digital Client Onboarding Works?
The digital onboarding process in banking works just like traditional onboarding, but each step is executed through electronic means such as a website or mobile application. This process involves the following steps:
Customer Registration
The first step in the digital onboarding process is user registration. When the client registers for a particular service or product, they need to create an account by providing some basic information such as their name, mobile number, email address, and email password.
Identity Verification
Once the client is registered, the company or the financial organisation needs to conduct customer identity verification and authentication. For this, a two-factor authentication process is involved in which the company sends a temporary code to the user’s registered mobile number or email. This step ensures the security of the user’s account.
Document Submission
The next step is the submission of the required documents in order to complete the digital onboarding process. However, the requirements of the documents vary as per the industry, business type, and requested service. For instance, if the user has requested to open a new bank account, they may need to submit their government-issued ID card and proof of address.
Documents Review
After submitting your documents through an online platform, the company reviews these documents and matches the information provided by the customer with the given documents. On the basis of document authentication, the customer gets approved or rejected.
Customer Onboarding
Once the customer’s documents get approved, their user account will be set up through which they can get access to particular services. This platform may offer you some additional services and support to help you navigate how to utilise these services and features.
Challenges Faced in Digital Onboarding Process
On one side, digital onboarding delivers numerous benefits, but numerous financial institutions often struggle with combating numerous challenges, which may include:
Customer Relationship
During digital onboarding, one of the challenges is developing personal relationships with new clients. Although providing them with a quick and convenient onboarding experience is helpful. But due to rapid procedures, institutions and their new users find it pretty difficult to get to know each other.
Security Risks
With online transactions, digital client onboarding is subject to several security risks for both the business and the new user such as data breaches or identity theft. Therefore, while conducting online customer onboarding, it is crucial for companies to keep personal information secure to maintain customer trust and prevent reputational damage.
Technical Issues
There could be several technical problems that may emerge during the digital onboarding process, such as poor internet connection or system disruption. These issues may interrupt the onboarding procedure and cause frustration for both the company and the customer. Thus, before executing the process, sufficient testing and planning is essential for seamless operations.
5 Benefits of Digital Onboarding
The digital onboarding process delivers numerous benefits as compared to conventional procedures. However, one of the most significant advantages of digital onboarding is enhanced KYC and AML compliance. Several benefits of this process are mentioned below:
Easy Regulatory Compliance
The digital onboarding process can help banks and other businesses meet regulatory AML and KYC compliance more hassle-freely by reducing the risks of false positives and enhancing data precision. Other than this, the companies will be able to avoid significant fines and penalties from government regulators and authorities.
Boosts Customer Experience
In addition, the digital onboarding process provides customers with a better user experience as compared to paper-based processes. Electronic procedures allow customers to easily provide required details and documents more quickly and conveniently instead of visiting the organisation in person.
More Cost-Effective
The digital onboarding process can be highly helpful for organisations when it comes to budgets. It can reduce costs to significant extent that are associated with the paper-based procedure involved in manual onboarding procedures such as printing, mailing, and storing. In addition to this, the companies do not need to employ an additional workforce to onboard new clients.
Smoothens Work Operations
Furthermore, digital onboarding offers more hassle-free and quick access to the required documents and forms to simplify the identity verification process. Besides, it allows customers to upload the required documents on the company’s official portal which will quickly and safely reach the business administrator.
Enhanced Efficiency
The digital onboarding process can drastically enhance the effectiveness of the workflow by automating various processes. With the digital onboarding procedure, businesses can eliminate the need for manual data entry, speed up overall operations, and diminish turnaround time.
Final Verdict
With the digital onboarding process, banks and other financial organisations can now keep track of their customers’ online transactions and activities, keeping them securer and safer. However, this automated process is considered a more convenient and effortless option for better digital identity verification solutions to combat identity theft and financial crimes. With present endeavours, several operations within banks are made significantly smoother with an additional layer of security, trust, and better customer experience.
