The popularity of online banking has peaked over the past year, and according to a recent survey, 80% of consumers prefer to use digital channels to process their finances rather than directly. This transition to digital services is expected to grow even after bank branches are back in full operation, demonstrating that it is not just a fad. This trend is especially noticeable among Gen Z consumers, 37% of whom prefer to use the phone to open a deposit account.
Consumer demand for digital banking is currently not met by most financial institutions (FIs), but only 45% of US and UK financial institutions. Recruitment Some form of digital account opening. Even the FIs that offer this feature find that their customers face some onboarding challenges, such as the tedious application approval process and excessive costs.
In the next detail, we’ll explore how these obstacles can lead to customer turnover and abandonment, and banks will deploy biometrics and ID scanning capabilities to make onboarding as seamless and secure as possible. I will explain the method in detail.
Onboarding friction and obstacles
The customer’s onboarding process is notorious for being cumbersome and frustrating, and many consumers give up the process altogether before opening an account. This problem is exacerbated as digital banking becomes more popular and customers are offered numerous banking options.38 percent of Europeans Said For example, we abandoned digital banking applications in 2019, but this number rose to 63% last year.
Customer onboarding friction is primarily a regulatory check that banks must perform on applicants to ensure that they are not using their bank accounts for money laundering, fraud, or other cybercrime. Due to. These routines are customer (KYC) checks, such as FI’s personal identification information, financial status, address, as well as credit checks, information requests, and other data that often involves in-store banks. We recognize that we need to collect and authenticate more detailed information. A series of visits and paperwork.
While these checks can take days or weeks to complete, the customer’s onboarding experience on other apps and websites can often be completed in minutes or seconds. Since FI spends more than $ 500 million annually on the KYC process, these onboarding processes can also incur enormous costs for the banks that implement them.In the case of banks, more revenue is lost due to customer abandonment report This could cost up to € 150 million ($ 168.9 million) annually over the next five years due to lost customer opportunities.
New technologies can simplify these onboarding processes, but they can also improve customer satisfaction and reduce churn rates. Biometrics and ID scanning are the most promising in this regard so far and are popular with banking customers.
Simplification and rationalization of onboarding
Biometrics come in a variety of formats, from behavioral analytics-based methods such as typing patterns to options based on physical characteristics such as voice recognition, facial recognition, and fingerprint scanning. According to all three physical methods, they are popular among banking customers. the study According to PYMNTS, 66% of customers are “very” or “very” satisfied with speech recognition, and 95% approve facial recognition and fingerprint scanning.
Biometrics are also used for individual payments in the form of credit cards with a built-in fingerprint scanner to confirm purchases.More than half of all customers Said They will switch banks to get these cards, and 66 percent of those 18-35 year olds said they were interested in doing the same. An additional 43% are willing to pay an additional fee for this ability.
Document ID scanning can also accelerate the onboarding process, allowing customers to take pictures of government-issued driver’s licenses, social security cards, or other documents and use artificial intelligence (AI) for analysis. Can be sent to. These systems then cross-reference IDs and their details with those stored in national databases to ensure their reliability and are much faster than visiting a bank branch for manual inspection. Provides an alternative. These options are becoming especially useful for FIs, given that digital shifts are working in the banking industry. 49% of Americans Say They will be happy to never step into a bank branch again.
Digital methods are the future path of the financial industry, and banks looking to grow during this shift need to be able to perform onboarding procedures digitally as well. The few banks that currently offer these solutions will be in a position to dominate the industry for the next few years and are likely to join a particularly attractive rank for FIs of all sizes.
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