Customers signing up for new accounts and services can feel frustrated by the hoops they have to go through, assembling information and entering it in complicated, sometimes multiple forms, whether on paper or online. What they may not realize is that the process can be just as frustrating for the people working at financial institutions, or other businesses performing underwriting functions.

Too often, technology forces both consumers and businesses to adapt to outdated onboarding processes rather than the other way around. In a PaymentsJournal Podcast, Penny Townsend, Chief Product Officer at Qualpay, and Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, discussed how the next generation of onboarding and underwriting procedures could bring greater efficiency and effectiveness for everyone involved.

A Siloed Approach to Onboarding

Onboarding is a financial services company’s first opportunity to build a relationship with its customers, so it’s vital to make the process as painless as possible. Yet too many companies still make it cumbersome. For example:

“When people sign up for a bank account, and want a debit or credit card along with the bank account there are multiple applications they have to fill out,” said Townsend. “If I applied for two or three different services, I likely have to fill in secondary and tertiary applications that don’t copy over the data already fed into it.”

Financial services companies have long been a siloed environment, but many organizations are realizing that by connecting their onboarding processes, they can also streamline their internal systems. For example, it’s possible to combine for a business, a bank account, credit card processing, and ACH transaction processing into one application that flows seamlessly through underwriting.

The key is to templatize the information and present it in a data-driven, no-code way, creating a unified experience across all financial products. The goal should be to shift the effort of customers bending to how the technology, the vendor and the implementation require data to be input to how can we optimize the experience to reduce repetition and breakdown the silos that existing for different financial products. Creating better customer experience and more transparency and integrity in the data used to manage ongoing risk and compliance.

“My team is out there talking to people about how they actually onboard customers,” said Townsend. “Sometimes if some of the data has to change on the application, a new application has to be sent out, creating friction right at the beginning. Some applications are manually underwritten, which means they take the data set, log into the third-party tools, then verify that the data set matches what was on the application. After they’ve done the data verification, they’ll do the physical underwrite, but they’re manually inputting it maybe into two or three different systems for different tracking purposes.

“So if you ask me about how automation helps scale onboarding operations, it’s a game changer,” said Townsend. “Move away from the bespoke applications that people have bought in order to solve problems, and start looking more broadly and more holistically. Ask the question, “how can I delight the consumer when they’re applying for something?” By making the onboarding experience as efficient, effective, and speedy as possible.”

Bundling the Processes

The implications extend beyond onboarding efficiencies. Consolidating multiple workflows into a single system powered by a common dataset not only streamlines operations but also enables businesses to present products together in combinations that align with how consumers prefer to buy them.

“If somebody comes in to open a business DDA, you can ask if they would like to set up merchant services at the same time,” said Apgar. “You’re not making them go through a separate application. And what that does for the customer is that it incorporates multiple products into a single buying decision. With a discrete workflow, after they buy product A, you have to ask, now would you like to buy product B? If you can bundle B with A in the combined onboarding process, that makes the buying decision much easier for the consumer.”

Benefits Throughout the Organization

The onboarding application should be able to accommodate a variety of financial service products, treating each application as structured data that can be validated through automated tools. A simple rules-based engine can then provide a clear red light/green light decision on whether to proceed.

The benefits of this approach cascade throughout the organization. As compliance requirements grow more complex, a transparent workflow becomes invaluable. Without technology that consolidates and supports the process, audits are difficult to manage because data is scattered across disparate systems.

This structure also supports risk management throughout the customer lifecycle. Because underwriting data feeds directly into the risk engine within the same platform, all information remains consistent and accessible. If an underwrite needs to be revisited, the data and tools are already integrated. By simplifying the process, organizations can improve quality while reducing expenses.

“We see that a lot in banking from our clients,” said Apgar. “For whichever product the customer requests, the team gathers the underwriting or risk metrics relevant for that product. If the customer wants a different product, they gather additional data from a different database. Measuring compliance and maintaining viability of the customer relationship requires stringing together a whole chain of information that’s not in an essential spot. There’s a ton of room for increased efficiency.”

Townsend added: “One of my dreams is to make that experience be as transparent as possible. We want people to make that critical decision the same every single time, so we can see how that decision’s been made and know that that if I send the same data set tomorrow, the same decisions are actually going to be made.”

Adding AI Into the Mix

This is where artificial intelligence shines—culling through large amounts of data to find patterns and detect anomalies. It’s challenging to maintain a complete 360-degree view of the customer relationship as it evolves. At this point, any organization that automates underwriting is going to rely on AI and rules-based engines.

Every business engaged in underwriting must have a policy reflected in the system in use. Too often, that policy is separated from the actual underwriting process, and people get caught out because they’re not truly following it. The next generation of platforms has the opportunity to bring that policy to life.

“When you start to use all of that intelligence and let the actual policy breathe life within the platform, now you get transparency and true predictability,” said Townsend.

It’s common for organizations to fall short by expecting underwriters to know everything about the policy and implement it manually. By shifting these elements to the platform, businesses can build greater transparency and predictability while also giving underwriters more space to focus on judgment-based decisions. When AI is introduced as a component, it not only adds options and flexibility but also enables the development of policies that are more adaptive—policies that better serve both customers and underwriters.

The post How to Streamline the Onboarding Process and Speed Up Underwriting appeared first on PaymentsJournal.

Onboarding has traditionally been viewed as the process of engaging and retaining a financial institution’s customers during the 60 to 90 days after they sign up for services. However, as technology—and competition—has reshaped the banking industry, it has become imperative for financial institutions to widen the scope of their onboarding approach.

In his latest report, Ongoing Onboarding: The Key to Deeper Customer Relationships, Gregory Magana, Digital Banking Analyst at Javelin Strategy & Research, detailed the four stages of the ongoing onboarding process and how financial institutions can leverage each of these steps to develop customer relationships that last.

Day Zero

Even the most robust onboarding systems can fall short if customers abandon the process before ever opening an account. For this reason, the ongoing onboarding process should begin at the account opening stage.

Many financial institutions already have powerful support tools at their disposal that could mitigate issues during the application stage. While they may offer these services to existing customers, these tools are often unavailable to prospective ones.

For example, a majority of the top 20 financial institutions offered click-to-call in their mobile app, per Javelin. However, significantly fewer provided this feature to potential customers during the application process.

“Just as bad, if not worse, you would think that live chat would be a no-brainer in the account opening process,” Magana said. “Somebody could help you and they don’t have to be on the phone, and they can help several customers at once. But only 15% of institutions support live chat in the onboarding process, versus 70% in mobile apps.”

The same issue applies to branch appointment scheduling. While banks offer digital account opening to save customers a trip to the branch, financial institutions with brick-and-mortar branches should offer ways for prospective customers to set appointments and get help if they are struggling with the onboarding process.

“A lot of what we talk about in the first stage is just getting people through that first application piece,” Magana said. “You don’t necessarily have to get them engaging with your most complex digital tools on day zero or day one. Just get them through the process and give them a lifeline if they need a little bit of help.”

Laying the Groundwork

Once customers have signed on, they enter the young account stage, which resembles the traditional onboarding process. The goal at this stage is to make sure that customers understand all the products and services available to them and to drive engagement with these tools.

A key way to lay the foundation for productive communication is by ensuring the user is comfortable with the mobile app. Alerts and push notifications are effective ways to connect with customers, but they can often be difficult for customers to find and customize.

“Education is big here,” Magana said. “Educational materials are rare within mobile, and even sometimes in online banking, but it seems like it should be a no-brainer. You have all these features—mobile banking isn’t where it was in 2010—but a lot of times customers are left to their own devices to figure out how these things work.”

Two of the main features that financial institutions should focus on during the young account stage are credit score monitoring and external account aggregation. These powerful features are already offered by many financial institutions and typically require only a one-time setup.

For instance, once a customer adds their financial data, banks can often set up a credit monitoring tool that keeps the user informed about their creditworthiness either on a constant basis or as-needed.

“Account aggregation is another big one if you want to be the center of your customers’ financial lives,” Magana said. “If you’re Chase or U.S. Bank, it’s saying, ‘We know you have this credit card account with Truist, or such and such home loan with PNC, give us your login and we’ll centralize it all here. Then you can login to our app and look at all that stuff within our space and we’re your top of mind.’”

The Linchpin of the Experience

Getting customers involved with digital features early is the key to success in the third stage of the ongoing onboarding process: digital engagement. This is the stage where financial institutions should use tool tips, pop-ups, insights, and gamification to suggest relevant digital features.

“If people have been customers for three months and they’re still not using something that you consider to be a linchpin of your digital experience, maybe it’s time to suggest things like budgeting tools or mobile deposit,” Magana said. “You don’t want people to have to hack through a bunch of pop ups like it’s some sort of virus-laden website, but just nudge people to use tools that you think are important to the digital experience.”

This experience should include ways for customers to improve their overall digital financial fitness. According to Javelin, many consumers strongly agree that their primary financial institution offers the tools they need for day-to-day banking. However, fewer agree that their primary financial institution helps them plan ahead.

This highlights the importance of offering a financial strategy built on digital engagement, which is essential for building both share of mind and share of wallet.

“Speaking of share of wallet, in this stage it could be about becoming the default card for online merchants and subscriptions,” Magana said. “For example, we’re going to offer you this link and it will take you to a sign-in page for Amazon. Once you sign in, it will offer to make our card your default card at that merchant, so that every time you make a purchase there, we’re the one making the interchange revenue.”

This is a similar strategy that credit card companies use with rewards, but credit card issuers can offer a much broader range of travel and cash back incentives. Debit card rewards tend to be more specific, such as 5% back at select retailers. While these rewards can drive strong engagement, the results will vary depending on how relevant the offering is to customers.

Driving Relevance

Staying relevant to customers is the primary goal of the final stage of the ongoing onboarding process: building advice-driven relationships. This stage brings the ongoing aspect of the ongoing onboarding theory into focus, as users are now well-established with the financial institution.

The goal is to provide consumers with tools that can improve their financial lives. This could include features they haven’t engaged with, such as mobile deposit, mobile wallets, paperless, bill pay, alerts, or aggregation.

Financial institutions should understand the areas of opportunity for their customers because they have a repository of data on customer preferences, which includes all interactions going back to the account opening stage.

Banks and credit unions can leverage this data to create personalized offers for new products and provide tailored suggestions for budgeting or changes in financial behavior.

“It’s the kind of stuff that takes a bank from being a tool for handling a customer’s money to a fiduciary partner that is in their corner,” Magana said. “They are offering insights that are relevant to customers that will help them move forward with their financial life. When a customer has a question, it’s making the institution the first place that they look and the mobile app the first way they interact.”

The post To Build Lasting Customer Relationships, Financial Institutions Should Expand the Onboarding Process appeared first on PaymentsJournal.

The old saying goes: You don’t get a second chance to make a first impression. For digital businesses, that first impression is the digital onboarding process. It must be a smooth and easy process for the customer, while at the same time ensuring the proper protocols for regulatory compliance and to prevent fraud are in place.

However, onboarding new customers seamlessly in a digital environment without adding risk is a challenge for many organizations, especially those with unique regulatory requirements and different tolerances for risk. As the competition for customers (and dollars) tightens, customer abandonment and conversion rates will become increasingly important metrics, as will the impact of fraud on the bottom line.

To learn more on this important topic, PaymentsJournal recently hosted a webinar featuring Gareth Walker, Global Head of Client and Digital Onboarding at Refinitiv, and Brian Riley, Director of Mercator Advisory Group’s Credit Advisory Service.

The Importance of First Impressions

Historically, a customer’s first impression of a business came through a face-to-face interaction with a sales representative, or perhaps a phone call with a customer service rep.

“Now it is digital,” said Walker. “And it’s about how many clicks you have to make, how long the website takes to load, and how much information you have to give out.”

It’s not surprising then that businesses in all industries are spending heavily on the digital customer experience. Walker noted that global spending on digital transformation initiatives is expected to reach $1.8 trillion by the end of 2022, and around $300 billion of that is earmarked for digital customer experience improvements.

“A better customer experience brings really rich rewards,” said Walker, adding that in the financial services industry, for example, satisfied customers are seven times more likely to increase their deposits and twice as likely to open a new account with an institution if they consider themselves a satisfied customer.

Yet despite the investment made in digital customer experience (CX) and onboarding, it’s an area that businesses often fail at. Walker said that 66% of consumers abandoned a digital application without completing it in 2021, up from 63% in 2020. This abandonment is largely due to poor digital user interfaces (UI).

This is especially true for Millennial and Gen Z customers, who are much less likely to put up with onerous digital processes than older consumers, said Riley.

“Think of where you want to grow your portfolio,” Riley continued. “Your long-term customers are going to be in those younger-age cohorts for obvious reasons.”

Simplicity Is Key

The top three reasons for digital abandonment are the consumer changed their mind, the consumer was asked to input too much information, or the process took too long.

While not much can be done if a potential customer changes their mind on buying a new product or service, the latter two reasons can be fixed with a better digital onboarding experience, according to Walker.

For example, “If an onboarding experience lasts longer than two-and-a-half minutes, there’s a high risk of abandonment,” he said. “They move on to the many other distractions available on their device.”

Having to input too much information can be resolved by using data that the company already has on that consumer, added Riley. He cited an example of getting a preapproved credit card offer but then having to still input basic personal information in a digital form.

“If they already prescreened me, why do I have to put in my name and address again?” he asked.

Overall, a poor onboarding experience can have an outsized negative impact for businesses, with Walker noting that 52% of consumers report they are less inclined to use a company’s services in the future if the onboarding process is too onerous.

A Delicate Balancing Act

One dynamic that makes it hard for businesses to get digital onboarding right is competing internal dynamics. Sales and marketing, for example, want as quick and easy a process as possible, while regulatory, compliance, and security teams may want more robust protocols.

This is especially important because digital application fraud is on the rise. About one in six U.S. consumers have been affected by application fraud in the past year, Walker noted.

Application fraud can be committed in various ways. Sometimes criminals buy username and password combinations that have been leaked after data breaches. Criminals can also piece together enough personally identifiable information (PII) from consumers through tactics such as monitoring social media accounts to create “synthetic identities” that look like they could be real people. Sometimes victims have had their credentials stolen by a family member or people they know.

Application fraud affects virtually every industry, said Walker.

“When talking about application fraud, you have to be cognizant of how fraud is committed specifically in your industry and what the regulatory landscape is,” he added.

As seen in the following graph, bank checking accounts, credit cards, and mobile phone accounts are the top areas where fraudsters commit application fraud.

Digital Onboarding by Refinitiv Giact

How then can businesses balance a smooth and easy digital onboarding process with having the proper fraud protocols in place? Giact, a Refinitiv company, aimed to solve this conundrum with its digital onboarding solution, said Walker.

“It’s a digital onboarding solution that is fully configurable and guides customers through a user-friendly onboarding process while also conducting real-time verification checks that are integrated with your in-house systems,” explained Walker.

He added that the solution is fully customizable and dynamic so that businesses can ensure they “are delivering the right CX to the right customer.”

For example, if certain information about a customer is already known, such as name and address, those questions can be bypassed so as not to add undue friction to the process. Furthermore, a picture of a driver’s license or passport can be taken, and information can then be extracted from there to auto-populate certain fields.

The solution has three main components: a front end that the customer sees and can be completely white-labeled and customized to show the business’ branding. There is also an orchestration layer, which Walker called “the brains of the operation,” that captures data and sends them to Giact’s application programming interface (API) hub, where know your customer (KYC), anti-money laundering (AML), and other antifraud checks are carried out in real time. Finally, the data and results are passed through a customer relationship management (CRM) system for exception management and audit purposes.

Ultimately, the solution enables “different onboarding processes with different controls depending on your industry,” Walker said.

The post Solving the Digital Onboarding Challenge​ – Increasing Conversions without Increasing Risk appeared first on PaymentsJournal.