This year we have all been forced to start doing everyday tasks differently. For many that has meant managing the entirety of their financial lives using remote channels for the first time, and large numbers turning to digital services as call centres are overwhelmed and branches shut. But financial service providers’ offerings have been found lacking. Before the pandemic they were not keeping up with user expectations, but as digital became customers’ only option and emotions regarding money run high as recessions bite, products and services are failing increasingly often to give customers what they need.
Onboarding is one of the most crucial areas where providers are failing, because if customers can’t or won’t open new accounts, these organisations will struggle even more to cope with economic turmoil. And it’s not just the pandemic that providers have to get their heads around, other, pre-pandemic factors which have not been addressed are exacerbating potential customers’ failure to complete onboarding.
One such factor is that every generation has greater expectations of digital than the last, and those who have most recently reached adulthood are no exception. They have been raised in an always-on, instant world where the very idea of picking up the phone to speak to someone is strange. Some will expect the opening of a bank account to be as simple as opening a social media account, and be put off when it takes longer and requires greater amounts of personal information and documentation.
Additionally, many consumers have more financial accounts than ever as more providers launch. That means they have greater choice over who they give their business to and so will look elsewhere if a provider cannot give them the experience they expect. It also means that an applicant might not actually need the account in question, and if getting one is too difficult they will simply give up. In short, providers should prioritise ensuring customers can apply, open, and start using accounts quickly and digitally if they want to compete in today’s environment.
Simplicity is the key in 2020. With so much uncertainty and disruption affecting personal and professional lives, people want quick, easy and reliable; the service providers that deliver this are the ones that will thrive, becoming the de-fault “goto” choice for consumers – and the word will spread. We now live in a world where people are increasingly likely to ask for the most basic information on social media, such as when the shops are open or restaurant recommendations, rather than try to look it up and make a decision for themselves. People are simply less likely to accept and tolerate a poor customer experience – and unlike before, they are now voting with their feet. This year’s Battle to Onboard report clearly show this, particularly amongst the younger generations who are used to having a steady flow of digital information on tap. Increasingly consumers will simply abandon processes that are seen as too challenging, problematic or intrusive. Older generations are more used to less user-centric processes and “learned helplessness” but are becoming aware that there are simpler, quicker and less cumbersome options out there for them – they too want to take advantage of the benefits of digital identity and onboarding.
The impact of Covid-19 on the financial industry goes beyond this though. A truly digital experience, from verifying identity for account opening through to authenticating a user’s identity to access services and beyond, is now a business continuity necessity for both banks and their customers.The biggest increase in usage of mobile banking and payments this year has been amongst older users and Covid-19 has been the catalyst. This further increases the importance of a well-implemented on-boarding process, else banks risk increased abandonment from first-time users who are less familiar with digital channels and tools.
At P.A.ID Strategies we see onboarding as simply the first use case for digital identity in financial services as it meets the immediate need of Anti-Money Laundering and Know Your Customer regulations. With PSD2 connecting together more services and increasingly driving interactions between them, the ability to offer/use services that are trusted by all parties (i.e. banks, consumers and approved third party service partners) increases. We believe that the well-implemented use of digital identity to meet the Strong Customer Authentication component of this directive will be the key to unlocking future growth for banks as trusted identity service providers.