Category: Digital Onboarding

Welcome to our category dedicated to the exploration of the future of onboarding customers in the digital era. This comprehensive resource is brimming with insightful articles that probe into the most recent trends, challenges, and technological progress shaping the onboarding landscape across a variety of sectors.

With the rise of digital technologies, the process of welcoming new customers has seen a profound transformation. Contemporary onboarding practices now incorporate frictionless user experiences, robust security protocols, and adherence to dynamic regulatory requirements. Our detailed articles provide a deep understanding of these elements, empowering professionals to navigate the intricate world of welcoming customers digitally.

The subjects covered within this category extend from the utilization of artificial intelligence in streamlining verification procedures to the influence of regulatory shifts on onboarding processes. Our goal is to furnish readers with a sophisticated understanding of the future of welcoming customers in the digital age, its impact on enhancing user experiences, and its critical role in boosting operational efficiency.

For those intrigued by the complexities of welcoming customers in a digital environment, the implications on customer relationships, and its part in shaping the future trajectory of businesses, our content-rich category is a must-read. We invite you to join us on this exploration of the future of onboarding in the digital age and to stay abreast of the most recent developments in this fascinating field. Embark on this knowledge journey with us, as we delve into the realm where technology and customer experience intersect.

The Era Of Digitization-Fintech Strategy of Digital Onboarding And What’s In Store For The Future

Posted on | by Signzian

Introduction

The world fintech market share across 48 unicorn fintech companies is north of $187 billion. This amounts to more than 1% of the global financial industry. A sensible question that comes to mind is, how are they doing this?

Fintech startups are considered underdogs in the financial ecosystem especially when compared to financial behemoths that are already present. Nonetheless, they are growing at a tremendous pace posing a challenge to these traditional giants. This is evident from the pace at which they acquire new customers. Some take less than 4 minutes to complete the entire end-to-end customer acquisition flow and in most cases right from the customer’s smartphone with almost no human interaction.

The reason for their excellent presence is due to multiple factors. The fact that they have defined a specific customer base to explore helps them identify their market. Their diligent proximity with advancing technology helps them create innovative and cheaper solutions. But mere statements for how they are doing it isn’t enough. We need a thorough understanding of the mechanics and strategy. Let’s have a closer look at how fintech startups approach digitization

How the Fintechs Have Fared in the Past Decade

The era before the dot-com bubble was the time of startup boom with over $30 billion in venture capitalist investments in the US. But once the bubble burst, investments for startups, especially fintech startups declined. By the early 2000s, the total investments were barely meeting the $5 billion mark.

The situation has been on a drastic change since the beginning of the past decade. Investments have grown tremendously, coming back on top to over $22 billion in the US alone. A good example is Venmo (launched in 2009) whose valuation rose from $150 million in 2013 to $38 billion in 2020. The company had proven that they had fresh ideas and excellent execution strategies for investors. The fact that they had grown from 10 million users to 40 million users was one of the primary reasons for this. This attracted the backing they required, boosting the venture.

Braintree, a division of PayPal acquired the company for $26.2 million in 2012. This was no epiphany for the fintech giant, but the result of years of close observation. Not only was the startup gaining customers, most of them remained active. Currently, with more than 26 million active users, Venmo is set to grow faster and better.

Venmo is merely one example of this potential opportunity. 2018 was particularly a crucial year as 18,000 startups received more than $254 billion globally. The majority of these were from the US. The global fintech market was worth $127.66 billion in the same year with an expected growth rate of 25% to $309.98 billion by 2022. All this was due to how sedulous catering of their customers.

 

What Are The Fintech Startups Doing Right To Grow?

Fintech startups are not bound by traditional methods. They have the freedom to think outside the box for they know not where the boundaries of convention confine them. They can understand the most fundamental concept in running a business. Gaining a customer is harder than retaining one.

Retaining your customers will help you forage all the low-hanging fruits. One of the vital aspects of any financial venture is to create retainable, loyal customers while improving the ease of onboarding new ones. Thus, it is easy to conclude that onboarding customers are the key to a company’s growth. But, whether fintech startups have done so is a question to be pondered upon. They have amalgamated technology into their onboarding process by making it completely digital. In an industry where 71% of consumers end their relationship with a company because of poor customer service, it is essential to provide the best service you can from the get-go.

Most Fintech Startups focus on certain areas of improvement when it comes to customer onboarding and service. Some of these areas are:

Selective Niche

The Startups define their customers. Mostly focusing on Gen X and Millennials, they cater to a younger customer base. This is beneficial in the long term as most of the current younger generations can be converted into long-term loyal customers with considerable financial assets in the future. For example, Most of Venmo’s customer base is aged lower than 34 years. 7.4 million P2P payment service users are between the ages of 18 and 34. 4.1 million of them are between 25 and 34 years. Since they are focusing on the younger generations, only 1.4 million consumers are above the age of 35 and below 44.

Digitization and Consumer Experience

The traditional methods of onboarding are tedious for newer customers. Fintech Startups acknowledge this by making the process easier. The first step is to provide digital onboarding options. Not only does this reduce the time required for the process, but it also enhances the overall user experience. Expenses too are reduced for the companies due to reduced exploitation of resources for storage and manpower.

The best technology usable will meet contemporary expectations in customer service. Banks with no websites or no online presence are yet to come out of the dark ages. By 2020 more than 67% of consumers have used a fintech platform. This was 33% more than in 2017. This number will soon reach absolute saturation. Giants in the insurance sector are wise in predicting this. More than 63% of CEOs in the sector believe technology like IoT(Internet of Things) will impact the whole financial sector.

60% of the consumers opt for transactions with financial institutions with a single online platform. This number is set to increase as a 2020 survey pointed out that 96% of the global population is aware of one or more fintech companies

Mobile Onboarding

The human palms are more powerful than ever with the advancements in mobile technology. Any financial task is performed on a smartphone with a mobile app by customers. This is made possible by the institutions welcoming and adopting this technology. Payment services companies promote this to a greater extent increasing mobility for the customers. Tipalti.com predicts mobile transactions to grow 121% by 2022. This will constitute 88% of all bank transactions. Fintechs are targeting this latent market.

 

The Road Not Taken- What the Fintech Startups can do going forward

The financial landscape is expected to change in the coming decades. 2021 has more than 90% of users making at least one payment using a smartphone. By 2022 78% of Millennials in the US will become digital banking users with credit cards, debit cards, and e-wallets surpassing cash at all points of sales. Fintech Startups see all this as an unavoidable opportunity.

Fintech startups’ methods of digitization and mobile onboarding have become inevitable for customer experience enhancement. They save time, energy, and in most cases, even money. Unfortunately, the traditional banks are struggling to adopt what the fintech startups have already embraced. Meanwhile, the startups are looking ahead in decades. They are understanding new technology that can be used for better customer service.

Some of these are:

Blockchain Technology
Neo-Banks are considering better methods for data storage and security. Blockchain technology is an excellent option for this. Blockchain is a DLT(Distributed Ledger Technology) that permits data to be stored globally on multiple servers. A form of cryptocurrency is used by two entities(people or companies) as payment. The agreement forms the ‘block’ in the chain. This type of financial technology revolutionizes central banks and financial markets.

More than 24% of the world population is familiar with this technology. This is because Blockchain and Regtech(Regulatory Technology) are leading in terms of growth in the fintech industry. Blockchain technology is set to reach $20 billion by 2024. This includes P2P digital lending which was at $43.16 billion in 2018. It is expected to reach more than $567 billion in 2026 with a CAGR greater than 26%

Artificial Intelligence
AI is already prevalent in the current fintech ecosystem. It is used for automation and related processes. It can vary from simple automation to complex Machine Learning(ML). AI and ML in the financial sector are used to perform tasks that are traditionally done by a human worker. Such repetitive tasks being automated will aid the company both financially and in aspects of time.

But fintech startups are looking at the next stage of AI implementation. Banking-related chatbot interactions are expected to go to 3150% by the year 2023 from 2019. This will enhance the experience the customer has while onboarding and interacting with the institution. Along with this $2 trillion will be managed by ‘Robo-Advisors’ by the same year.

AI will also enhance labor productivity by a maximum of 40%. The projected expectations of 2035 estimate profitability of 39% for all industries, let alone banking. Even customers are expected to prefer Machine interaction over human interactions in the coming future. Startups analyze these data and evolve their modes to suit the future customer base.

 

Conclusion

The financial niche has been altered by the booming fintech startups. Among traditional banks and organizations, nearly 82% intend to collaborate with fintech companies in the next decade. If they do not, they might lose the total customer base by the end. With nearly 90% of banks fearing their consumers to be lost to up-and-coming startups, they are willing to adapt.

Consumers demand a seamless digital experience while onboarding and transacting. Smart traditional banks see the solution and upgrade their methods. If that is not possible they collaborate in partnerships or contracts with fintech startups and other technology companies. Most of this helps in onboarding younger customers. This converts many B2C models to a more B2B model. They then gain access to a bigger client pool.

Established financial institutions need to focus on onboarding more customers, for their existing consumer base will soon be exhausted. Thus, while retaining their customers they must focus on expanding their presence in the future. For this Help of fintech startups can be used. This will be the swiftest and smartest step traditional financial institutions can take for the better.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

Boomers, Gen X And Millennials- What Fintech Startups Get Right About Digital Onboarding?

Posted on | by Signzian

Introduction

Onboarding a customer has always been a challenge to the Financial Industry. With the USA having less than 32 bank branches per 100,000 customers makes the entire procedure tedious for the customers. If creating an account online is not an option, they can spend days in the physical process of onboarding. Such bad customer experience and high customer drop-offs while onboarding is harmful to the institution. The solution is Digital Onboarding, which onboards customers remotely with the help of technology.

Digital onboarding is a relatively new method that has not been implemented to the fullest of its potential. But the worldwide availability of the internet has made it universally accessible if designed properly. Most financial institutions are already onboarding their customers digitally. But the processes in which they do are vastly different.

Compared to the traditional and established banks, the up and coming fintech startups are doing a better job at digital onboarding of customers. A closer look at this will provide traditional banks with new ideas to improve their systems. This is evident as Neo-banks like Ally and Chime went public, in the mid-2010s. Many more fintech startups are expected to follow suit.

Some Banks Still Use Inefficient Traditional Methods To Onboard New Customers

 

New customer onboarding is one of the most important issues retail banks face. When someone visits a website or walks into a branch to open a new account the bank doesn’t have a relationship with the customer, yet. It simply has a new account holder and actions need to be taken to move that relationship forward to become a long term profitable banking client.

Traditional methods trying to accomplish these goals are outdated, inefficient, and ineffective consisting primarily of paper brochures and phone calls from personal bankers.

Though. Most Financial institutions at this stage have upgraded their systems to digitize customer onboarding and engagement via a combination of apps and digital onboarding platforms.

Most of them though haven’t done this efficiently. Traditional banks form a major portion of this category while the neo-banks including fintech startups have done a far better job.

Usually, Traditional onboarding involves:

  • Hardcopies of documents
  • In-person verification
  • 2–3 days required for onboarding
  • An excessive requirement of space for storage
  • Dreadful onboarding experience

This can be a long and excruciating process and the only reason customers put up with it was because of a lack of alternatives. In a way, almost all the existing financial services followed the same process.

This changed when NEO banks and other fintech came into being. Not only they gave an alternative from existing banks to the customers, but they were first to adopt the changing behaviour of the customers, which aligned towards everything digital, everything remote and everything private.

And this shows, from the rapid growth of NEO banks all around the world.

Why The Banks Aren’t Doing A Great Job at Digital Onboarding of Customers?

 

Most banks backed by regulators have slowly but steadily moved towards incorporating digital onboarding into their process.

Having said that, digital onboarding methods adopted by traditional banks have resolved some of these issues but they have not been efficient and leading to customers moving to NEO banks that offer a much easier onboarding and management. Some of the issues with traditional banks digital onboarding processes are:

  • Confusing interface-. Customers find it difficult to navigate the facilities provided online.
  • Extra charges and fees for digital access- many banks charge their customers for an online presence which can be provided for free.
  • Onboarding time can further be reduced as the process is confusing and results in wasted time.
  • Customer experience is poor- The applications and software used are not optimised to make the journey easy for the customers.
  • The targeted customer base is mostly from Baby Boomers and Generation X who are mostly unfamiliar with digital technology.

Some traditional banks have had the foresight and done the necessary to cope with advancing times. A good example is that of Bank of America. The Bank focused on digitization since 2015 which yielded excellent results. The company onboarded more than 20 million users between 2017 and 2020, the majority of whom were onboarded digitally. Unfortunately, barring a few titans like JPMorgan Chase & Co. and Citibank, most of the traditional banks are behind in adapting to digitization.

Why Do Younger And Older Generations Respond Differently To Digitization?

 

Hard data available indicates only 8% of US customers consider an online bank as their primary bank. Prima facie this might seem unimportant. But the numbers almost double to 14% when it comes to customers with two accounts. The share rises to a staggering 17% with Americans who have 3 accounts. These numbers became 2 digits as late as the mid-2010s.

The reason attributed to this is the level of comfort and convenience of online banking offers. More than 56% of Americans acknowledged this. Hence, this indicates that there is a market for online banking, but better onboarding procedures are required.

While there is a general consensus that younger generations usually prefer completely online procedures, even the older ones are warming up to the concept. 30% of Gen X and 27% of Millenials have an online-only account while 8.8% of Baby Boomers also embraced the online platforms according to Finder. They also reported that more than 4% of Boomers planned to open an online account. If they are keen on accepting online banking as a primary option, then digital onboarding is simply the first step in it.

Fintech Startups Are Doing It Different… And Better

Fintech Startups acknowledge the customers’ needs to a great extent plus being the upstarts in an industry dominated by behemoths they had to find ways to optimize costs and play on their strengths.

That’s one of the major reasons why they optimized user experience over everything else (since everything else was usually well defined by the regulators) leading to their digital onboarding systems to cater to even the most unfamiliar users. What might take days at traditional banks could be done within hours or even minutes through the new banks.

They know that even though boomers constitute the majority of the clientele and funds right now, in the long run, they will need loyal millennials on their side. Thus they cater to the need of the new. Most of their products and services are focused on Millennial and Gen X but yet are easy for the older clients to handle. Their digital onboarding procedures are designed to not tire the customer. Their primary aim is to get customers on board.

In brief, some of the important steps taken by fintech startups to better their customers’ digital onboarding journeys are:

  • User Experience driven process
  • Easy interface for onboarding
  • No or Low Cost of Onboarding
  • Reduced Time for Onboarding with Automation
  • Defining Clientele for Long Term Benefits
  • Comfortable Onboarding Process
  • Developing Loyal Millennial Customer-base

 

What Can The Traditional Banks Adopt To Improve Their Services?

In theory, the Traditional Banks should acknowledge and adopt the right approaches Fintech Startups use to improve their customer onboarding. But in closer observation, we will see that all that the new banks are doing will not benefit the Traditional Titans. The methods require scrutiny before implementation.

A good example is how different the primary clientele is for both groups in terms of age. A ditto approach of focus on newer generations will distance the traditional bank’s existing customers. But a good plan to secure future customers must also be implemented. Hence, Traditional Banks have the task of retaining their existing customer base while expanding it into newer generations.

Since they have enough funds to back them, they should emphasize on better research and outsourcing to international fintech startups. This will improve their digital onboarding processes. These companies would exhibit no competition in the US market. A collaboration would enable the traditional banks to understand and access the new ideas and models they bring.

Along with this, banks need to improve the overall experience of the customer. This results in:

  • Better User Experience
  • Lower Cost of Onboarding
  • Faster Processing
  • And all the aforementioned benefits of digital onboarding

Conclusion

As the USA is moving towards a more advanced future where remote access is preferred and time is of the essence, onboardings will be digitized. The entities in the financial sector are aware of this which has rendered them to upgrade their current systems. This is regardless of them being traditional giants in banking or the up and coming startups in financial technology.

Amid such cutthroat competition, banks must find ways to expand their customer base. As it is with most cases, the trouble is always getting started. An easier and more convenient experience of digital onboarding is what the customer seeks to begin his journey with a new bank. If traditional banks can cater to this with attractive options, they will flourish in the coming decades.

If the banks acknowledge the needs of the customer and empathize with their struggles, they can provide far better services. The banks being the spine of the financial sector need to make the changes. These changes will cause a ripple effect in the sector, advancing it towards a modern world.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

Financial Institutions Should Heed Digital Merchant On-boarding

Posted on | by Signzian

Acquirers are always struggling with the cumbersome merchant onboarding process. The need is of an enhanced digital merchant onboarding experience. A platform that is agile. A platform that supports a 100% automated onboarding.

One that incorporates checks for fraud and Anti Money Laundering (AML), digital Know-Your-Customer (KYC), and risk decisioning. Digitizing the process is the solution for faster onboarding and better compliance.

3 Key Problems with the Traditional Merchant Onboarding Process

  • The traditional merchant onboarding process is frustrating and siloed. This means that each linear step is isolated in its functioning. An inordinate delay of about a week could come up to complete the application process. There is no status monitoring process which could track applications end-to-end. In the short term this could choke operational excellence. In the long run threaten business growth.
  • Existing data entry systems used for traditional onboarding are manually-driven and painfully slow. The process is susceptible to human error and can result in squandering of days of time. It could cause rampant inaccuracies in the entered data. The situation is extremely precarious because data inconsistency could prove to be detrimental to user privacy and the reputation of the business. Trust cannot be built in a system prone to error.
  • Merchant onboarding journeys are tedious, long and inconvenient. They stretch across numerous drawn out touchpoints and channels. This leads to excessive service delays lasting up to days or weeks, and poor customer experience. In case of an error the to and fro communication causes further delays.

These key problems thwart any chance of a seamless process. They peak their heads in the following 3 friction points, which slow down and complicate the merchant onboarding journey. This section explains what they are and how the digital onboarding process can solve these issues:

Friction point 1: Manual Form Filling

Data from physical paper applications has to be manually put into the computer database. This requires considerable effort from many physical operators. Significantly reduces errors by eliminating as much manual data handling as possible. This is a common source of error and denied applications. An AI based OCR (optical character recognition) performs extraction at the front-end. It is optimal to reduce time and error. With this, it is now possible to fetch customer information by extracting it from their IDs. The field filling process is also automated. This reduces the mistakes which were made by individuals filling the application. The cumbersome need for manual form filling is eradicated.

Friction point 2: Time-consuming Document Verification

Significant diligence checks and third-party verification is needed to ensure merchants aren’t involved in fraud. The solution must validate the authenticity of documents as part of the onboarding process. When this is done manually it takes huge amounts of time. It is also prone to human error. If additional details are required like court history, there emerges another layer of research. With digitization it is just a matter of ticking the box for another method of verification. Details are then pulled automatically from the Ministry of Corporate Affairs (MCA) database and tallied.

Friction point 3: Risk Assessment/ Underwriting

Information collected in the application paired with a rules-based engine is what decides if an account is approved or declined. The rules-based verification engine determines whether or not a merchant is a pass/fail. According to the required verification needs, data can be retrieved on the merchant very fast. An interactive scorecard or report needs to be made. Organizations generally have access to required data. The question is how do they automate the process and stitch it all together. Risk assessment done manually is arbitrary. But, an automated process has set parameters.

Major Advantages of this Solution

Smoothening over these 3 friction areas results in a host of benefits. They can be boiled down to the following three advantages:

Taking down Time

With automated onboarding abandonment is largely avoided due to the simple process. It cuts through red tape and desk delays. Even in the case of insufficient information, the merchant can be contacted and details clarified without leaving the house. Apart from that, merchant onboarding solutions like Signzy empower a business to create easy real-time processes without sacrificing the risk strategy. A customizable fully automated onboarding process that meets all compliance and KYC regulations can be created with Signzy tools. Whether it’s a straight through process or more complex processes to verify high-risk merchants decisions can be made in real-time. For a merchant, the need to spend hours in filling applications is eradicated. For banks, the verification of documents is expedited with some automation.

Curbing Cost

Digitization with an onboarding solution successfully streamlines the merchant onboarding process to the point where the merchant doesn’t have to even speak to anyone to set up. With manual data entry not required and the time taken to process the applications at the backops drastically reduced, the operational expenses of onboarding come down.

Lighter Labour

A major pain point for the industry is manual work like data entry. The work is often done multiple times. Manual work slows down the process. It can also introduce points of failure in the system. It adds a significant cost to the process. This should not be translated as eliminating people from the process. But, people should concentrate human effort on identifying fraud. Data entry is easily automated. Automation also enables smoother integration between the steps. If data is digital from the start, then the entire process has the potential for automation, especially in the case of smaller merchants. New risk assessment automation, as well as integration and optimization tools, are on the market, so dramatic improvements are already possible.

This story was originally published here

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

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