The battle to onboard: consumers want digital IDs 

UK banks are failing dismally to optimise digital account opening. A staggering 56% of new account applications are abandoned and according to a report commissioned by Signicat, the position has worsened significantly over the past two years, reports Douglas Blakey

Account opening should be quick, seamless and painless and offer a great customer experience.


Get it wrong and the customer will give up and abandon the process.


In the digital age, customer expectations have never been higher and understandably consumers expect to be able to open an account as easily as they transact with tech giants.

PSD2 and Open Banking initiatives, combined with the rise and mainstream acceptance of new products and services being offered by fintechs, means that the battle to retain consumers is only getting fiercer for banks and other financial services providers.


And almost without exception, every bank, incumbent and established, is investing heavily to remove customer effort, reduce friction and optimise the onboarding process.


Two years ago, Signicat commissioned its first Battle to On-board report. The report found that 40% of consumers in the UK had abandoned bank applications thanks primarily to the slow and cumbersome paper-based and online processes that banks were using to meet their KYC and AML obligations.


In the interim, given the time, energy and money banks are investing in improving the customer experience and their understanding of the importance of the onboarding process, one would expect abandonment rates to be falling.


Not so. Signicat’s follow-up report, The Battle to On-board II:The European Perspective on DigitalOn-boarding for Retail Banks, will make uncomfortable reading for UK banks.

UK abandonment rates on the rise

The survey finds that the number of applications that are abandoned has leapt from 40% to 56%.


What consumers want to fix is clear - 52% said that they would be more likely to complete a new account application with a bank if the entire process was online.


The same number said that a completely online on-boarding process would encourage them to take additional services from the provider, providing incumbent banks with the opportunity to retain and expand their relationship with existing customers, rather than lose them to new fintech service providers looking to steal away customers with a slick product and a smooth on-boarding process.


The report contrasts the position in the UK with Sweden, the Netherlands and Germany.

Sweden

The survey finds that the number of applications that are abandoned has leapt from 40% to 56%.


What consumers want to fix is clear - 52% said that they would be more likely to complete a new account application with a bank if the entire process was online.


The same number said that a completely online on-boarding process would encourage them to take additional services from the provider, providing incumbent banks with the opportunity to retain and expand their relationship with existing customers, rather than lose them to new fintech service providers looking to steal away customers with a slick product and a smooth on-boarding process.


The report contrasts the position in the UK with Sweden, the Netherlands and Germany.

Germany

In Germany the story is not so clear cut as the UK with less focus on the ability to complete on-boarding entirely online, only 43% would be more likely to complete the process if this was entirely online. Germans are also least likely to abandon an application at 40%.


With large numbers, 61% applying for new services and 34% adopting 3 or more products this suggests that German consumers will persevere in the process despite having similar reasons for abandonment as other consumers outside the UK, changing their mind (30%), too much information requested (30%), taking too long (27%), and needing to go to a branch (27%).

Netherlands

Consumers in the Netherlands with the highest number of consumers with eIDs found the application process easy or very easy but were concerned about the amount of personal information being required and the length of time it took to complete the application process. These concerns seem to impact how often consumers will apply for new products with the lowest number of applications.


With the ongoing investment in technology over the last two years1, it’s hard to believe abandonment in the UK, Germany and the Netherlands is as high as it is due to deterioration in on-boarding processes. Rather, the data suggests that it is due to customer attitudes shifting.


The report authors suggest that opinion is split on whether paperwork means people are less likely to switch bank account. Most interestingly, in the last two years the UK has seen the number of people likely to be put off increase from 20% to 46% - that’s despite a scheme that allows bank account switching in five days.

Banks may see this statistic and think that this means their customer base is safe.


In reality, the first bank to remove the barriers to better on-boarding will benefit greatly, whether that’s an established bank or a challenger bank. This comes at a time when Open Banking is attempting to re-engineer how financial services work.

This clear (and increasing) reluctance to switch must be addressed if Open Banking is to be the success it promises to be.


Overall, across all four nations, 52% of respondents said that they would be more likely to complete an application if the entire process was online. The UK, the laggard when it comes to eID, is the most keen to make use of them, with over 60% of respondents more likely to complete online applications.


Where online on-boarding really shines, however, is in the impression it leaves with consumers. New consumers don’t just want to complete applications online, doing so encourages them to give these providers additional business.


An overwhelming number of consumers are more loyal to providers that give them the option of using an eID. Overall 64% of consumers will buy additional services from banks that don’t make them go through a paper-based ID process.

Conclusion: consumers want digital Ids

Consumers have a clear message for banks: identity is a problem, and we want you to fix it. This is good news for banks—they retain the trust that will help them retain business against their new rivals. Furthermore, trust and ID services could present a lucrative business opportunity at a time when traditional revenue streams are under threat.


But this trust will only hold back the tide for so long. The increasing rate of abandoned applications is evidence that convenience and a better on-boarding system will beat trust over time.


Banks, much like in the survey of two years ago, hold the key to improving customer experiences. They had the opportunity in 2016 and they have the opportunity now. In 2016, Open Banking was some way off and eID infrastructures were not present in the same way as now. While banks can still take advantage of the current situation, the need to do so is more pressing than ever—and the excuses have disappeared.


Banks need to both create eID where it doesn’t exist and educate their customers as to exactly what it is and how to use it. They need to create paperless, online/mobile-only processes that their potential customers will happily engage with. Smaller and challenger banks must do this too—through partnerships they can offer as compelling a suite of services as large banks, and eID will mean customers can get on board easily.


Consumers are more dissatisfied than two years ago. If account switching gave consumers the means to leave their banks, Open Banking now gives them the motivation. While time has not yet run out for traditional banks, the clock is ticking.

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