There is an abundance of research about the growing importance of customer satisfaction and experience in the long-term success of all companies, with the link being especially robust in the banking industry. Earlier this year, for example, McKinsey & Company released research arguing that “customer experience is proving to be the strategic differentiator for banks, with experienced leaders outperforming laggards.” A seminal study by Harvard Business Review found that a 5% increase in customer-retention rates increased profits by between 25% and 95%.
Financial services executives are aware of the connection between satisfied customers and financial performance. Early in 2023, the International Data Corporation (IDC), a global market intelligence firm, released survey findings that found that customer experience and satisfaction was ranked as the third priority among bank executives, surpassed only by revenue growth and the need to build a more efficient and resilient organization.
Not as widely recognized is the critical role that seamless onboarding plays in forming the strong relationships financial services companies aim to establish with their customers. In fact, a ABBYY study released last year found that a remarkable 90% of companies lose customers during digital onboarding.
Why onboarding matters now and long into the future
It doesn’t have to be this way. Indeed, it’s hard to overstate the importance of onboarding when it comes to setting expectations and establishing the type of valuable relationship a customer would seek to expand in the future.
“Everything starts at onboarding,” said Greynier Fuentes, Vice President of Sales and Digital Strategies for Veritran, a global tech company that works with financial institutions to simplify banking experiences, including onboarding. “That’s the first impression and the first interaction customers get from your financial institution, and it sets the tone for the relationship that continues after.”
There is compelling evidence that ensuring a positive experience for customers during onboarding has both immediate and lasting benefits for banks. As part of the earlier research outlined by ABBYY, it was observed that the banking sector, as highlighted in the same study, is the poorest performer among all industries, with 1 in 4 customers discontinuing the onboarding process.
This high rate of abandonment has obvious short-term consequences, including higher customer-acquisition costs. In the long run, failing to provide immediate satisfaction to new customers during onboarding results in adverse financial consequences. “Happy customers end up acquiring more than three products with the bank,” said Fuentes. “Unhappy customers usually get one or two products, and they usually end up leaving.”
The elements of superior onboarding
For banks, a pertinent question arises: What defines an onboarding experience that aligns with or surpasses customer expectations, fostering deeper engagement? The answer lies in engaging with customers based on their preferences.
For customers onboarding online, the process must be intuitive and seamless. It should be swift, requiring no more than five minutes to authenticate and onboard a new customer. Furthermore, it should be omnichannel and adaptable, enabling potential customers to seamlessly transition between channels without restarting the onboarding process. “Customers want the option to transition from one channel to another, whether it’s from digital to a branch or from digital to a customer service call without having to provide all their information a second or third time,” said Fuentes.
Somewhat counterintuitively, a misstep or problem during onboarding is an opportunity for banks to demonstrate their distinction from competitors. One way banks can demonstrate their commitment to new customers is through their omnichannel capabilities. For example, if a potential new customer runs into a problem during onboarding using a digital channel, they should be able to walk into a branch and speak with a teller who can quickly access all the information the customer has already shared.
Obviously, providing this type of experience to potential new customers requires banks to work with the right technology providers. When this happens, progress can be fast. “There are solutions out there that could be implemented in less than three months from the technology standpoint,” said Fuentes. “You can integrate with the bank’s system and deploy an onboarding solution for end users to take advantage of in less than three months.”
The right product mix matters
Failing to recognize that a significant determinant of success in onboarding is having the selection of products that customers would desire is a mistake. These days, that frequently means offering digital wallets. For example, over 70% of consumers today seek digital-only solutions, and digital wallets offer much of what digitally inclined banking customers want.
Offering digital wallets depends on technology capabilities that some banks don’t have. However, partnering with the right technology partner enables a swift realization of the digital products customers are seeking. That’s exactly what happened in Argentina during the COVID-19 pandemic. Although 80% of adults in Argentina had a bank account before the pandemic, only 48% acknowledged having one. This posed a challenge during the pandemic, when the government aimed to promote social distancing and required a rapid means to quickly disburse financial assistance.
The answer was a rapid rollout of a digital wallet. Banco Provincia, which serves customers in the province of Buenos Aires, worked with Veritran to develop and deploy a digital wallet called Cuenta DNI. The digital wallet allowed banking customers to receive emergency assistance without going to a bank branch and perform other essential financial transactions, like making payments and transfers using a mobile phone. The digital wallet quickly became a tool for over 1 million Argentines to receive government assistance, and the product has since helped many people gain access to the country’s financial system.
The opportunity for banks to create lasting relationships with customers begins at onboarding. With the right technology, banks can continuously build on the success of onboarding. “Onboarding is the first impression,” said Fuentes, “But then you need to continue delivering on that, and every interaction with your users needs to be customer-centric. It’s all about the customers now, and banks need to make sure they have that as their top priority.”