Finance onboarding

What is customer onboarding?


What is customer onboarding?

Customer onboarding, or client onboarding, is the nurturing process that helps new users and customers to become familiar with your product or service. A great customer onboarding process involves support for your new customer as they step through the journey as well as providing tailored guidance and support.

Onboarding clients within the finance industry, within a frictionless experience that doesn’t compromise on compliance (such as anti-money laundering legislation), is crucial if banks and other financial institutions are to meet the ever-demanding expectations of their customers.

When an organisation achieves a positive onboarding experience it serves to confirm that your customers made the right choice, and ultimately, helps you to retain them.

Customer onboarding can sound like a daunting part of the customer journey, but the good thing is your customers already like you and they already believe in your product — that’s why they started the onboarding journey. You just have to help them through.

No two client onboarding processes can be the same even within the same industry. Each organisation must seek to demonstrate their unique personality and engage with their customers by using the insights they have about their audience and what they need.

At its most simple, onboarding needs to replicate the experience that your new customer will have when using your product. Core fundamentals include simplicity, clarity and management of expectations. Your aim should be to create a seamless customer experience from the very first touchpoint to the post-purchase stage.

If there was any doubt about the critical importance of a successful onboarding experience, the recent Hubspot research into onboarding found that you can lose 75% of new users within the first week and that, if you offer a free trial you could see as little as 40% uptake at the end of the trial.

During onboarding customers pass through a few key stages:

  • The greeting and welcome – how you communicate those early messages which includes the tone and style you use to generate engagement. This communication must also act as a point of reassurance that their data is secure with your organisation, that you are to be trusted and are compliant.
  • The product set up – how easy is it for your customer to complete the signup? This includes information gathering where it is imperative to achieve a balance between the data you need to collect about a customer whilst making sure that they are not overwhelmed with the form-fill process.
  • Product usage – making sure that your new customer has access to your product, support in the early days of usage and reason to become a regular user.
  • Successful move into a business as usual – delivering a seamless experience into a long-running relationship. Ensuring data quality is maintained and that you are able to maintain the customers’ services and continue to meet their needs.


What do customers need when they create a new account?


What do customers need when they create a new finance account?

Speedy onboarding

According to Deloitte 38 percent of new banking customers will abandon the account creation process if they find that the onboarding process is taking too long, or requires more information than they are prepared to disclose. Forrester suggests that as many as 54% of people filling out financial application forms abandon prior to completion.

One of the biggest barriers in the world of finance is all the data you have to gather about your customers. Financial organisations are obliged to gather such information by regulators. When this is compounded by overly cautious compliance teams, this can make forms up to 3-4 times as long as people are used to in other industries. This can make registration or application processes frustrating and effort heavy for the customer who is at the beginnings of their engagement with a financial organisation.

Address lookup and validation which allows users to search for their address can reduce the time and keystrokes required to enter the data which make a significant impact on customer satisfaction.

84% of consumers prefer type-ahead address validation.

Given that many types of finance application will require customers to provide several years of previous address history, it can make things vastly easier for those who have moved around a lot.

Let customers track onboarding

Both online and offline, setting clear expectations about how long application processes can take gives users peace of mind in terms of the time they invest in thinking and doing.

When there are manual steps like KYC involved, set a clear timeframe in which the process should be complete (or may need further action), otherwise some users will have it on their minds, may become impatient and leave without providing all the required information.

Letting people know before they begin the process what documents they might require (e.g. passport or address verification documents) can also save time and keep them engaged and active in the application process.

Multi-device capability

By allowing your customers the choice of interacting on any channel, they will be reassured that they can enjoy a multichannel experience throughout their interactions with your brand. Make sure that data gathering is well optimised for mobile use.

Confidence in the organisation and security

Privacy is a hot topic for your customers. Whilst some of your audience may have a variety of financial products and be aware that they will need to provide certain
details for KYC and AML processes, many may be left questioning why certain information is needed and what will be done with it. Setting out the reasons you are asking for certain pieces of information, at the right point in the process, can reassure customers that your organisation is taking the time to protect their identity and fight fraud.

How to give new finance customers a better onboarding experience


How to give new finance customers a better on-boarding experience

When a new customer enters the onboarding journey for a financial product or service what matters most to them is the quality and simplicity of the customer experience. According to Deloittes “26 percent of customers feel that “easy enrolment and login” are the most important criteria upon which they decide who to bank with.”

Customer needs must be met alongside regulatory, compliance and business operations targets which often focus on collecting data.

Research by the annual Digital Banking Report reveals a global increase in overall customer willingness to change banks. This would seem to be particularly true for younger segments of the market who have come of age in a digital world. They understand how easy it is to switch loyalties and don’t see any reason they should treat your bank differently than another service provider.

Studies have long shown that when your customers decide to leave, it’s usually early in the relationship. In fact, 43% of those who had low satisfaction during new account opening indicated they will “definitely or probably” switch banks as a result, further evidence of the importance of effective onboarding.

Within the finance sector, it’s important for your customers to see onboarding as a single process, no matter how many channels they use. To avoid losing customers, your onboarding strategy must offer experiences that:

  • Ask only for the information you absolutely require
  • Offer a consistent experience on multiple channels
  • Evidence accuracy
  • Keep customers informed through the process

Research also found that many financial institutions still require duplicate entry of information, even when a customer is buying a new product from the same financial institution. When you ensure that a customer needs to only enter data, such as their address once, you can support a speedy form fill process.

Although many bank legacy systems function well, older systems can be inefficient, inflexible, and expensive to redevelop. A recent report shows that up to 90% of technology budgets are being used to re-engineer ageing systems. That’s why making use of integrations with innovative software, such as address verification from Loqate can help keep up to date without heavy investments in new systems.

How to speed up onboarding in the finance industry

When onboarding takes too long, your customers will seek other solutions. In fact, for some banks, customers abandon up to 90% of new account applications prior to their completion.

When your customers are ready to submit an application, it’s important that you do all you can to speed them through the process at the earliest possible opportunity – no waiting to get in front of a desktop computer or print and manually fill forms. MCommerce solutions are a must – customers expect to be able to have an end-to-end interaction with a finance brand through their mobile device.

Any-channel access to application status and timely, relevant updates are must-haves for consumers accustomed to full transparency in their digital interactions with organisations in other industries. Once onboard, customers also expect to receive relevant communications as they begin a relationship.

How to manage compliance through onboarding

In the financial sector, onboarding new clients within a highly regulated industry can be complex. Validating the identities and financial circumstances of your prospective customers is vital. To ensure compliance with AML (Anti-Money Laundering) legislation and Customer Due Diligence (CDD) requirements, conducting KYC, or Know Your Customer checks on the details of your customers as they pass through onboarding and at regular intervals during their time as your customer is of critical importance.

With KYC and client onboarding becoming increasingly complex, those Financial Services firms most affected are spending growing amounts of time manually processing checks. Automating these checks is a must.

One crucial piece of data that must be collected and validated quickly is address data. Using an address verification service supports a slick process which can help customers enter key parts of the address only and be presented with choices which means that financial organisations can avoid the risks associated with manual entry, mistyping and inconsistency in data fields.

Further to this, advancements such as the development of verification means that address entry is not only accurate but speedily captured.


Challenges and risks awaiting new onboarding customers


Challenges and risks affecting customer onboarding for finance

How to successfully manage risk when onboarding new finance customers

When assessing credit applications, business operations functions within lenders have to be 100% confident the customer is who they say they are. Their address history is vital to this process – the quality of the data is paramount. Totally Money is one such financial organisation managing this risk by using the Royal Mail's 'Postcode Address File', a database containing 29 million residential and business addresses, which constantly changes to reflect new builds, updates and deletions with between 3,000 and 5,000 updates every day.

What is multi-residence address data?

The Multiple Residence dataset from Royal Mail contains over 700,000 additional address records not recorded in standard PAF®. By adding this into your datasets, you can bolster your data with accurate address data for thousands of premises where multiple households share a letterbox, such as university halls of residence, apartment blocks and self-contained flats. Your prospective customers living in this type of property may struggle to access your products and services and, when they do, may experience an extended onboarding process whilst you verify their address. This delay could lead them to access equivalent services from your competitors or leave you carrying extra risk without the validation you desire.

How can address data accuracy reduce fraud?

Whilst changes in card security in recent years has achieved reductions in card fraud in card present purchases, card not present fraud continues to rise. That means online purchases are more vulnerable today than ever before. This comes at a time when international eCommerce and mCommerce are ever-growing.

Customers are transacting more often and more regularly with you than ever before. Quick growth in digital transactions offer opportunities to learn more about your customer but it comes with associated risks – at the end of 2018, reports showed an increase in consumer and retail fraud, up by 27% on the previous year.

eCommerce merchants must work with financial institutions to reduce the risk of credit card fraud for their customers and their businesses.

Outside of online transactions, when we look at the application processes for financial products, an address remains the single most important identifier of an individual. When they are applying for any financial product, it is crucial to get this information correct first time. A comprehensive fraud reduction system must always include using an Address Verification Service.

How do finance businesses work with retailers to manage fraud?

The finance industry is the gateway for all retailers who need to manage their fraud risk whilst delivering customer experience excellence to their customer base. Retailers must juggle the customer’s needs with their fraud management. Customers can find the process of an online purchase onerous and complex, with more and more merchants requiring the credit card number, name on the card, Card Verification Value (CVV) code and, on top of that, postal code or full address. However, this extra information is for the sake of customers and merchants alike, because address verification can help to validate a credit card purchase.

When a card is not present, a verified address helps to increase the chances that the customer is the actual cardholder. In fact, AVS helps add an extra layer of security. Without a positive AVS response, card-not-present retailers have fewer dispute rights.

Why machine learning is critical to the finance sector?

Machine learning provides systems with the ability to automatically learn and improve from experience without being explicitly programmed. Machine learning focuses on the development of computer programs that can access data and uses it to further its own learning internally. The keyword here is ‘data’. The system can only learn what it is given so if the quality of the data you are providing the system with is of poor quality, the learning will be based on bad data, in other words, rubbish in equals rubbish out. Using data verification and geolocation tools helps ensure the collection of quality data for your machine learning systems to learn from, which will, in turn, enhance the effectiveness of data or location analytics.

Onboarding in the finance industry


Onboarding in the insurance industry

Within the finance sector, insurance organisations stand-alone with somewhat different requirements and, by the nature of insurance, a more transient relationship with their customers.

The insurance industry has the opportunity to learn a lot about onboarding from outside the finance industry.

When designing onboarding processes in insurance it is worth considering the option to allow customers to interact and make purchases without the need to register an account straight away. You can still add registration as an option, but don’t make it the primary focus.

Insurers can also be prone to ask too many questions users may not even know the answer to.

With regards to home insurance, it’s imperative to know as much as possible about the property your user wants to insure but, if they don’t have the answers to hand, they will inevitably become confused and frustrated, and likely to leave the onboarding journey sooner.

A great solution for gathering property data is the use of Property Intelligence data. This data provides you with a complete picture of a property and its surrounding area, meaning you won’t need to ask your customers vast amounts of complicated questions.

Property Intelligence tells you information such as the type and size of the property, the number of bedrooms and bathrooms and potential risks around the location, such as distance from the nearest watercourse, allowing you to provide the right quote.

Address data quality (and especially enhanced address data such as an Address Base) can further support insurers wishing to carry out further checks.

The manner in which insurers choose to capture data can also support the data gathering. Using a tool such as type-ahead address verification will also reduce the volume of data you need to ask for and will speed up the process and reduce delays and drop-offs.

Other industries also offer some great examples of best practice when it comes to managing the expectations of their customers through the onboarding journey. Looking to sectors such as utilities and retailers there are great examples of how it is possible to effectively manage the expectations of customers through onboarding. These processes which include confirmation of the information gathered during take on process, offer another opportunity for customers to check the data and be reassured about an address and property verification that you have undertaken.

The insurance industry is packed with jargon and acronyms so anything you can do to remove these will further aid frictionless take on.

Trends in address verification for finance


Trends in address verification for finance

Data Accuracy

Customers’ expectations have never been higher around the performance they expect from the organisations they interact with. As they interact more with technology in their homes, they know what is achievable, that a device can know its location, understand its environment and respond to change. They expect this from their personal technology, and they expect the financial institutions they work with to be utilising advancements.

When companies reveal themselves to have inaccurate or outdated data the customer perception will be that they are, not only behind the times but not customer focussed enough to prioritise the data quality.

Utilising technology (like machine learning or geolocation) to manage and maintain data must form part of future strategies for onboarding and caring for the customers of the finance sector.

How to create online forms which convert?

As we’ve covered throughout this analysis of onboarding, forms and application processes are key for the happiness of your customers and the conversion rate through onboarding.

The future of brilliant forms requires shorter, more intuitive forms that can gather only the minimum required amount of data and utilises solutions such as property intelligence data and type-ahead address solutions to enrich the data they provide. By minimising the effort your customers have to put in, the result will be maximising their satisfaction.