Could you please take us through the state of digital onboarding in the EU? Has COVID-19 changed onboarding expectations?
For the last few years, Signicat has published The Battle to Onboard Report to provide insight into the experiences and expectations of European consumers when onboarding to a financial service.
For The Battle to Onboard 2020: The impact of COVID-19 and beyond we have asked consumers in different countries about their onboarding experience, and one of the results was that 67% of the people had abandoned onboarding to a financial service, which according to P.A.ID Strategies, amounts to about EUR 5 billion in yearly loss for financial institutions.
Many financial providers still require physical information, and printing and sending in an envelope interrupts the process and causes abandonment. Visiting a branch during COVID-19 has been difficult or in many cases impossible.
The COVID-19 pandemic has accelerated the need for digital transformation and digital identity solutions for traditional banks, and as people are doing more and more online, they expect onboarding to be smooth, fast, and easy.
Despite the widespread adoption of federated eID schemes, there is still no overall indication that onboarding is improving for traditional banks. Why?
With modern trusted technical solutions (such as the identity platform delivered by Signicat) there are no excuses for requiring the users to provide any physical information in the process. It can all be done digitally, from proving who you are by using an eID or scanning identity documents, to signing a contract using electronic signatures.
In many cases, digitisation is done by retrofitting existing processes digitally, instead of revisiting and improving the processes. The problem banks face is that big tech and fintech have altered customer expectations forever. Users now expect access to be as simple as a social media log-in where banks sometimes underestimate how much a seamless onboarding experience matters, a process where fintechs and neo-banks take the lead.
Through existing know your customer (KYC) processes, experience with fraud monitoring and detection, banks have the infrastructure in place and customer base but not all have capitalised on their expertise for seamless digital end-user experiences.
As in previous Battle to Onboard reports, banks still enjoy high levels of trust despite delivering a poorer onboarding experience, but for how long?
We do need trusted entities. And banks are in a good position. They still have trust. They have the users. They have experience with fraud monitoring. They already have mechanisms in place for transferring physical assets to next of kin, something which is currently missing for digital assets.
One thing we saw from market research was the difference between different age groups. One trend was the clear correlation between age and acceptance to bad user experience. Younger people are less tolerant in this respect, and 40% of those who went through with the onboarding, found the user experience ‘difficult’, ‘very difficult’ or ‘painful’, as opposed to less than 10% of those over 65 years of age. This should be a serious reminder to banks to improve their processes. We also found that while the older generation was more focused on security and the possibility to get in touch with a human, Generation-Z wanted privacy and 100% digital.
Is 2020 the end of learned helplessness?
Learned helplessness is a behaviour exhibited by a subject after enduring repeated aversive stimuli beyond their control. In this context, aversive refers to all the bad user experiences we have. While there are really bad websites, there are also some good ones, where we are learning that this could be a lot better. The younger generations are not putting up with all the sucky experiences the older generations are and can in that way put more focus on better experiences. But this will take time, and the learned helplessness will not go away any time soon.
As digital identity promises to boost the digital onboarding experience, how would consumers expect the financial product application process to be different in ten years?
Predicting for 2031 is not easy, especially considering how much has happened since 2011. One thing which I think is clear is that there will be an increased focus on privacy and control of data.
And we will for sure have better mechanisms for identifying online. One example is dynamic biometrics, which combines several sensors from your phone, smartwatch, and possibly other body devices. The way you walk, breathe, talk, and even your heartbeat will make it virtually impossible for somebody to impersonate you.
I would also hope that we have legal and technical frameworks in place around pseudonymity. We all claim to want anonymity, but that would also grant anonymity to any criminals, including those stalking your teenage daughter.
Given the above, I would hope that onboarding in 2031 would be a very smooth process.
This editorial was first published in our Financial Crime and Fraud Report 2021 - How to Fight Fraud and Master KYC, Onboarding & Digital ID, which provides a comprehensive overview of the major trends driving growth in fraud prevention, identity management, digital onboarding and KYC, transaction monitoring, financial crime compliance, regtech, and more.
About John Erik Setsaas
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