Rupert Spiegelberg, CEO, IDnow, informs banking enterprises how they can adapt their services to appeal to every demographic.
In a world where data breaches are so commonplace they barely make the news, persuading a customer to share their personal and financial details online requires two important things: trust in the institution and a positive user experience. Fail on either of these levels and the customer will likely terminate any transaction before signing on the dotted line.
This is particularly true for the financial sector which experiences the highest number of failed sign-ups – known as ‘leakage’ in the industry – mainly due to stringent legal requirements for identity verification which make for a long drawn-out process for the customer. While transactions within this sector have to remain understandably watertight, they nevertheless need to factor in convenience for the customer. This, after all, is why they’ve chosen to sign-up online in the first place, rather than visit a traditional institution.
In the Now Economy of instant interaction and gratification, buying, selling, booking, renting, applying, publishing and account opening are all possible while on the move, or from the comfort of a customer’s home. Banks who can win customers over with their online offering and maintain their confidence to the end of the sign-up process will be rewarded with a closed deal and a happy customer. But online banking is governed by special regulations, such as the Know Your Customer (KYC) standards set out in the EU’s Third Anti-Money Laundering Directive. This means that handling online transaction processes in the financial sector is considerably more challenging than it is for retail.
KYC and regulations like it mean that financial institutions must verify their customers’ identities appropriately and this significantly increases the number of steps in the transaction process, making the online signup process quite extensive. As a result, customers seeking to open a bank account online find that they are required to provide considerably more sensitive information than they would, say, when shopping online.
Customers of the Now Economy: price-conscious and discerning
There are many factors that lead to customers abandoning an application process and these tend to vary depending on the customer profile, the type of transaction they are looking to carry out and other, more personal considerations. If customers discover, for example, that they are required to visit a physical location to confirm their identity at the end of the verification process, the extra effort needed for this is likely to cause millennials – a demanding customer group – to abandon the process.
At the opposite end of the spectrum, older people are often inherently mistrustful about sharing sensitive information online and are more likely to abandon a transaction at the first obstacle due to security fears. The lesson for banks lies in recognising that customers are not simply looking for the best-priced product; they also attach significant value to a signup process that offers maximum convenience and confidence in the security.
Indeed, onboarding should be as flexible and frictionless as possible. When customers see the speed, ease, security and convenience you demonstrate during onboarding, their positive perception of your brand — as well as the likelihood they will become a customer — is reinforced.
Building online trust: authentication by videochat
In January 2017, the financial market authority created a way of addressing this problem: it authorised the use of video identification procedures as a valid method of authentication in the financial sector. These semi-automated procedures, which are usually offered in the form of Software-as-a-Service (SaaS), significantly enhance cost efficiency for the provider, while simultaneously ensuring that customers have a convenient, user-friendly experience. The application begins by providing the customer with a brief and simple explanation of the identification process and then, using video chat, a support worker then takes the customer through the various steps in the online procedure. Any questions that arise can be answered immediately and this real-time dialogue with a human being boosts customer confidence in the process. In addition, this semi-automated approach accelerates the onboarding process, enabling companies to increase their customer conversion rates. However, in order to be successful, the following points should be taken into account when choosing an identification solution:
1. Availability on all end devices
Some customers will want to sign up on their desktop, others on their phone. Banks should try to find a solution that supports all devices, so as to not alienate any potential customers.
2. Integration capability
Switching to a separate app from an unknown service provider for the identification process can make customers hesitant and may result in abandonment. Integrating the solution into the company’s application interface, so that the process continues seamlessly, creates confidence and makes it more likely that the customer will see the process through to the end.
3. Supporting ID documents worldwide
More and more people are now spending time abroad. If customers are unable to open an account with a bank because the authentication solution cannot handle their ID documents, customer satisfaction is at risk. If, however, the company can handle such issues quickly and easily, it is likely that customers will turn to the bank for other services in future and even recommend it to colleagues and friends. As customer groups become increasingly international, it is essential for companies to consider a solution that supports all ID documents.
4. Data security
Regulatory standards like GDPR require the use of sensitive personal data to be controlled. End customers, too, are increasingly emphasising the importance of being able to request information on how their data is being processed and stored. Transparency and the ability to obtain information about the verification process is becoming increasingly important. Banks should therefore ensure that they choose an identification solution that gives them full control of the data collected from their customers.
5. High-quality support
High-quality, friendly advice is an important factor in online business. This means that the chosen identification solution needs to offer a variety of language options. Depending on the company and the customer structure, it may also make sense to employ advisers with a knowledge of various languages, possibly including some less common ones.
By integrating a verification application into their online signup processes, banks can dramatically reduce the amount of customer signup fails. The right verification application will instil trust in the customer and make the onboarding process smoother, so that both customers and banks can reap the rewards of the online banking process.