Digital Account Opening: Future-proofing the Digital Customer Experience in Banking

The financial services landscape is shifting. The market share of the big four legacy banks is shrinking (from 92 per cent to 70 per cent in a decade), and it’s been predicted that one in ten European banks won’t exist in the next five years. The fintech explosion – including the rise in challenger banks built on modern technology – has brought the spotlight on the quality of the services banks offer like never before, and consumers’ expectations are only getting higher: customers simply won’t tolerate inconvenience or poor interactions.

Tim Bedard

Agreements sit at the core of all businesses, but for banks and financial institutions (FIs) they’re often higher value and higher risk. Opening a new bank account, onboarding new applicants, or taking out a mortgage are usually more sensitive than your everyday employee agreements, and they’re also subject to regulatory standards and legal enforceability.

Worryingly, many banks are still relying on manual, disjointed approaches to agreements, which exposes them to potential operational, regulatory, fraud and customer experience risks. Agreement automation, which has been made possible thanks to significant advances in ID document verification and other technologies, such as identity verification and e-signatures, can help to mitigate these risks.

Banks and financial institutions need to ensure they adopt these new technologies in order to future-proof the digital customer experience, and remove the risks inherent in manual agreement processes.

E-signatures: Eliminating the Paper Trails and Increasing Compliance

Signatures are a foundational component of financial agreements that have traditionally required customers to visit a branch, or go through the time-consuming process of printing, scanning, signing and posting documents. This becomes even more testing if you’re spanning geographical regions, and as we continue to operate in an increasingly dispersed world, banks need to ensure they’re able to offer the same positive customer experience no matter where they, or their customers, are located.

Additionally, e-signature solutions can also capture a comprehensive audit trail which records what the customer consented to, when and how they signed. This is a crucial capability so banks and FIs can be GDPR compliant along with other regulations.

When it comes to agreement automation, many banks start by adopting basic e-signature capabilities which eliminate the pain-points associated with traditional “wet” signatures. However, e-signatures alone are not enough. Banks with semi-automated or siloed processes end up being insufficient from both a customer experience and risk perspective – either because paper agreements are introduced back into the process at a later stage, or because manual identity document verification checks are required.

Context Aware Identity Verification

Customer Identity verification has historically been one of the most challenging processes for banks to digitize. Up until now, it has either involved requiring a customer to come into branch or by leveraging legacy knowledge-based authentication (KBA) methods that rely on cross-checking information provided by the customer with third-party databases or credit agencies.

There are obvious downsides to both approaches. As bank branches continue to close combined with the accelerated adoption of digital banking, requiring customers to come in-store to verify their identity is a significant source of friction in the new account opening process. This has been compounded by the rise of mobile-only challenger banks who have played a large part in altering customer expectations of what they want from a bank. If someone can open a bank account with Monzo on their mobile phone, then they expect to achieve the same quick and positive digital customer experience from other providers.

The problem with KBA is the static nature of the information, combined with the rise of large-scale data breaches. If the information is stolen, then it’s all too easy for criminals to open fraudulent accounts.

In order to verify identities securely and without compromising the customer experience, banks need to adopt a context-aware identity verification approach, which combines risk analytics with multi-layered digital identity verification methods, such as ID document capture and biometrics. By doing so, banks will be able to digitize an essential component of account opening process that allows them to acquire new customers quicker while boosting customer experience.

There are a range of benefits to agreement automation and digitizing the account opening processes, including boosting conversion, reducing abandonment rates, stronger regulatory compliance and increasing operational efficiencies, all of which contribute to an enhanced customer experience.

Banks are operating in an increasingly hyper-competitive market, and customers are no longer wedded to one provider. Digital account opening goes a long way to ensuring financial institutions can provide a secure digital customer journey, which will not only safeguard ongoing customer loyalty, but also win new customers from competitors.