Let’s face it – Banks have abandonment issues.

By Aaron Goldsmid, VP Twilio Account Security

Aaron joined Twilio in 2021 and leads Twilio’s Identity, Verification, and consumer business. Aaron brings more than 20 years of leadership experience at the nexus of consumer internet, fintech and security. He has helped to build and scale some of the world’s most beloved products. He previously served in product leadership roles at Facebook, Amazon, Microsoft, Twitter, and most recently as GM/CPO of Kiva.org where he built the National Digital Identity for the nation of Sierra Leone. Built fully on the block chain this product was awarded Global Prize for the 2020 World Bank Mission Billion Challenge.

Love it or loathe it, we check our devices an average of 344 times a day—which is equivalent to once every two minutes. Our mobile devices have become an extension of ourselves and we expect them to be as responsive as our own bodies. Waiting, even a few seconds, for an experience to load or to make a transaction could send your prospective customers into the arms of another company.

Businesses of course know this. That’s why they invest heavily in de-snagging every aspect of their platform, app or service. The margins between a great customer experience and an abandoned one are oftentimes fine.

And yet, when it comes to onboarding, sign-on and log-in, businesses are prepared to accept significant friction. That choice has profound impacts on the customer relationship – and nowhere more so than in financial services.

Identity matters

Verifying customers is a vital and highly-regulated part of every financial service transaction. Customers want to know they’re protected and banks need to prevent fraud. While consumers overwhelmingly report security is their greatest priority, we know that around 42% of consumers report abandoning sign-up to a new service because the onboarding process dragged.

The issue is even greater in the financial services sector, where Forrester analyst Peter Wannamacher found abandonment rates for online banking as high as 97.5% . In Europe, a recent study of financial service institutions revealed companies are losing at least $5.7 billion each year on abandoned financial services onboarding processes, with abandonment rates rising from 40% in 2016 to 68% in 2022. Customers reported speed, excessive personal information requirements and a lack of fully digital options as key reasons for abandoning the process.

This is even more troubling when you consider the cost of acquiring these prospective customers who then, due to friction at onboarding, fail to convert. Studies regularly report that the average Customer Acquisition Cost in banking reaches into the hundreds of dollars. You can throw customer churn into this mix too, with verification friction causing abandonment throughout the customer journey so customers you’ve transacted with before fail to return.

Guilty until proven innocent

Banks today require every prospective user to go through the exact same friction-ridden onboarding process. Verification processes start from the presumption that every user is fraudulent. Genuine users are required to prove their identity – typically with SMS one-time passcodes to complete, multi-channel authentication to navigate, even scans of identity documentation.

Sadly, some of these security measures can themselves be exploited by fraudsters. The result is that some genuine users abandon the process, while some fake users get through.

A smarter way to onboard would be to use data to triage prospective customers. Genuine customers would use a VIP lane giving them a fast and entirely friction-free onboarding —while fake users would be immediately identified and prevented from onboarding at all with high-friction requirements.

Treat genuine customers like VIPs

Your customers compare their experience with your financial service brand to every other mobile experience they have. One of my go-to examples of what seamless technology feels like is how easy it is to use your phone abroad today. The plane lands, you switch off airplane mode, and boom—your mobile phone automatically switches to the local carrier network, the correct billing’s applied to your account, and you’re instantly connected. All without any input required from you, the user.

Imagine for a moment if mobile carrier networks introduced the same levels of onboarding friction that we accept in financial services – that you had to respond to an OTP before making a call on a new network. It just wouldn’t fly.

Using our mobiles abroad isn’t just an illustrative example of seamless technology. The data infrastructure that underpins mobile carrier networks around the world is actually the solution to financial services’ abandonment problem.

Mobile carriers are the trusted and secure custodians of our personal data—who we are, our SIM number, and our individual phone numbers. Aggregated and leveraged for the first time in onboarding, mobile carriers’ deterministic data has the power to automatically identify and silently verify your genuine customers. Fake or fraudulent users can automatically be triaged and required to complete additional security checks via failover technologies such as PIN-less SMS or biometrics.

Security and CX: now banks can have the best of both worlds

Carrier data is about to change onboarding as we know it, allowing banks and financial services to treat genuine customers like VIPs with friction-free onboarding, and ending the trade-off between enhanced security and user experience.

Customer verification with these next-generation security solutions takes less than 5 seconds and requires no user input. That’s a saving of up to 20 seconds on the average time onboarding verification currently takes. For customers, it’s like swapping coach for a private jet. Once they experience it, they won’t want to go back.

When companies improve their onboarding flow, customers return the favor. Research shows that every dollar invested into onboarding solutions by companies returns $412 in customer lifetime value. Now that onboarding for genuine customers can be entirely friction-free, that already significant return on investment is sure to grow faster than it takes to, well… connect your mobile to a new network.