Better Customer Experience and Compliance via Digital Onboarding
What is digital onboarding?
Digital onboarding, also called as remote or online onboarding, is a process of acquiring new customers via digital tools so that they can access the services and products provided by the financial institutions in a more user-friendly, simpler and faster way. Since this process remarks the official commencement of the relationship with the customers, after the registration with the data identification, the institutions or the banks are entitled to ensure the same quality, security and guarantee for their services as they did in their in branch customer operations.
As digitalization brings in many advantages for speed, cost and efficiency, it also increases the vulnerability for financial crimes such as money laundering or fraud. Regulatory requirements have become more stringent as a natural result of changing dynamics in financial ecosystem and banks or financial institutions need to make sure that they are compliant with the regulations as they are transforming into digitalization. With digital onboarding, artificial intelligence based ID verification procedures have been implemented to ensure better compliance with KYC (Know Your Customer) processes and to create better customer experience.
Digital onboarding answering the challenges in the financial world
Together with the digitalization and globalization of financial eco-system, cyber security has become more vulnerable to fraud, therefore regulatory environment needed to be harsher and demanding for ID verification which means extra work, time and cost for the banks and financial institutions. Therefore, solutions like digital ID verification that provides simpler, more secure and cost-effective process handling both for the institutions and the users constitute a win-win outcome. With remote onboarding, clients are presented with a real-time, seamless and safer banking experience via an application or web interface overcoming the physical barriers. On the other hand, with the implementation of AI (artificial intelligence) and machine learning software, technologies like facial recognition and digital signatures enables real-time verification and ensures better customer due diligence and KYC (Know Your Customer) processes.
Additionally, digital onboarding is versatile and comprehensive, namely it can incorporate varying needs of different customers. It is possible to track and observe the financial activities of a customer and create thorough reports that can be used in improving the scalability and the services offered by the companies.
Banks and financial institutions which integrated this technology into their customer acquisition systems have increased their conversion rates substantially.
ID verification is one of the most essential methods on the way companies interacting with their clients and allowing them to use their services online and in-person. With the remote onboarding, banks and financial institutions are able to authenticate their clients online, without a need to personally meeting them and they are entitled to do comply with the regulations and provide security while doing this authentication.
With increasing mobilization rates, customers prefer to handle their financial services online (anytime and anywhere). At the same time, financial crimes like fraud, money laundering and identity theft are on the rise. Therefore, having a secure onboarding process and remote identity verification are becoming much more critical than before. Institutions already getting the help of RegTechs in acquiring a system that offers solution for a safe and smooth customer experience while at the same time managing the risk for fraud and complying with the regulations are the ones that can achieve success in the market. The best method in this case is to make sure using different kinds of verification like biometric verification, two-factor authentication and identity document validation at the phases of account creating and authentication to fight the risks of ID fraud.
As digital onboarding highlights the importance of improving customer experience and convenience, the institutions have to put their priority is on the security and safety by ensuring a compliance with KYC (Know Your Customer) and AML (Anti Money Laundering). However, providing the best service and complying with the regulations at the same time can be challenging for the financial institutions if they insist on going with the traditional methods. The ID verification systems of digital onboarding process aim to prevent unwanted practices resulting from the alienation of the potential clients since mobile or online banking options both increase the engagement with existent clients and offer new online customers to open accounts instantly for savings, checking and credit card accounts.
On the other side, the only customers of banks and financial institutions are not the individuals but corporates too. For the sake of the implementation of anti-money laundering procedures, working with corporate customers can be harder because some of them may have higher risks. Thanks to the digital onboarding requirements, the risks can be reduced and compliance required for financial institutions is restored with AI based AML.
Benefits of digital onboarding
The whole process of digital onboarding is designed and aimed to improve the client conversion rate and the overall user experience while at the same time it helps banks, Fintechs and other financial institutions meet the strict regulatory requirements, reduce operational costs, improve productivity and agility, and remove the obstacles related to offline transactions.
The benefits of digital (remote) onboarding include but not limited to:
- Improving customer experience by offering more flexibility and user-friendliness
- Better customer experience creating more satisfaction and loyalty
- Diminishing the barriers and workload of manual interference with automated systems
- Increasing the amount of transactions by allowing for more new digital account openings
- Reducing the recruitment (of a new customer) and the transaction time
- Improved ID verification and Customer Due Diligence processes reducing the risk of fraud and money laundering to the minimum
Choosing the right partner for the onboarding process
The digital customer onboarding plays a key role in the banks and financial institutions’ relationship with their potential customers. Although the customers may vary in their particular needs and demands, they share a common expectation during their onboarding journey, which is flexibility and agility. Therefore, to ensure a seamless onboarding process, the institutions need to be selective in deciding their partner that will provide them with the best technological solution in the transformation to digital onboarding process.
Recently, Fineksus has collaborated with Amani AI to pioneer digital onboarding processes while ensuring more enhanced AML services. Together, Fineksus and Amani AI, have developed a fully integrated KYC / AML solution for digital onboarding and fraud prevention.
Burçin Güney, Account Manager