BLOG: Digital transformation in banking: it’s time to get it right

This is a crucial time for digital transformation in banking. The dwindling of bank branch networks on the high street has only served to illustrate how the adoption of digital technologies and remote devices has accelerated in a trend supercharged by the COVID pandemic.

And yet there is still a pressing need for improved digital performance and in particular better onboarding processes with recent surveys revealing that two-thirds of consumers have abandoned financial service applications. The most common mistakes banks make in digital transformation include:

· Failure to Understand Customer Expectations: Banks sometimes overlook the evolving expectations of their customers. As digital identity schemes mature, customers expect smoother onboarding experiences, and this demand has led to more abandonment rates, which have risen from previous reports.

· Lack of Local Expertise: Banking operations span across diverse markets, each with its own regulations and customer preferences. Banks that don't collaborate with local experts can find it challenging to navigate these differences effectively.

· Ineffective Communication: Banks often fail to communicate the necessity of collecting extensive customer information, leading to mistrust and application abandonment. In recent surveys, over a third of consumers have abandoned an application for a financial product because they did not have the right identity credentials.

And the stakes are high with poor digital transformation seeing potential customers and market share slip away from banks as customers are more willing than ever to shop around for the best customer service.

Which is exactly why the most critical aspect to get right in banking digital transformation is that first interaction - the onboarding experience.

Banks must prioritise a seamless, user-friendly onboarding process that meets consumer expectations and complies with regulatory requirements. This

includes effective communication, reducing abandonment rates, and ensuring that the process is efficient and straightforward for customers. Integration with existing electronic identification methods and offering customers choices for identification are also essential components of success. It's critical to address the service element of the customer once onboarding and it must be done entirely online without the need to visit a branch.

Indeed, the most significant mistake banks make when converting to digital onboarding is underestimating the importance of user experience. Lengthy, complex, or confusing onboarding processes can lead to high abandonment rates and customer frustration. Banks must ensure that the digital onboarding process is user-friendly, efficient, and effectively communicates the necessity of data collection. In recent surveys, the average time for an application process was perceived to be around 15 minutes, indicating room for improvement.

There are three key rules to get digital onboarding right and they are:

· Meet Customer Expectations: Understand and meet the rising expectations of customers for a seamless and user-friendly onboarding experience. In recent surveys, over two-thirds of consumers have abandoned financial service applications in the last year, highlighting the need for improvement.

· Effective Communication: Clearly explain the reasons for collecting customer information to build trust and reduce abandonment rates. Over a third of consumers have abandoned an application for a financial product because they did not have the right identity credentials.

· Local Expertise: Collaborate with partners who possess local knowledge and expertise to navigate the unique regulatory landscapes of different markets effectively. This is crucial to address the diversity of consumer attitudes and behaviours across markets.

Oscar Wilde famously said ‘you never get a second chance to make a first impression’ and never has this quote been more aptly applied than to modern banking.

It’s time to get onboarding right and there’s no second chances.