How the onboarding process turns out to be is almost always the first impression that a customer has with a new banking or insurance service provider. To put it simply, this process is very critical to setting the tone for the client’s overall experience with the bank or insurance service provider. Moreover, in today’s age of important KYC (Know Your Customer) norms, it is also a critical compliance step for gathering (KYC) data that will be critical for the ongoing maintenance and management of the account.
Today, with the availability of digital data banks such as Aadhaar, NSDL, CKYC repositories etc. and regulatory mandate for performing e-KYC via biometric authentication, we are truly able to unlock the full potential of digital services and usher in a new era of customer onboarding. eKYC and digital onboarding of the customer ensures no more lengthy paperwork or waiting time for accounts to be opened, no more queuing up at bank branches to submit paperwork and wasting time and effort in multiple follow-ups and innumerable other such processes that the customer had to undergo until some years ago. Today, opening a bank account or availing an insurance policy has become as easy as online shopping or booking a ticket on a travel portal. All it takes is just a few minutes and some basic details and you are ready to go.
What is an eKYC?
E-KYC is a process in which approved entities query a digital (and usually national) ID system to authenticate or verify their customers’ identities and, in some cases, retrieve basic information about them. In layman terms, an e-KYC is a paperless verification process for online confirmation. It is where a customer approves and allows the KYC procedure to be performed electronically. It vastly reduces the time taken in the requisite documentation. The procedures that take weeks to complete can be finished in a matter of hours, thus vastly improving the onboarding process of customers.
Importance of eKYC and Digital Onboarding
Financial services providers, whether be it banking or be it insurance, have a mandated responsibility to identify their customers and understand & negotiate the risks they pose before providing services. When prospective customers lack any sort of identification, or when their identification is difficult to authenticate, it would be difficult for service providers to perform the necessary customer due diligence (CDD) on them. This can then result in two constraints on financial inclusion: on the supply side, expensive customer identification and due diligence procedures can render low-income customers unprofitable, constraining the size of the viable market; and on the demand side, lengthy or inconvenient onboarding procedures can deter potential customers from signing up for financial services.
Efficient and effective CDD procedures address both these constraints. Here is where ekYC and digital onboarding are very helpful to banks and insurance providers. Although more challenging to implement than conventional KYC, it promises much more benefits in the long term such as cost reduction, lesser manhours, improving record keeping procedures and as a macro view, also helping boost financial inclusion.
Digital Onboarding Helps Financial Institutions to be Seen as Innovators
Apart from creating a customer-centric experience, digital onboarding strategies also help a bank’s or an insurance company’s brand be seen as an innovator and help create efficiencies. Of course, all of us would agree that being seen as an innovator today has massive advantages in terms of brand buzz, brand recall value amongst prospective customers.
Digital methods of onboarding customers have other big advantages such as automating activities like applicant background checks frees up time for employees to focus on higher-value tasks, and iteration, since making tweaks to the process based on customer feedback is far easier on an app than the effort necessary to make similar changes in a branch.
Leading Banks Across the World are Making Rapid Strides Towards Digital Onboarding
Until about 5 years ago, in most retail financial services markets across the globe, opening fully digitized prime current accounts for new-to-bank and customers was almost impossible. Banks were not able to meet strict compliance with the regulator’s guidelines for security and customer verification. This has changed big time in recent years, with banks in most mature and even emerging markets having started to leverage on the seemingly endless opportunities that digital onboarding provides. This is even more true for markets in the Asia Pacific, with regulators in some countries having massively liberalized account opening processes.
Some examples of this are,
- At many banks in China and Korea, a prime account that has no limits in regard to fund transfers, payments or access to cash can only be opened at the standard counters or by video-chat-based ID verification.
- A fully digitized comprehensive current and savings (CASA) account opening is already available in Singapore enabled by strong e-government registries. It also eliminates the need to submit ID copies for verification and authentication. DBS Singapore embarked on a digital transformation journey with new streamlined processes and customer journeys being introduced gradually over the last two years.
- In Hong Kong, with the launch of mobile current account opening by end 2018, a bank can potentially now complete the process including e-KYC and form completion in under 10 minutes.
Although banks and insurance companies’ have made very noticeable progress towards digital onboarding, however, we would also have to accept the fact that there are some persisting hurdles, resulting in high dropout rates for onboarding on digital channels. Having said that, its crystal clear that the high dropout rates are often due to issues that can be easily resolved. Let’s have a look at them.
How can Banks and Insurance Companies Overcome Digital Onboarding Hurdles
- Banks and Insurance Companies need to make financial tasks simpler and easier, from the time consumers run product and price comparisons on through to onboarding and usage.
- Moreover, the whole digital onboarding process also should be made more simpler and in line with a prospective customer’s preferences and digital usage habits.
- Companies should always keep in mind that effective onboarding begins with an effective landing page. Research has shown that almost always, financial institutions have less than 10 seconds to persuade a prospective customer to stay on the site.
- Another important point for financial institutions to keep in mind is to provide additional and immediate value beyond instant onboarding.
SimpleCRM’s Digital Account and eKYC Virtual Assistant
The Digital Account and eKYC virtual assistant, developed by SimpleCRM is perfectly suited for banks, insurance companies and other financial institutions to make the process of digital onboarding of customers effective and customer friendly, overcoming all the above mentioned hurdles that financial institutions face. Through the Digital Account and eKYC Virtual Assistant, banks and insurance companies can,
- Seamlessly complete the process of digital onboarding of customers.
- Integrate it with CRM, core banking systems for a more customer-oriented approach.
- Also integrate it with credit decisioning systems, to ensure more efficiency in the loan approving process.
- Prevent fraud through the virtual assistant’s AI-based fraud prevention system.
- Improve cross sell and upsell opportunities.
Features of SimpleCRM’s Digital Account and eKYC Virtual Assistant
- The virtual assistant enables banks to automate the process of opening of the CASA account upon submission of application by a customer.
- The virtual assistant is OCR enabled, i.e. – it extracts textual data from documents, thus helping to verify the authenticity of identity documents of customers.
- It can also be integrated to payment gateways, thus allowing customers to fund the newly created account.
- In case a customer does not completely fill up the virtual assistant application, the eKYC information captured in the intermediary steps can be forwarded to lead management systems for further follow ups.
- The virtual assistant also provides the feature of facial recognition with confidence levels of accuracy, example – it tells how much the faces from profile picture/selfie and government id match with each other, ensuring more accurate customer verification.
- The virtual assistant can be further integrated with blacklisted database, credit check systems, anti money laundering systems for effective verification of customer information. Moreover, the verification can be done within the app itself.
Perfect for Banks and Insurance Companies in their Digital First Approach
For financial institutions such as banks, insurance companies, the stakes are even higher — hiccups or outright failures during the onboarding process can impact their bottom-line. One of the most common methods for applying for a small-business credit card, line of credit today or getting information about an insurance policy is a desktop or laptop computer, yet a large number of customers rate their digital experience as average or needing improvement. This lack of confidence in service experience for critical needs should be a major concern for banks and insurance companies.
With any digital-first approach, financial institutions should aim to guide customers through the onboarding process across multiple digital channels with only the most relevant information on each page. Customers should be able to seamlessly move from one step to the next and should not have to re-enter personally identifiable information (PII) they provided at the start of the application. Regardless of where they begin the onboarding process — be it on their phone, a desktop, or tablet — customers should be able to finish applications at their own convenience and, most importantly, have a consistent experience regardless of what channel they choose.
A lot of the above-mentioned requirements can be taken care of by using SimpleCRM’s Digital Account and eKYC virtual assistant. The virtual assistant is perfectly suitable for banks and insurance companies looking to improve or to overhaul their digital onboarding process. It will help them immensely in their endeavors of gaining new customers, increasing customer satisfaction, selling more of their products and services and improving operational efficiency.