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Navigating Automation in Digital Bank Customer Onboarding
Navigating Automation in Digital Bank Customer Onboarding

Navigating Automation: Top Strategies for Digital Bank Customer Onboarding

Gergo Varga

Jan 26, 2024

One of the most visible aspects of our accelerated turn towards a digital-first society is the slow but steady extinction of the local bank branch, all thanks to digital bank customer onboarding.

With virtually every consumer in the Western hemisphere armed with a smartphone and an internet connection, banks and financial institutions have followed other industries in opting for a digital-first approach over the operation of costly brick-and-mortar storefronts.

The pandemic only accelerated the shift. S&P Global reported last year that banks of all shapes and sizes are closing down their physical locations left, right, and center.

bank closing graph

Digital banking presents numerous advantages, including the convenience and efficiency of utilizing digital tools to deliver banking services. However, the challenge lies in effectively translating traditional, physical banking experiences into a seamless digital customer journey.

Leveraging digital tools and automation can promise cost savings and meet the expectations of digital customers, but missteps in execution can frustrate users.

Such errors not only dampen the customer experience but can also have a detrimental impact on the financial health of the institution.

Without a doubt, the most important part of the customer experience is the onboarding process. It can make or break your customer relationships. Disappoint your clients during the customer onboarding process, and they'll run straight to the competition.

This article will explain how to create the best digital bank onboarding proces in 2024.

We'll be covering:

  • How to develop a good digital onboarding process for banks

  • Best practices for onboarding automation

  • Mitigating risk and fraud during the customer onboarding process

  • Utilizing customer data: the road to automated decisioning

  • Next Steps: How to get started with generative AI risk decisioning for your business

Let’s get started.

How to develop a good digital onboarding process for banks

bank onboarding process

During customer onboarding, you have a unique opportunity to build a solid foundation for a good customer relationship. Your goal is to provide access to your banking services almost instantaneously, which means that you want the onboarding process to be as frictionless as possible.

On the other hand, you still have to fulfill your regulatory obligations, which means conducting customer due diligence for KYC checks and anti-money laundering procedures.

Thankfully, with digital tools, you can achieve both at the same without the onboarding processes becoming too bothersome.

The key to a good digital onboarding experience is understanding how your customers will behave and layering the steps accordingly. It's also worth keeping in mind that during the different stages of the user journey, you are not only showcasing the different aspects of your product, like credit cards or loan options, but you are also requesting information that can be useful for other things, like anti-fraud checks.

Ideally, you wouldn't commit to building your own internal tooling system to handle the customer onboarding process, but would instead rely on different tools such as eKYC providers to make life easier for both you and your customer.

A good digital onboarding process can be seen as a seamless journey through which a customer is verified and his/her details are collected. 

The following are the most important elements that banks should include in their digital onboarding process:

Easy access

Ensuring straightforward access to digital onboarding platforms is a fundamental step in acquiring and retaining customers in the digital banking age. The platform should be readily available through both the institution's official website and its mobile application.

For instance, a bank could optimize its website's homepage with a prominent "Open an Account" button that leads directly to the onboarding platform. Similarly, the mobile app could feature a "Get Started" banner on the landing screen, guiding users smoothly into the registration process.

Take the case of Bank A, which implemented an accessible onboarding strategy that proved highly effective. They placed a clear "Join Now" call-to-action on the top fold of their website, ensuring it was one of the first things visitors saw. 

Additionally, within their mobile app, a "New to Bank A? Sign Up Here" notification popped up for first-time users. 

To complement these digital entry points, Bank A also launched an email campaign targeting potential customers, succinctly detailing the benefits of their digital banking services and providing direct links to the sign-up page. 

These strategic placements not only made it easy for customers to find the onboarding platform but also significantly increased new account registrations, showcasing the importance of accessibility in client onboarding process in financial services.

It's equally important to harmonize your service with your marketing efforts. For example, senior citizens will have vastly different expectations than say, millennials. 

When developing and prioritizing your features, it's important to keep in mind who your users are, and it's clear that the best banking apps out there were developed after extensive UX research.

Customer verification

The customer onboarding process in banks should implement robust customer verification to confirm the identity of the customer. 

Biometric technology is becoming a popular method of verification, as it allows for fast and secure onboarding through facial recognition, and there are plenty of services out there to help with document verification. 

Companies like Onfido and Trulioo specialize in document verification, using AI to check the security features of government-issued IDs. They can verify passports, driver’s licenses, and other official documents from various countries, making them versatile tools for banks that operate internationally.

The information provided by the customer can be cross-checked with third-party data sources.

Using a risk decisioning platform such as Oscilar allows you to plug in several different identity verification providers during new customer onboarding in banking.

Ideally, customer identity verification runs in the background as the user submits their information. By doing so, this allows you to layer your checks in a cost-efficient manner. 

Your customer verification or KYC process is your first line of defense against fraud after all.

Data collection

The collection of personal and financial information should be conducted in an easy-to-understand way, with minimal room for error. Forms and applications should be optimized for both desktop and mobile, prompt clarity, and make the process as simple as possible. 

Moreover, any ambiguity should be minimized, to avoid any confusion and ensure customer satisfaction.

Again, third-party sources and services can and should be utilized effectively: if you are offering loan products for example, it's easier to verify a user's income and employment status through a relevant data source rather than asking them to provide scans or screenshots of their bank statements.

Review and approval

Once the data and information submitted are verified and wholly collected, the customer info should be reviewed and approved by banks before full access to the platform is given. 

A dedicated team or approval platform should be in place to conduct independent reviews and approval processes.

The biggest advantage of moving to digital channels can be harnessed here, as automated decisioning can make your risk management team more efficient by handling the easy cases, allowing them to focus on only the most complicated ones. 

Automated decision-making also comes with the added advantage that from the point of view of the customer, they can almost immediately access banking services, which is what you should be aiming for.

Compliance and legal guidelines

Customer onboarding is a highly regulated process. Banks have a number of regulatory guidelines they must follow, including proof of identity (KYC), proof of address (KBA), risk rating (Fraud Risk Assessment), and ongoing monitoring and compliance (AML). 

Banks should take tremendous care to keep up with ever-evolving regulations, in order to ensure compliance and avoid possible fines or penalties.

It's also in your best interest to protect your users from financial fraud, so during customer onboarding, you should make sure that you ask the customer to set up Multi-Factor Authentication and provide PIN codes. You can also use the information captured during onboarding as a reference point for future risk-based authentication measures.

The power of digital customer onboarding in banking lies in the opportunity to not just meet but exceed customer expectations. 

Remember the old adage that sufficiently advanced technology is indistinguishable from magic. Your client onboarding experience should feel magical for your customers.

With that said the actual "magic" happens in the backend, where the intricate web of technology operates out of sight, ensuring that the user experience is as seamless and intuitive as possible. 

This backend is the technological backbone of the onboarding process, comprising servers, databases, application interfaces, and complex algorithms that work tirelessly to process data, authenticate users, and maintain security.

By relying on the onboarding orchestration approach, you harness the power of not just internal data you might have built up historically, but third-party data providers as well. 

On one hand, this allows you to verify customer identities without introducing too much friction in the process. On the other, you can tailor and customize your offerings to your customers.

For example, by having access to your customer's financial information, you can inform them of products that they are eligible for right of the bat, automatically, allowing you to upsell or cross-sell your services effectively.

In essence, while the customer experiences the simplicity of a well-designed interface, the real complexity is handled behind the scenes. 

This could involve real-time data synchronization, continuous monitoring for fraudulent patterns, and dynamic response systems—all running smoothly to create an onboarding experience that's not only efficient and secure but also, in a way, quite magical.

Best practices for onboarding automation

automated onboarding best practices

While the onboarding process will differ for every bank when it comes to automating onboarding, there are several time-proven steps that you can follow.

Automated information capture

The main advantage of digital customer onboarding is automating customer interactions. During signup, your customers can provide their information which will be automatically processed by your system. 

You can automate everything, not just data entry, but ID or address verification as well using digital tools, saving you costs on manual work while keeping the experience self-serviced and magical.

Automated verification

We've mentioned this above, but it's worth reiterating. The information provided during the onboarding process can be cross-checked not just with internal data, but with third-party data providers as well to verify your customer's identity. If you want to explore this subject in depth, read our article about KYC fraud detection.

Automated notifications

Both the customer and your staff need to be aware of the necessary next steps in the onboarding process. Mobile banking allows you to communicate with your customers automatically, which can decrease churn by driving engagement. 

You only need to involve a human in the loop if the matter is more complicated, but managing customer communication can be safely automated in most cases.

Use a decision engine

At the heart of customer onboarding in banking in the digital-first area are decision engines. These are sophisticated software services that can use in-house as well as third-party data in conjunction with machine learning to produce decision flows to process as many applications as possible. 

The right decisioning software comes with several service providers integrated right out of the box, and it should give autonomy to your risk and fraud teams when it comes to changing said flows on the fly.

Since we at Oscilar have built such an engine, have a look at our demo to see what this looks like under the hood.

Mitigating risk and fraud during the customer onboarding process

The inexorable march of digitalization has transformed the landscape of interaction and transaction, yet it has also broadened the avenues for fraudulent activity; digital onboarding in banking stands as a case in point.

Fraudsters proactively look for weak players on the market to exploit, and your digital customer onboarding process should account for dealing with fraud attacks.

The biggest threat to emerge in the last few years has been synthetic ID attacks, where fraudsters combine the personal information of existing people with forged identities. 

As these types of attackers specialize in targeting credit lines and loan operations, risk management becomes increasingly important.

The best you can do against these attackers is to have your defense systems on high alert during onboarding.That might look like scrutinizing the details submitted by a customer, relying on active, passive signals and machine learning technology with multiple layers of fraud checks firing at every step to thwart would-be attackers.

The tricky part of course is to do so without denying good customers. Your approach has to be flexible, not conservative before you lose out on revenue.

In short, you need a 360-degree view of your customers, and your risk team needs to be armed with not just the necessary information, but the ability to react to quickly emerging threats, which is best using a decisioning engine that's built to beat KYC fraud.

Using customer data: the road to automated decisioning

In conclusion, there are many benefits you can reap by moving to digital customer onboarding. As we move towards a digital-first economy, consumers everywhere are expecting you to have a mobile banking app over having a branch near where they work.

However the main benefit is not really the cost advantages associated with digital systems. The data captured during a digital onboarding process is vastly more valuable when it comes to building trust and customer loyalty as long as you use it correctly.

To really tap into the advantages of a digital onboarding process, banks need the right tooling for the job. Cleverly designed onboarding processes will only work as much as they are empowered by the systems behind them. 

To really orchestrate the different aspects that come into play during onboarding, they need decision engines.

How Oscilar’s AI decisioning engine can help

Oscilar's AI risk-decisioning tool is designed to empower banks and financial institutions to streamline their onboarding processes, enhance user experiences, and achieve a multitude of benefits.

  • Integrated Onboarding Assessment - KYC, Fraud Risk, Credit Risk: With Oscilar, you gain access to an integrated solution that covers Know Your Customer (KYC) checks, Fraud Risk assessment, and Credit Risk analysis. This means you can onboard new customers while ensuring compliance and mitigating risks seamlessly.

  • Orchestration of Multiple Data Points: Oscilar excels in orchestrating data from both 3rd party and first-party sources to create a holistic view of your customers during onboarding, so you can make informed decisions while providing a personalized experience.

  • Self-Service Workflows for Dynamic Onboarding Flows: Our platform empowers you with self-service capabilities to create dynamic onboarding flows tailored to different customer segments, ensuring that every customer’s experience is tailored to their unique needs.

  • AI & ML for Improved Approval Rates and Reduced Friction: Oscilar leverages Artificial Intelligence  and Machine Learning to optimize the approval process. By automating decision flows, we not only enhance approval rates but also minimize friction in the onboarding experience, making it smoother and more efficient for your customers.

  • Analysis and Scenario Testing: Gain insights and make data-driven decisions with Oscilar. Our platform allows you to analyze customer scenarios, conduct "what if'' analysis, and perform backtesting. 

  • Customer Management and Monitoring: Oscilar doesn't stop at onboarding; it offers Customer Management tools that ensure a seamless transition from onboarding to monitoring. You can efficiently manage customer views and track their progress, ensuring a consistent and secure experience throughout their journey.

Next Steps: How to get started with generative AI risk decisioning for your business

Ready to revolutionize your decision-making with cutting-edge AI? Take the first step towards enhanced fraud detection, reduced false positives, and improved operational efficiency with Oscilar's Generative AI for Risk Decisioning.

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