3 Onboarding Challenges FinTechs Face

3 Onboarding Challenges FinTechs Face

The key component to long-term business success is customer satisfaction. With online users used to—expecting—the instant gratification of swift and hassle-free experiences, adapting to the rapidly evolving digital and mobile landscapes is a must for FinTechs.

Our consumer study found that while the use of desktop is growing for new account openings—42% in 2022 compared to 33% in 2021—the use of mobile is growing much more significantly and rapidly, with 78% of survey respondents having used a mobile device as part of an account opening process.

When it comes to onboarding, the key is balancing the customer experience with effective identity proofing and Know Your Customer (KYC) processes to prevent fraud while still ensuring compliance. Ineffective processes will result in dissatisfied customers and business lost, and in some cases, hefty fines for noncompliance.

Be it a start-up or a well-established enterprise, there are three challenges FinTech companies are likely to face when onboarding:

  1. Limiting friction during customer onboarding
  2. Detecting sophisticated fraud
  3. Complying with data privacy regulations

01. Minimizing Onboarding Friction

There is significant pressure that comes with ensuring customers are satisfied, particularly as part of onboarding. Today’s consumers have high expectations for consistency and minimal friction across all channels. In fact our study found that 47% of the consumers surveyed said they would abandon a brand after two negative digital interactions.

That’s not to say that customers don’t expect some level of friction depending on the service they are requesting: setting up a new bank account or securing a loan requires certain levels of identity checks. Nonetheless, if the process takes an unreasonable amount of time or is too cumbersome, customers are very likely to drop off and go elsewhere. FinTechs must find a way to balance identity proofing with minimal friction–added only as needed to establish trust online according to the risk level of the transaction.

02. Catching Sophisticated Fraud

It’s not enough for companies to solely focus on seamlessly onboarding new and repeat customers. Today’s environment requires fraud prevention to be top of mind. Whether it’s money mules, account takeover or other forms of identity fraud, criminals have no qualms about using whichever tactics will result in financial gain. And as technology evolves, so too do fraudsters’ methods. Companies are being targeted with sophisticated types of fraud like synthetic identity fraud that can be difficult—but not impossible—to detect. Having solutions in place that can accurately validate identities and authenticate identity documents will be essential.

03. Complying with Data Privacy

In addition to complying with Anti-Money Laundering (AML) to prevent financial crime and money laundering, FinTechs must also comply with data privacy regulations. With heightened governmental—nationally and internationally—scrutiny on the importance of data privacy and data protection, companies will need to ensure they are jurisdictionally compliant with evolving privacy laws such as GDPR.

The right identity proofing solution will enable FinTechs to gather customer data in a non-intrusive and consent-based way by validating information that customers are typically comfortable sharing. Utilizing multi-layered, intelligent and comprehensive identity proofing with seamless omnichannel deployment will enable FinTechs to minimize friction, prevent fraud and comply with regulations during onboarding. All without negatively impacting customer experience.

 

Read our new eBook, A Guide to Identity Verification for FinTechs, to learn how FinTechs can leverage a comprehensive identity proofing solution to overcome onboarding challenges.

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