The Future of Onboarding for High Street Banks

According to a 2020 survey conducted by Bankrate, the average adult uses the same primary bank account for just over 14 years.

In these days of new account and switching bonuses, this stat seems incredible, but for financial institutions it means that winning new clients is more important than ever.

But, are customers really as loyal as this suggests? A number of factors have made the financial landscape more competitive over recent years, here we will explore the future of onboarding for high street banks.

The current financial landscape

Today’s financial landscape is very different from that of yesteryear. Countless new business practices, regulations, and compliance procedures have emerged, while technological innovation has rapidly changed business models and operational processes.

Those who wish to access financial services are no longer limited to the banks on their local high-street; technological advancement and an influx of funding has provided options while opening doors to a previously unbanked population. This, along with increased regulations and cyber-security risks are just some of the modern-day threats to banks.

Despite technological advances, much of traditional banks’ customer onboarding process continues to be carried out manually and heavily relies on traditional data from credit bureaus when performing identity verification checks. High street banks are still utilising multiple forms, paper files, manual compliance checks, and in-person identification checks, a process which has long been considered archaic, time-consuming, and creates a poor user experience.

In a post-pandemic world, relying on traditional data to verify identity doesn’t just alienate the modern digital consumer, it can also lead to huge demographics being unable to access the services that they want. Currently, there are two billion people worldwide who cannot access financial services because their data is not held on traditional sources. Reliance on traditional application processes prevents underserved or unbanked populations who may not have formal identity documents from creating accounts, applying for loans or mortgages, or gaining access to other potentially life-changing opportunities. 

The future of onboarding

Technology-based financial services have been leading the charge to ‘bank the unbanked’, making daily financial operations accessible and user friendly for almost everyone – especially people who had no access to banks before.

Removing the hurdles created by traditional methods of onboarding can help open doors to financial inclusion for ‘thin-filed’ customers. Where these customers usually have some form of identification, they often lack the documentation and credit records required by traditional financial institutions to assess creditworthiness and perform consumer due diligence.

This is where utilising a wider range of data sources can be used to draw insights into a consumer’s financial profile. Alternative data is the antithesis of traditional data in that it includes anything from mobile phone usage, monthly payments, and social media activity, to biometric identities derived from iris scans, fingerprints, and hand geometry.

1 in 3 adults under the age of 37 in the UK, say their primary banking relationship is with one of a host of challenger banks now available and according to finder, almost a quarter (23%) of all British adults have opened an account with a digital-only bank. They also found that two-thirds of banking customers say they plan to convert fully to a digital bank in the future.

We recently ran a poll to further explore the attitudes towards digital-only banks, asking how likely people would be to ditch their traditional bank accounts. Half of all respondents stated that they would consider switching or have already fully switched to a digital-only bank.

In the first quarter of 2020, challenger banks Monzo and Starling made net gains of 19,049 and 15,153 customers respectively, while Barclays, Halifax, Lloyds, RBS and Santander all made net losses.

Finder also found that customer sentiment towards 10 of the UK’s biggest banks fell by 7% during the lockdown, which leaves overall consumer sentiment for the banking industry at -24% (on a possible scale of +100% to -100% for the period between 1 March and 31 July). However, high-street banks had, and continue to have, a much lower overall sentiment than digital-only banks (-35% vs -13% currently).

A long and complicated onboarding process costs a lot in the long run. Peter Ramsey, the founder of UX site Built for Mars, conducted a test where he opened 12 real bank accounts and logged everything involved in applying for an account online. 

As you’d expect, the results showed that traditional banks’ onboarding process is significantly longer and more complicated than the newer challenger banks: Challenger banks Monzo & Starling took just 2 days to activate an account opened digitally while HSBC took a comparable lifetime with 36 days to activate an account.

Financial institutions must adopt a modern and digital identity verification process if they wish to effectively combat the FinTech revolution and improve inclusion for everyone. With the rise of digital data, it is now possible for demographics that struggle with traditional data to implement alternative ways to achieve this, provided they have the right tools.

How we can help

Here at Acuant, we utilise digital data gathered from a range of sources such as digital footprint verification, document authentication, facial recognition matching, liveness verification, live utility data address verification, and CRA identity checks. Working together, these sources can act as a catalyst for creating digital identities and improving financial inclusion. The added benefits for an organisation when using these data sources is that they provide additional insights into a consumer’s behaviour, likes, dislikes and background.

Traditional checks, such as using credit history mean that many good customers are turned away. A vast number of younger people do not have CRA data so if this source is used, they are rejected. Equally, in countries with thin files, where traditional data does not exist or is scarce, our product offering can be used to qualify and verify new customers.

We have a comprehensive family of KYC and AML solutions all working together and delivered via a single API integration. Using this wide range of data, we provide a unique, real-time ID scoring system that intelligently verifies the identity and can be sure your customers are who they say they are. Our global ID, KYC & AML platform, Sodium, is designed to help save you time and money, streamline your customer journey, automate your onboarding process, reduce fraud and achieve regulatory compliance. One simple integration; a flexible 360° solution that is scalable and secure.

Utilise a single element or multiple processes – it’s entirely up to you. Learn more about how we can help to automate and simplify your verification processes to help you to learn more about your customers. 

Book a demo today and see for yourself how powerful our suite of solutions are.