Why building better onboarding processes is the biggest opportunity for lenders right now

October 4, 2021 by Neil Stephenson, Vice President, SaaS Client Engagement

digital onboarding

The pandemic accelerated the number of digital interactions in finance. Typical methods of managing finances, connecting with lenders, and buying goods and services were much harder due to lockdown measures, so consumers went digital, including large numbers of non-digital natives.

As the demand for online banking and services has intensified – moving from a necessity to a preference for many – pressure on businesses is twofold. They must rapidly build new and better models to onboard customers and create a more dynamic customer journey. In many markets, doing so is the biggest competitive differentiator right now.

Creating a dynamic digital journey and understanding the customer

With Millennial customers becoming a bigger influence in the space, organizations were always going to have to plan for a slicker and quicker digital customer experience to keep up with expectations.

The pandemic simply accelerated this, forcing businesses to rapidly react. In fact, although 9 in 10 businesses have a digital customer journey strategy, 49% of those businesses only put this in place as Covid-19 began according to research in our Global Decisioning Report 2021.

This did help them improve in some areas, including access to quicker customer service responses online. But without the right technology in place, it is not surprising that 55% of customers surveyed said they expect more from their digital experiences.

Such a rapid shift has exposed weaknesses around agility, leaving traditional institutions trailing Fintech competitors further down the digital transformation road. However, whilst Fintechs have the benefits of agility, traditional, established lenders have large amounts of customer data from which they can target and tailor existing customer journeys more effectively.

Improve the digital onboarding process

Optimizing the digital experience for new customers from the beginning encourages usage and, ultimately, loyalty. A stress-free and fast onboarding process is an expectation for the younger generation but can also capture the ‘new to digital’ group migrating online.

Bio-metric recognition technology, instant document verification, and auto-filling customer data are far more appealing than entering hundreds of data points, and can boost efficiency and reduce friction. The problem is businesses rightly want to make sure they can remove any bad actors to reduce risk and prevent fraud. The key is doing so without disrupting the genuine, low risk customers.

Building better models to onboard customers

Covid continues to shift population demographics due to factors such as job losses, furlough schemes and migration of workers to alternative sectors. There is also the realization of pent-up demand for property and vehicles, in particular – among those fortunate enough to be less impacted – such as those able to save more as they work from home. This has led to a change in the demand for finance with a need to tailor experiences to specific customer requirements.

As the number of credit needs grow, lenders must have a structure in place that allows them to scale and handle the increased volume. New models must also be introduced to allow organizations to access extensive data insights and ensure they are reflecting the ‘new normal’. As businesses move away from sampling towards models that are based on full populations there must be a marriage of technology with data.

Data is ultimately captured for the benefit of the lenders, helping them to gauge risk and tackle fraud. But a blended, multi-layered approach in which customers are only asked for the information specific to their individual circumstances – at the appropriate time – can provide a positive and tailored onboarding process. Having solutions in place that combine risk-based authentication, identity proofing, credit risk decisioning and fraud detection into a single platform ensures all checks can be carried out in one place with minimal disruption to the onboarding journey.

Putting businesses in first place

Online experience and credit and fraud risk management need to be more closely entwined. As the demand for a simple and fast experience intensifies, a digital-first approach that puts businesses ahead of the game must involve embracing the right technology that supports the entire customer journey.

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