How Banks Should Fix Their Poor Digital Onboarding Experience

§ 01 Executive Snapshot

• What: Banks face significant customer loss due to inefficient digital onboarding processes.
• Who: Banks, credit unions, European ID tech vendor Signicat, biometrics provider Innovatics, bank software firm Backbase, and consulting firm Deloitte.
• Why it matters: The disconnect between consumer expectations for digital services and the reality at banks can lead to lost opportunities and increased operational costs.

§ 02 Key Developments

• 68% of people abandoned the digital onboarding process for a banking product in 2022, up from 63% in 2020.
• Retail client acquisition costs average $280 in physical environments, while digital onboarding reduces this to $120 and $19 for additional clients in subsequent years.
• Only 30% of prospects visiting bank websites move to the product details page, and 13% complete a product application.

§ 03 Strategic Context

• The digital onboarding issue reflects a broader trend where consumer expectations for simplicity and efficiency in online services are not met by traditional banking processes.
• As fewer customers visit physical branches, the reliance on digital onboarding has increased, highlighting the urgency for banks to adapt their processes to modern standards.

§ 04 Strategic Implications

• Banks that enhance digital onboarding can gain a competitive edge by increasing customer acquisition and retention rates.
• A shift towards streamlined digital processes could lead to significant long-term cost savings and improved customer satisfaction.

§ 05 Risks & Constraints

• Regulatory compliance requirements may continue to add friction to the onboarding process, complicating improvements.
• Competition from fintech and neobank alternatives may pressure traditional banks to innovate quickly or risk losing customers.

§ 06 Watchlist / Forward Signals

• Banks should monitor consumer abandonment rates and onboarding completion metrics to gauge improvements in their processes.
• Future developments in technology partnerships or new onboarding solutions could signal advancements in the banking sector's digital transformation.