Onboarding is everything. Sometimes FIs don’t get the memo

  • Onboarding is expensive and can cost FIs a lot of money and customers if it isn't done right.
  • But getting it right is the job of balancing security with minimal friction, an equilibrium not all FIs are able to strike.

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Onboarding is everything. Sometimes FIs don’t get the memo

Onboarding steps hold the power to drive off customers. Having to switch screens, deal with buggy image recognition, or experience long loading times can all contribute to a customer abandoning the onboarding process.

But not all onboarding flows are created equal. For example, ecommerce apps have a shorter list of checks and steps they need a customer to get through. But financial institutions are a different story. Banks and fintechs need to strike a delicate balance between providing an easy to use experience and making sure all authentication checks are completed.

Onboarding is expensive, as well. Deloitte estimates that banks invest as much as $30,000 to onboard a new commercial client. This kind of onboarding has an average of 8 steps and is therefore even more vulnerable to abandonment. Every customer that abandons the process results in a lost opportunity and lost revenue. As onboarding experiences across the app world get better, customers have become less tolerant of processes that take time or too much effort. The abandonment rate of onboarding processes for financial institutions has been steadily increasing, reaching up to 68% in recent years.

While friction points can pop up at any point during the onboarding process, some problems are more endemic to how onboarding for financial products is conceptualized and designed: 

1) Realizing goals

Common issues highlighted within the onboarding process are increased wait times before approval or needing to visit a branch. Customers usually download an app with a specific intent, like getting access to a credit card. To do that, customers likely first need to open a checking account through a banking app and then move on to applying for a credit card. 

If the pathway to a credit card application is not clear after opening a checking account, or requires customers to switch screens or worse, devices, customers are likely to tap out and look for a completely digital option. This isn’t a made-up example  – testimonies of customers finding it frustrating to get access to credit are common.

2) Aesthetics and accessibility

Aesthetics matter in onboarding, too.

A personal account from a student trying to sign up for a Bank of America Credit Card reads “So, the home page is a beach, and there is a girl with a surfboard. It is a beautiful stock image with slick graphics. Judging from the home page this is gonna be a breeze. I’m excited. As I went on, it turned out I was wrong about the aesthetics, maybe I shouldn’t judge a book by its cover. “

A wireframe of the Bank of America app. The screen shows a term and conditions page with a grey back ground and very fine text.
Source: Lightico

From making the fine print a bit too fine or not guiding users through what certain financial jargon means, there are some big gaps in banking UX. 

Another issue that haunts banking apps is accessibility problems. If buttons are not labeled correctly, pages time out too quickly, or use image verification or CAPTCHA, things can quickly become tricky for users that are visually impaired. Even elementary steps like entering passwords can become an issue if fields are not correctly labeled. 41.4% of users report facing an issue while filling in their passwords while 63.6% reported an accessibility problem kept them from accessing the banking system. 

3) KYC

Image details the onboarding journey steps, in which 50% of the users drop out at the KYC stage.
Source: HooYu

KYC steps may require customers to grab a selfie and upload a picture of their identification documents. To do this, apps often pull services from a 3rd party KYC provider, which means part of the onboarding flow is then determined by how this third party solution is built.

This can be troublesome if the third party providers don’t provide analytics about which screens or steps customers faced friction on and then dropped out. This means bank developer teams have limited insight into what’s going wrong with the process.

Moreover, while a third party evaluates the KYC documents and pictures provided, customers are usually left waiting. This can take up to a minute or more. Waiting is undesirable in nearly all digital processes and the adverse effects of it are exacerbated when the user has to look at a progress bar or buffering icon with nothing to do.

There are solutions to this. As the former product lead at Rewire (acquired by Remitly), Nitzan Guy highlighted, the team reworked the steps in the onboarding process to make sure the user is occupied. “We switched between the flow’s parts so the user will start the ID processing flow early in the flow and the time-consuming address form will keep the user occupied while his ID is being processed,” he said.

Consequently, the Rewire app saw a 12% increase in conversion during the KYC process and a 6% increase in customers who wired money in the same session in which they signed up.

Currently Remitly utilizes electronic KYC techniques while onboarding a customer but if additional information is required, a separate onboarding flow is triggered later which ensures that additional effort by the customer is not required in the basic onboarding flow. 

Solutions, solutions

Even though onboarding is tricky, some basic design principles and strategies can help it make it more effective in retaining customers. 

For example some KYC technology providers recommend rendering the onboarding process into a conversation through a chatbot which can help people be prepared with the correct documents when applying. This type of design pattern can have its own set of problems. While conversations are more interactive and engaging than forms, people can get frustrated by chatbots, as well, especially when their queries are more complex than the system was prepared to handle. Perhaps the key takeaway from this recommendation is providing access to help through chatbots and live agents while onboarding. 

Secondly, for onboarding to be truly effective it has to take all types of users into account. Which means the experience needs to be operable through keyboard only (for assistive keyboards).i It must have correctly labeled fields and a consistent navigation structure that makes sense to users who are listening to the interface rather than viewing it. 

Finally since KYC is such a big friction point for most consumers, it needs to be thought through. This means taking into account the average time it takes to verify the authenticity of the documents, what the user is doing while this process is happening, whether the process can be undertaken by someone who has limited mobility or is visually impaired and if KYC necessarily needs to interrupt the onboarding flow at all. 

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