The digital customer onboarding process is just one of many processes companies implement to keep up with the evolving online business landscape. The process allows customers to familiarize themselves with your product or service from wherever they are rather than having to visit your brick-and-mortar location or storefront.
By contrast, traditional customer onboarding can be cumbersome for clients and expensive for companies. Client acquisition using a manual process costs an average of $280, while corporate client acquisition costs can average $4,000. Shifting to digital customer onboarding reduces the cost for clients to $120 and corporate clients to $1,200.
While digital customer onboarding can substantially reduce costs, there are some steps you need to consider. Below, we take a look at some challenges you may face with digital customer onboarding and analyze how Instnt AcceptTM solves them while enhancing your digital services.
Complexities of Digital Customer Onboarding
Hyper-digitalization advances have pushed banking and financial services to the threshold of extreme exploitation by cybercriminal activities. For reference, the escalating threats to digital banks cost the global economy $5.8 trillion in 2020.
Adding to the above complexities, the U.S. Financial Crime Enforcement Network is in the process of streamlining, modernizing, and updating the U.S. anti-money laundering and countering terrorism financing regulations, as required by the Anti-Money Laundering Act of 2020. The goal of the process is to make financial service firms’ compliance with the Bank Secrecy Act (BSA) more effective and efficient. The agency is also assessing what documentation requirements are no longer useful and what new reporting and documentation requirements will aid in fighting illicit transactions. The agency will likely impose additional KYC requirements, particularly for clients in high-risk jurisdictions.
Driven by the desperate need to comply with regulatory obligations and build customer loyalty, banks have started making efforts to intensify the KYC/AML compliance monitoring and safety processes, but with little attention to detail. There is a lack of alerting systems or proper monitoring signals in the existing technologies or tools. That’s the reason why despite spending $50 billion on anti-money laundering processes, banks are unable to keep pace with the KYC/AML obligations. As per reports, banks and financial institutions suffered penalties and fines worth $10.4 billion in 2020.
It is time to reevaluate the digital customer onboarding solution that your existing platform provides. Institutions must find new ways to scale capabilities so that they deliver a frictionless and seamless customer onboarding experience without compromising security.
Top Challenges of Digital Customer Onboarding
Financial institutions increasingly rely upon digital customer onboarding solutions to ensure compliance with KYC rules. The process of digital customer onboarding, however, can be challenging.
1. Difficult Sign-up Process
Most users won't have any trouble signing up for a service when a site is easy to navigate. Yet, users tend to give up if the process takes too long. A recent survey found that nearly two-thirds of people ready to open a bank account remotely abandoned the customer onboarding process before completion.
By leveraging Instnt AcceptTM for effective digital customer onboarding, you can minimize manual processes and cut down on wasted time. As a result, there will exist less friction for customers and fewer chances for deviation that could otherwise cause lost leads. The frictionless account opening process ensures that customers are confident to provide their information without hesitation. The entire customer onboarding process should be easy, quick and seamless.
2. Lack of In-house Resources
Digital customer onboarding vendors invest years in software development and utilize the best minds to develop tools. If you aim to build your custom onboarding app in-house, consider people costs which range between $60,000 and $150,000 per IT hire. Take into account the additional resources to help you with hiring procedures, which can extend beyond ten months to reach the full productivity level for each IT staff. Besides, the IT costs to allocate multiple tools, alongside the cost of downtime can wreak havoc on your business-critical mission. With your limited technical resources, rolling out your custom app seems challenging.
To minimize costs, most companies prefer to outsource such tools. Outsourcing, however, has its drawbacks as well. One major drawback is the subscription charge, which accumulates significantly over time. Another drawback is the time your technical team spends fixing technical issues.
The Consent Order issued to Coinbase Inc. on January 4, 2023, showcases the true cost of outsourcing to third parties. Coinbase hired “more than one thousand third-party contractors” to work through a “backlog of unreviewed transaction monitoring alerts,” which had by 2021 grown to over 100,000. As a result, Coinbase then retained a third-party audit firm to review and quality check the work of three problematic contractors on the backlog who cleared around 73,000 TMS alerts. Overall, more than half of the sampling from these three contractors failed the firm’s quality check. For one contractor, the failure rate was 96%. Ultimately, Coinbase faces a $50M settlement for allowing customers with limited background checks to open accounts. Coinbase will also pay $50M to improve compliance.
No-code platforms are the answers to this dilemma. Had Coinbase partnered with an expert in digital customer onboarding like Instnt, they would have received a fully managed solution with fraud loss liability shift and compliance. By warrantying each accepted user, Instnt indemnifies businesses up to $100MM in fraud loss liability protection so they no longer need to dedicate resources to fraud and compliance management.
Instnt also provides a competitive advantage by adopting no-code or low-code platforms that reduce the time of development by 50% to 90% vs coding methods. Instnt’s integrated and automated AI technology is purpose-built to tackle digital customer onboarding while you focus on your core business.
3. Fraudulent Identities
Fraudsters strive to avoid linking their real-life identities with online aliases. By using both real and fake information, they can even fabricate identities. To safeguard your business, you need to verify the authenticity of the customers to avoid handing over money to crooks and scammers.
Scammers have developed creative ways to dodge ID checks as more companies offer financial services online. Often, they will use disposable or newly created email addresses and phone numbers as part of their schemes.
Secure customer onboarding solutions like Instnt AcceptTM help prevent false identities and account takeovers. Our thorough and diverse identification methods keep perpetrators from signing up for new accounts. Additionally, our streamlined customer onboarding process collects information from customers to develop an overall profile that better allows you to monitor and identify unusual behavior.
4. Cost to Upgrade Technology
Technology is rapidly evolving. Your business must keep pace with innovation to take advantage of its potential power. A regular upgrade of the digital customer onboarding system is a key part of this process.
Each online tool, software, and program experiences upgrades periodically. For their products and software to remain cutting-edge, vendors must continually remove bugs, shortcomings, and complexities.
Digital customer onboarding software is no different. To meet KYC requirements, digital customer onboarding software must exist in its most recent and secure version. Regular updates also ensure the system is user-friendly. Without timely upgrades, customers will experience the same difficulties repeatedly. As a result, not only will you lose customers, but your brand reputation will suffer.
When you adopt Instnt AcceptTM, you are less likely to experience additional burnout for software upgrades because the responsibility rests with Instnt itself. Instnt manages your account on a serverless architecture and provides full support for maintenance and upgrades, simultaneously cutting operational costs to customers.
Instnt AcceptTM Transforms the Digital Customer Onboarding Process
Instnt AcceptTM enables businesses to provide a frictionless customer experience through a fully managed digital customer onboarding platform. With Instnt, you can quickly verify, accept, and onboard online customers without fraud loss or compliance issues.
Our technology works with your sign-up flow, so you can take control over who to accept or reject and send for additional reviews. Our AI suggests better orchestration rules and flows without you having to work hard to decide the customer onboarding steps.
It is simple to implement checkable verification methods for device possession with OTP, and other steps like Selfie or Passport and driver's license checks. In the last, PKI key-enabled data encryption prevents customer data leakage and account takeovers. Our solution is 30% cheaper compared to the existing vendors in the market, and it helps you reduce customer rejection by 40% to save you more on operational costs and grow your top-line revenues.
By leveraging Instnt AcceptTM, one Challenger bank was able to cut its applicant rejection rate from 60% to 20% per year, increase digital sign-ups by 300%, reduce its fraud rate from 20% to 0.2%, and grow its top-line revenue by $60 million with zero fraud loss.
To achieve these results, we have a three-step process to ensure your customers are onboarded quickly and securely.
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1. Walk us through your customer journey. |
Create an account by signing up on Instnt’s dashboard and configure your workflow. Choose the features you want to enable and the attributes you want for your signup workflow as well as pick your security and integration options with Instnt.
Tell us about the data you collect when online customers sign up for a new account— name, address, phone number, and anything else your business requires. |
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2. Instruct our AI tools on what fraud and compliance checks you want us to perform. |
We then configure PKI keys to encrypt your data, so it will always be secure. There are no orchestration rules to write; it's as simple as flipping a switch.
Unlike some other vendors that provide similar end-to-end onboarding services, Instnt's workflow configuration is very simple and abstracts the complexity from the customers. It also relies on Instnt's flagship AI-based decision engine. |
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3. Use our low-code SDKs to integrate our platform. |
Choose one of the Instnt's provided SDKs to embed in your application based on the technology of your choice like React or Angular web SDKs or Mobile SDKs based on iOS, Android or React Native. Instnt SDKs work under the hood of your application to do the heavy lifting and let you keep control of your user journey.
You control the sign-up process, and we keep it that way. You can plug the JavaScript we generate into your website or app without disrupting it. |
We are the first line of security defense, fraud prevention, liability shift, and KYC check, allowing you to enhance your digital services. As a result of Instnt Accept'sTM identity assurance service, businesses are covered for up to $100 million in fraud loss liability protection, enabling them to focus on growing instead of worrying about fraud and compliance issues.
Book a personalized demo today to see how Instnt AcceptTM can boost your revenue, cut your costs, reduce false-positive and abandonment rates, and eliminate fraud losses.
Sources
Hubspot Blog - Digital Onboarding: The Ins, The Outs, and Everything In Between
DruidAI Blog - Digital Solutions to Top Customer Onboarding Challenges
UserGuiding Blog - Digital Customer Onboarding in Banking – 3 steps to get it done right