Getting Digital Onboarding Right # Fintech

Data, Trust, Regulation & Convenience

I’m hoping to deep-dive into how digital onboarding (especially for regulated industries such as banking & financial services) can be done right and what kind of critical factors need to be considered in order to drive optimum and intuitive onboarding experiences for end consumers.

COVID pandemic has accelerated the need for such contact-less & touch-less digital identity and onboarding solutions.

  • Ease of access to a product/solution (credit, personal finance, savings, investments, loans etc.) without the consumer having to walk into a physical bank branch, call the support center or conduct any offline activity that increases friction and frustration on the part of the user.
  • Minimal time to onboarding completion from A -> Z, thus reducing the time it takes to onboard into a new product/service from days and minutes to a few seconds.
  • Optimum consumer experience by asking for minimal data-points from the user and pre-populating (or defaulting) information that we already know about the end consumer. This negates the need for the customer to enter superfluous irrelevant information whilst onboarding into a digital solution.

And there are a few important ingredients to achieve this :

ability to conduct a KYC (know your customer) check without the consumer having to provide paper documents in an offline setting.

  • Digital Identity verification — ability to accurately identify the consumer from the information they provide (through collating datapoints from various sources, matching the information provided by the consumer with the information we already have about them).
  • Identity document verification — ability to verify the authenticity of the identity documents such as drivers license, health cards, passports etc. (liveness detection, matching biometrics with identity documents).
  • ability to verify risk-profile & credit power (in a way “client-worthiness”) of the consumer from the KYC information.

Let’s get into each of these in detail below.

Digital KYC compliance

Onboarding a customer into a financial ecosystem and Digital Identity have a lot of synergies as you might have guessed.

If a financial institution can accurately identify you as a person, verify your authenticity, and have more information about you from other trusted sources (without you having to input any information yourself in the first place), they can provide the customer an intuitive, faster and frictionless onboarding experience to access the said financial products and services.

Processes which the customer normally performs while trying to access a financial product or service include walking into a branch, showing two pieces of government issued ID, identifying oneself and providing other KYC information. This entire process would be eliminated through digital identity, because banks & fintechs would be able to accurately identify the user online, and provide them with online onboarding experiences without the customer having to waste their precious time.

  • Digital Identity verification — After the customer enters a few basic pieces of information (eg. email address/SIN/Name etc.) into an online platform of the service provider ABC (let’s say a bank), ABC can pull up information they already have about the customer, and/or contact a trusted identity brokerage /entity who can verify the identity of the customer for the bank. In this case, if the customer is already a verified and “identified” entity in service provider XYZ, service provider ABC doesn’t have to go through the ID verification and KYC process once again. ABC entity can choose to trust XYZ to provide them the accurate “identity” of the said consumer, thus eliminating a bunch of steps in between and optimizing the onboarding process.
  • Identity document verification — After receiving digital copies of the customer’s identity documents, the key step is to verify the authenticity of the said documents. Do the documents match the facial features of the real consumer (can be verified through facial recognition and matching), are the documents issued by known trusted parties (can be verified by plugging into databases from governments and other such trusted civic organizations etc.).

Digital credit worthiness check

Similar to digital id verification from a trusted third party, the credit check and risk profile of a customer can be accurately determined by tapping into an ecosystem of trusted identity brokers/institutions in your country. These institutions can be banks, insurance companies, telecom providers, local & federal governments and so on.

If the customer has a good credit rating in the country, and has a track record of paying their rent, mobile & insurance bills, mortgage on time (other datapoints can be gathered from a host of sources), it’s possible to determine with a high degree of accuracy a holistic credit profile of an end customer. This helps to reduce the time for customer onboarding into a new product or service.

Role of Trust in digital onboarding

Trust plays a huge role in designing digital journeys; organizations should be able to trust the customer, and the customer should be able to trust the organization with their data.

Hence more and more, we see organizations relying on other trusted parties to help accurately identify a customer (other trusted incumbent banks, government agencies, telecom providers or insurance companies). If a trusted source/entities has already verified and created an identity for the consumer, other companies can and should be able to trust that identity.

It saves the consumer a ton of time and provides a neat experience. And on the opposite side of the spectrum, we also have customers, who should be able to trust the companies with their data. And should have the proper mechanisms to control what they share with organizations.

Consumers need to be able to receive tangible value from the data they share with organizations, and in turn the organizations should be able to optimize its processes, thus saving operational effort, increasing business value and providing incremental value back to the consumer.

At the end of the day, it’s all about data. If organizations take minimal amount of data from the consumer, accurately inform them how, where and when that data is going to be used, for what purpose is it going to be used, consumers would be in a better position to trust the organizations. Transparency from the organization and data regulation/controls over consumer data could definitely lead to more trust between customers and organizations in the long term.

Role of Regulation

Technology is moving fast. Policy, processes and standards cannot keep up with new experiences and technologies. How do we as fin-tech organizations accurately address this?

As with any new innovation or technology, regulation and policy will take time to catch up. It’s a fragmented market, however organizations still need to go ahead and work with regulators to be able to influence the final outcomes of these regulatory decisions.

Organizations need to innovate for their customers, fail if required, tweak the innovations and try again. When policy and regulation do catch up, you tweak again to comply to those regulations; in fact you can help the government and the ecosystem to define the standards, because you already have skin in the game.

Role of Convenience

Is convenience the key driving factor? Or security and trust? There has to be the right balance between the two — privacy and experience.

Digital experiences cannot be so frictionless that users don’t even stop and think about what they’re signing up for. We don’t read the T&Cs while signing up for new products and services. And we’re more than happy to divulge their data in anticipation of getting something valuable in return. However, valuable user experiences should not come at the cost of data siphoning.

There have to be tighter controls enforced by organizations to ensure privacy and security, thereby mustering trust from informed customers. And these controls have to be incorporated in such as way as to elicit a feeling of accomplishment (convenience) among users.

Role of Data & Biometrics

As with any other data, biometric data for identification and onboarding purposes should also have tight security & privacy controls. Organizations can form a consortium, an ecosystem of sorts to lay down standards for a secure, uniform way of capturing biometric data and sharing of that data with the network participants to create value-added digital experiences for end-consumers.

Role of Humans

Humans will always have a role to play in product experiences — albeit after a time, we can expect us mortals to re-skill ourselves and focus on more value generating opportunities.

For example, an investment /financial planning platform might provide a digital frictionless intuitive experience for its customers. Financial advisors and Financial planners could focus their energies on having more value-added conversations with their clients — focusing on long term goals and aspirations, exploring the human side of finances, the emotional side of financial planning. These interpersonal skills are still challenging to replicate in the online world.

In the dystopian future, Eliminating Onboarding altogether might just be the final frontier in this journey.

Product Lead @RBC | #Fintech #Innovation #Payments #AI | Previously Head of Product @ Klood, @Scholastic, @Accenture | https://www.swapnamalekar.com/

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