Outside-in - The Key to Customer Onboarding

The giants of ecommerce have brought about the most radical change in how the world works since the industrial revolution. Apple, Amazon, Facebook, Alphabet, PayPal, and so on have transformed the way businesses and consumers interact. Consumers today are increasingly leading digital lives, with access to technology and information to help them make more informed and efficient decisions in their interactions with other individuals and companies. As a result, businesses need to understand the digital ecosystem that is driving their customers.

Digital technology is fundamentally disrupting the social, cultural and technological approach to how companies do business. It provides diverse ways to deliver tailored services to customers anytime, anywhere, and in a cost-effective manner. And the potential for digital disruption is greatest in businesses with significant customer-facing environments.

Most retail companies are investing in digital platforms to understand their customers better and help improve the customer experience. So, it comes as no surprise that retail is leading the digital revolution with innovative solutions, such as wearables, beacons, Augmented Reality, Virtual Reality, Near Field Communication, Radio Frequency ID (RFID), smart sensors, gamification and so on. The widespread adoption of digital technologies in the retail sector also extends to retail banks, giving rise to a new age in consumer banking.

Historically, retail banks have not been overly concerned with customer turnover. This was particularly the case after the financial crisis when banks focused more on cost reduction than customer recruitment. As customer loyalty is typically driven by security, interest rates and returns, and ultimately the bank’s credibility, there is little impetus to change.

But, is this enough to recruit and retain tech savvy customers in the digitally-enabled market, where in some countries, such as the UK, regulations have forced financial institutions to make switching accounts easier? With competition from innovative start-ups, rising customer turnover, the burden of legacy systems and dwindling revenues, retail banks are focusing once more on bringing, and keeping, customers onboard. But, to meet the expectations of the digitized prospective customer, are they doing it the right way with an outside-in customer-centric approach?

A high digital transformation bar

When it comes to buying a new product, customer expectations are set by the leaders in ecommerce, and not by banks. Banks may be shifting away from branch-centric selling, but that change is still going on. As a result, the experience of buying a bank product can be disjointed and bureaucratic. Customers can’t get the information they want or support when they need it.

Digital is disruptive and more often than not there are no signs signaling the arrival of change. When it does, there are usually one or more new players waiting on the sidelines to capitalize, and incumbents quite often find themselves grappling to make sense of it all. Think of Kodak, Nokia, and Blockbuster to name a few.

In banking, onboarding disruption has arrived in the shape of optical character recognition, third-party data integration, video ID verification, facial matching, and e-signatures. New Revolut customers can open accounts in three minutes. The Clydesdale-Yorkshire Bank ‘B’ account opening process automatically gathers information from customer data agencies. A plethora of new banks – from Simple and Moven to Starling and Monzo – offer customers re-engineered onboarding processes designed around what they want and not how legacy banking systems work. These disruptors are in a better position to attract and retain a digitally savvy customer base.

Studies also show that 90% of customers prefer in-person attention for more complex banking transactions, in particular opening new accounts. While the role of the branch remains, the challenge of providing a consistent and seamless customer experience across all channels is becoming ever more important. And as start-ups learn to offer that seamless omnichannel experience, combining human interactions with digital channels, branches will become less of a differentiator for banks. Competition can now practically be anywhere.

Legacy system vs. modernization

One of the key challenges retail banks face is how to absorb digital disruption while taking regulatory and compliance requirements into consideration. The bulk of digital transformation happening in traditional banks today revolves around the customer front-end (online/mobile banking), while the middle and back office get bogged down with issues, such as:

• Complex, legacy IT systems
• Manual, paper-based processes
• Siloed data sources
• Higher costs for labor, infrastructure, error and rework
• Lack of agility
• Lower customer satisfaction due to lack of a seamless experience

Maintaining legacy systems can eat up about 90% of a bank’s technology budget, which has a significant impact on customer experience. This also renders the bank sluggish – only 30% of bankers feel their processes can adapt to external changes.

The disruptive technology opportunity

By adopting a mobile-first strategy, banks can tap into the staggering growth of mobile banking. Growing numbers of customers feel mobile banking is enough for their banking requirements – banks need to reach these customers with new products and slick onboarding processes. In addition, self-service channels can unlock immense savings from reduced acquisition costs, as sales migrate out of the most expensive channels.

Disruptive digital technologies can help banks provide a seamless and integrated user-experience to customers across channels during the onboarding process. Banks can gather data about their customers by analyzing their social behavior, browsing patterns, etc. This data can be used to tailor offerings and pre-populate application forms.  And by leveraging big data analytics to scrutinize this customer data, banks can validate customer identity and eligibility. At the back-end, by integrating all the key parameters like technology and data, they can optimize their customer interaction strategy throughout the application process.

Analytic tools

Digital technology has provided banks with access to billions of exabytes of data. This “big data” is easily accessible from varied sources like mobile devices; geospatial data and image data from video, satellite, surveillances; supply chain data from vendor catalogs and pricing, and device data sensors facilitated by RFIDs and telemetry, in both structured and unstructured formats, with volume, velocity and variety. This data can be analyzed and utilized effectively to deliver a better experience during onboarding. With advanced analytics mechanisms, such as predictive analytics, descriptive analytics, diagnostic analytics, and sentiment analytics, data can be absorbed to give businesses a deeper understanding of customer mindsets, behavioral patterns, and prospects’ future strategies, as well as expose fraudulent applications. These insights can be used to optimize onboarding processes to suit each customer micro-segment.

Building blocks for a successful outside-in onboarding process

The true potential of digital transformation is not always easy to comprehend as digital technologies are constantly evolving and offer different sets of opportunities for different businesses. Digital can seem like a wormhole, leading to a parallel reality for each industry. However, banks can find their way by putting a well-defined strategy in place and creating a digital transformation roadmap with the customer at the centre, as illustrated here:

Infrastructure

By moving from legacy systems to modern cloud-based platforms, such as Software as a Service (SaaS) and Business Process as a Service (BPaaS), banks can move towards building an integrated, agile and scalable infrastructure that can lower the total cost of onboarding operations and deliver a seamless application experience for the customer, from the front to the back end. In this way, banks can keep up with the innovators in the market.

Data management and analytics

Data management is one of the key areas of focus for building a digital roadmap. With the massive volume, velocity, and variety of data being output today, banks need to evaluate robust systems for master data management (MDM), unified delivery and information integration, and global data semantics with standard data models. This will require banks to create new plans and policies that can infer more value from information assets, while also maintaining security and compliance standards.

Using advanced analytics tools, data that is gathered and managed through MDM can be meticulously and multi-dimensionally analyzed to gather actionable insights. Data analytics can give businesses deeper insights into customer behavior, correlate that with revenue generation and marketing initiatives, and identify scope for cross-selling. Data analytics tools can dissect structured and unstructured data by geography, user-type, channel, campaigns, content, and so on. The most important aspect of digital transformation is that banks have to bring their social and mobile capabilities to the forefront of their digital aspirations. This data is critical in enabling banks to optimize their onboarding processes. Large banks are already acquiring technology start-ups to leap-frog their competition in the digital race.

User experience, social media, and mobile

The front-end customer experience is largely dependent on the business process structure followed by a bank. For this, a bank has to go through the entire onboarding life-cycle – for ‘happy path’ applications and exceptions, re-orientation of process flows, governance audits, process optimization, and enterprise service bus adoption.

Customers have a habit of jumping from channel to channel during account opening processes and therefore it’s imperative to give them a consistent experience across all touch points. The experience on mobile, desktop, tablet, social networks, and even inside a branch should have a common thread to help make the account opening process as easy as possible. Ways to achieve this include information architecture, process user interface, visual consistency, personas, campaign management, user experience and session control, responsive web designs, prototyping, and user interface technology.

The future from outside-in

Digitization has taken the world by storm and retail banking is in the eye of this storm. With online banking from handheld devices growing exponentially and expected to double over the next four years, banks must expedite their digital strategies and get down to execution. As the market focus shifts from cost reduction to customer acquisition, this is particularly important for customer onboarding and product origination.

As digital continues to evolve and grow at an astounding pace, banks have to become more nimble, approachable, and adaptive to stay relevant in an age of mobile product opening and digital disrupters. While traditional banks have benefited from account inertia working for them in the past, new digital customers have higher expectations. Banks have to open the gates for innovation, modernize their back-end processes, get ahold of all stakeholders and departments, and instill a customer-centric culture in the organization. They must also create a holistic experience across all channels, with the customer’s experience at the forefront, and desig onboarding and origination processes outside-in, instead of inside-out.

Change is a challenge in traditional banking, with legacy systems and complex, siloed organizational structures major impediments. It is therefore vital for banks to create a strategic roadmap based on the building blocks of digital adoption to make this transformation happen and get executed quickly. The best time to set the ball rolling is now.

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