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The term “digital onboarding” is well known in regard to the remote enrollment and orientation of new employees. However, it is also used to refer to the identity verification process used for people to access the products or services provided by a company or institution.
Digital onboarding is also widely used in the financial sector when opening a new bank account or something similar. In this article, we will take a look at the process of digital onboarding, why it often leads to abandonment, and how this can be avoided.
What is Digital Onboarding?
Digital onboarding is the process of verifying the identity of an individual or business through a secure online portal. It usually involves submitting personal information, such as name, address, date of birth, and Social Security number to an online service provider. The provider then uses this information to verify the customer’s identity and confirm that they are who they say they are.
Digital onboarding can be used for a variety of purposes, including opening a new bank account, applying for a loan, or signing up for a new service. It is a convenient way to verify someone’s identity without having to meet in person or send sensitive information through the mail.
For some types of services, such as financial or digital banking in particular, digital customer onboarding involves extra steps which fall under the scope of KYC/AML regulations. Details about KYC regulations are explained here.
How Does the Digital Onboarding Process Work?
Before remote services and digital onboarding became common, people provided their data in person, by mail, or by fax. This was often more expensive, time-consuming, less convenient, and of course in many cases less secure. To keep up with technological advancements, most businesses and institutions are moving more and more of their operations to online platforms or virtual environments. Therefore, having a secure and reliable digital onboarding system has become a necessity.
The digital onboarding process starts when the customer decides to buy/sign up for a product or service. Using a device such as a laptop or smartphone, the customer can provide all the necessary data online following a step by step process. This includes filling out online forms with personal data, answering questions, and uploading required documents that prove their identity. The customer then waits for the company’s approval.
Digital Onboarding in Finance
Digital onboarding for financial services is a regulated practice. Due to the high risks associated with the handling of funds, the digital onboarding process for financial services must include steps in compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
A prime example of digital onboarding in finance is digital customer onboarding in banking. As mentioned above, to set up online banking, customers must follow a digital onboarding process that incorporates KYC and AML regulations. The process usually involves filling out an application, verifying one’s identity, creating login credentials and setting up passkeys, enrolling in additional services or programs if desired, adding funds to the account, and last but not least receiving confirmation that the information has been verified and finalizing the account creation.
Digital Onboarding in Marketing
Marketing agencies most often work directly with other businesses. This relationship is known as B2B. The onboarding process for marketing services is more comprehensive to establish a level of clarity in regard to the roles and responsibilities between the agency and the new client. Naturally, each agency has its own unique onboarding process, and while many may still use manual methods, digital onboarding tools offer a suite of capabilities that both accelerate this process and improve the client’s digital onboarding experience.
The purpose of a marketing agency is to provide business clients with marketing services that enhance and optimize the marketability of the products or services that they offer and ultimately increase customer conversion and sales. Providing new clients with a frictionless pre-onboarding and onboarding experience is a great way to demonstrate marketing expertise and cultivate a relationship of trust and loyalty. With the integration of digital onboarding tools and the implementation of digital onboarding best practices, you can pave a clear path to success.
Customer Abandonment as the Key Challenge of Digital Onboarding
The digital client onboarding process takes place during the early phases of establishing a new customer relationship. Therefore, it is very important to ensure that the customer’s digital onboarding experience is as convenient and well organized as possible. This process is one of the first impressions a customer will gain of a company, which directly influences their initial perception of that company and decision whether or not to follow through.
Unfortunately, it is not uncommon that the customer decides to abandon the onboarding process mid-way, either because it takes too long or is too difficult to complete. Customer abandonment can also occur when the digital onboarding process includes a digital identity verification solution.
The biggest driver for dropouts is a poor user experience. Digital onboarding processes that are not highly customer-focused and tailored to user expectations will result in frustration and can ultimately lead to termination of the process.
4 Digital Onboarding Best Practices
Optimizing your customer’s digital onboarding experience is about more than just the technology itself. The tools you use are important, but equally important are the best practices you implement. Applying digital onboarding best practices will augment your technical solution and provide users with an even better experience. Here are four best practices you should implement:
- Maintain regulatory compliance: Maintaining regulatory compliance goes beyond following the rules. This practice ensures that your digital onboarding process maintains high standards for information privacy and security. Having the most advanced security systems will reduce risk, help prevent fraud, and provide customers with assurance that their information is protected.
- Use multi-step verification: When identity verification is a necessary step in the digital onboarding process, having at least two or three forms of identity verification will exponentially increase security and reduce risk. In addition to two-step verification (identity verification through email confirmation or a one-time password (OTP)), adding a third step, namely biometric verification, will add another layer of encryption that is much more difficult to crack.
- Have a user-centric approach: The digital onboarding process should be designed with the user in mind. The onboarding process should be set up for convenience, simplicity, and timeliness. Once you’ve finished the set up phase, audit the process to catch any bugs and ensure a seamless experience.
How PXL Vision Speeds up and Simplifies the Digital Onboarding Process
Fast digital onboarding improves the user experience, increases conversion rate, and expands your customer base. Here are 5 key benefits of our identity verification solution:
- Unique user experience (UX): A fully automated UX with reduced screens and less interaction in the onboarding process
- Clear instructions & instant feedback: Immediate responses without long waiting times for the customer
- Multiple ID support: Support of various types of IDs and ongoing assessment of new versions to avoid failures and frustration
- Flexible configuration and branding options: Convenient integration into existing processes and designs to avoid modifications or information that could confuse the customer
- Security: Extremely high data protection for sensitive personal information to increase customer trust
Conclusion
Digital onboarding is a fundamental practice for the onboarding or enrollment of new customers and employees. With the right solution, customizations, and implementation of best practices, you can optimize your digital onboarding process and enhance user experience and engagement.
Find out more about how our solution can help optimize your digital onboarding processes. Click here to reach out to one of our experts for a one-on-one, non-binding consultation.
FAQ
Digital onboarding is the process of verifying the identity of an individual or a business via a secure online portal. It usually involves submitting personal information, such as name, address, date of birth, and Social Security number, and in some cases biometric data. This process enables online service providers to remotely verify and authenticate the person’s identity and establish their account or enroll them in a program.
1. Streamlined processing: Digital onboarding enables companies to streamline their workflows and data collection in a centralized virtual environment, thereby avoiding outdated messy and time-consuming manual paperwork processing and filing systems.
2. Reduced costs: Traditional onboarding systems required more physical resources, like paper and ink for printing, and overhead for HR staff to process all the information. However, with a digital onboarding solution, companies can reduce these costs significantly with just one software solution to manage and maintain the entire digital onboarding process.
3. Improved user experience: Digital onboarding is not only more convenient and efficient for the company, but also for the user. Rather than investing copious amounts of time to prepare documents and commute to a physical location for the onboarding process, with digital onboarding, users can now complete this process in minutes either on the go or from the comfort of their home.
4. Enhanced customer engagement: A positive user experience and the reassurance of information security will foster a relationship of trust and enhance customer engagement. Digital onboarding sets the stage for the user’s first impression of the company and its processes. Therefore, having a seamless digital onboarding system is crucial for both immediate and long-term customer engagement.
Cyberattacks are the number one threat digital onboarding technology faces. Despite the use of highly sophisticated security solutions and AI or machine-learning technology to combat various types of cyberattack threats, the risk is always present, especially when money or highly sensitive information is involved. Here are some of the top risks of digital onboarding:
- Deep fakes: In recent years, deep fakes have emerged as a new threat to digital identity verification and onboarding. Deep fakes are indeed the dark side of AI and deep learning technology. As the name implies, deep fakes are AI-generated false images, videos, or audio recordings of non-existent or impersonated people used in digital onboarding to gain access to personally identifiable information.
- Document fraud: There is more than one form of document fraud. Document fraud can include altering the language of an official document, changing its physical properties, impersonating an individual’s writing without their consent, or deliberately supplying false information. Tampering and forgery are the two most common types of document fraud.
- Man in the middle attacks: A man in the middle (MITM) attack is a type of cyberattack in which an attacker intercepts communication between two parties (often a user and an application) to maliciously gain unauthorized access to information or make unauthorized purchases.
- Phishing: Phishing is a form of fraud in which an attacker sends impersonated communications via email or text that appear to come from a legitimate source. The intent of this illicit activity is to install malware on an individual’s device, maliciously gain access to sensitive information like login data, or steal money.
There are many different types of digital onboarding processes that are customized for each use case and individual business in accordance with specific company policies and regulatory compliance measures.
Generally speaking, digital onboarding requires a device such as a laptop or smartphone that the customer can use to virtually provide all the necessary data following a step by step process. This includes filling out online forms with personally identifiable information, answering questions, and uploading required documents to prove their identity. The customer must then wait for confirmation of the company’s acceptance. Traditionally, this wait period could go on for days or even weeks. Fortunately, however, digital onboarding has significantly reduced these wait periods to mere minutes.
