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What is digital onboarding and how to reduce business costs during ID verification

What is digital onboarding?

Digital onboarding is an online process whereby an individual signs up with a company or a government/institutional service in order to later access its products and services. The individual provides their personal data, and if required, a piece of biometric information such as a fingerprint or face scan. The digital onboarding process allows the individual to be easily and securely identified at a later date.

Before the onset of digital onboarding, an individual provided their individual data either in-person or through the mail, which was often an expensive and time-consuming process. As businesses and institutions continue to shift their operations online, the need for a secure and reliable digital onboarding solution has increased. This is all the more true as the Covid-19 pandemic continues, requiring us to minimize person-to-person contact.

Online businesses in particular are massively benefiting from digital onboarding technology. The onboarding of customers into a company’s database allows the businesses to better keep track of their customers and better target their products and services to their customer base.

The current proliferation of well-designed digital identity platforms on the market, which are simple for the end user to operate, is turning a once tedious and time consuming process into a more streamlined and faster one.

The digital onboarding process

For online businesses, the digital onboarding process uses the platform that your company has either developed in-house or chosen from a list of contenders. The platform is used for ensuring compliance (when required) and ultimately for converting potential new customers into paying customers; those who will eventually form your customer base.

For many online businesses, an email and credit card or PayPal account has long been sufficient for onboarding purposes. However, this rather nonchalant onboarding method has been proven insecure with high numbers of fraud cases still being reported. Thus, the concerted effort by the digital onboarding industry to add extra layers of security to the onboarding process.

However, the customer onboarding process is the beginning phase of establishing a relationship with a new customer. And it is crucial to get it right as the customer already begins to form their opinions of your company at this point. It is still possible, and altogether too often the case (as you will see below), that the customer decides to abandon the onboarding process, either because it takes too long to complete or is too difficult.

Digital onboarding and identification

The industry that is growing up around trustworthy digital identities has risen out of this pressing need to make online interactions and transactions safer and more secure. Digital identity solutions are transforming online businesses by adding an important layer of trust and security to the digital realm.

However, global fraud figures reveal a darker side of the digital onboarding process and account-based fraud now makes up one of the most pressing threats to businesses today.

According to US-based Javelin Strategy, a research-based advisory firm in digital finance, the number of consumers who were victims of identity fraud fell to 14.4 million in 2018, down from a record high of 16.7 million in 2017. However, on the flip-side, new account fraud, whereby hackers use a victim’s identification to open new accounts, has been on the rise. Fraudsters open new accounts for credit cards, student loans, mortgages, and the like.

Our article on how to prevent cybersecurity attacks provides a number of useful tips for businesses interested in getting the most protection from their digital identity verification platform. It’s especially relevant during the digital onboarding process.

With the technological solutions now in development by RegTech companies such as ours, online fraud is about to receive a serious blow. As digital onboarding technology continues to progress, especially in the areas of facial biometrics, artificial intelligence and machine learning, it will become possible to create a digital twin that exists online as a representation of our real world selves.

To learn more about identification and digital onboarding, read our article on digital identity verification.

Customer abandonment issues with digital onboarding

Despite the added security that a more robust digital onboarding process offers, a major issue in the industry is that of high customer abandonment rates. This high rate of abandonment is primarily due to poorly-designed digital onboarding platforms that are too difficult or too time consuming to complete. Some of this is due to poor UX design (see our previous article on the effect of UX design on the digital onboarding process) and much of it has to do with the identity verification process itself.

When you dig further into the figures, some digital ID platforms in the European market have even reported 40-50% customer abandonment rates.

This issue is easily visualized through a simple demand side curve. However, instead of price on the y-axis we will write in the time/difficulty of the digital onboarding process. The x-axis will denote the # of customers converted.

A linear agreement is made where the more time that is needed to complete the onboarding process leads to fewer converted customers and vice versa.

The solution then is to rethink and simplify your company’s digital onboarding strategy in order to move the C-point downwards and rightwards along the curve.

Case study: costs associated with shopping cart abandonment at the checkout

Similar to the checkout experience at physical stores, customers do not want to waste time in line. When online, the same customer who simply wants to make a purchase will not stand for an onboarding process that takes too much time or is too difficult to complete. An independent web UX research institute, Baymard Institute, found that abandonment rates for online checkout carts average nearly 70 percent for some online merchants.

To be clear, this high abandonment rate is not only due to a less than satisfactory onboarding experience. In a survey of around 4500 people asking why they had abandoned their shopping cart, 20% responded that the checkout process was “too long / complicated”. Yes, one of the primary reasons for high shopping cart abandonment rates is the length of time it takes to verify a customer’s identification.

digital onboarding shopping cartCart abandonment is one of the single greatest costs to a business. The bottom line of your business takes a direct hit when a potential customer abandons their purchase. Moreover, the cost can be immeasurably higher when that customer simply switches tabs on their browser and takes their business to a competitor.

A faster, more streamlined digital onboarding process reduces these abandonment rates. PXL Vision’s digital onboarding solution uses passive liveness detection, which increases the speed of the online ID verification process – topping out at less than a minute on the customer side.

Fast verification times and the prevention of financial fraud

While the use case for online shopping carts is clear, there are other use cases, such as with online banking and finance (Fintech), wherein your onboarding solution needs to comply with a regulatory framework in place – for starters KYC / AML guidelines.

For online banking, one would think that the longer the process takes the more bona fide and trustworthy it ought to be. A streamlined and fast digital onboarding process might even appear to be in conflict with fraud prevention. What we have witnessed, however, is that low quality and poorly designed digital onboarding platforms actually increase the risk.

When low-risk consumers come across a complicated, time consuming onboarding process they are more likely to take their business elsewhere. High-risk consumers, on the other hand, are more likely to complete the processes of overly complex and time consuming onboarding processes, given that they might have fewer options to choose from.

PXL Vision’s flexible online identity verification platform protects their clients against fraud by complying with the strictest of KYC / AML guidelines all the while maintaining fast onboarding speeds. Furthermore, PXL Vision has adopted the most recent AML5 Directive as well as the GDPR into its digital onboarding process, providing access to the entire European market, with more than half a billion potential customers.

5 Ways PXL Vision speeds up / simplifies digital onboarding

  •  Overall User Experience – A fully automated UX with reduced screens and need for interaction in the onboarding journey
  • Clear instructions & Instant feedback – Follow the KISS acronym: Keep It Simple Stupid! Image too blurry? We inform the customer immediately so they can try again
  • Multiple ID support – Supporting a wide variety of ID types – and the multiple variations therein + an ongoing assessment of new versions
  • Cross-platform and architecture support for the perfect fit into existing business processes
  • Compliance – KYC, AML, GDPR and other regulatory legalese taken care of

PXL Vision’s digital onboarding solution is a modular and fully-customizable platform wherein your customers will be able to verify their identity in 20 – 30 seconds. The time savings are substantial and it reduces the potential for customer abandonment in the final stages of the onboarding process.

Fast digital onboarding improves the user experience, increases the conversion rate and expands your customer base.

PXL Vision’s digital onboarding platform

The digital onboarding of new customers is the most crucial aspect of your online business. We understand this and understand the time constraints of today’s consumer in an online marketplace with almost endless choices.

Reduce your company’s abandonment rates today and build your customer base by verifying your new customers’ identities with speed and peace of mind. Find out how PXL Vision can reduce identity verification costs for your business by up to 95%. Contact us today.

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