Blog Post

What is ‘smart onboarding’ and how does it help banks?

Today’s banks and financial institutions offer a plethora of different and independent financial products to their increasingly demanding customers.

It can therefore be very difficult to efficiently manage and operate the respective separate onboarding processes that each product requires, such as authentication and verification checks.

Individual onboarding for each product is not only expensive but also severely hampered by a lack of data sharing. It’s been estimated that KYC checks cost banks on average $60m annually, with 25% of applications carried out in the UK abandoned due to KYC friction.

These statistics are concerning for those working in financial services. And the costs will only soar further with the introduction of the Fifth Money Laundering Directive (AMLD5) because organisations will have to ensure that their systems comply with this updated regulation.

A smarter solution

Banks and financial institutions are now turning to fintechs to help them solve business-critical problems. Fintech-incumbent partnerships are becoming more and more prevalent. A report by Business Insider found that 84% of commercial banks in the UK have considered a fintech partnership in 2019.

One area of fintech that is booming is Lending-as-a-Service (LaaS). There is a wide range of LaaS vendors, but the better ones are considered ‘end-to-end’, due to the full range of support services they provide to clients. This includes onboarding, risk management, automated decisioning, and servicing with personalised customer communications. They are also harnessing the latest developments in biometrics and artificial intelligence, specifically machine learning, to further bolster lending speed and decision making.

One of the key benefits to adopting this digital lending technology is that it allows banks to onboard customers more efficiently, driving down the associated time and costs whilst also enhancing user experience. We like to refer to this as ‘smart onboarding’.

Unlock a range of benefits

Smart onboarding is based on a unified digital identity (one digital identity for all services), enriched with data collected via API connections with multiple local and global data sources in the Open Banking environment. This includes e-mail validation, device and IP detection, customer screening and profiling, blacklist scanning, and politically-exposed persons (PEP) lists. It also includes the ability to provide lending decisions based on non-traditional online data, such as Amazon, e-bay or PayPal activity.

It draws on the latest technological innovations, including data capture using facial (selfie) ID to help confirm identity and further lower fraud risks, while still preserving a short and easy-to-use loan application. When a customer has submitted their details once, they can be shared across other product silos.

Smart onboarding solutions leverage the latest user interface (UI) and flow design technology to enable a bank’s engineers to easily and quickly edit application form design and journeys across multiple products; think consumer, commercial and asset finance. They also feature smart, real-time monitoring analytics that uncover customer journey optimisation opportunities to increase acquisition conversion metrics.

Another key feature is that they are omni-channel. The technology is built to support user onboarding starting from one device, such as a desktop, and completing on another, such as a mobile device, while remaining compliant with the latest regulations, such as GDPR.

A bank that adopts smart onboarding will benefit from being able to run multiple checks on its customers without having to have multiple data providers as vendors of the bank, which is both costly and time consuming. And from the customer’s perspective, the journey is enhanced through the simplicity of only having to enter standard fields such as name, address and date of birth.

This cutting-edge technology is enhancing the loan application process for customers, in turn offering cost and efficiency savings for banks.

Get in touch today to organise a demo and find out how Ezbob Smart Onboarding can add value and provide a competitive advantage.