Given the time and money fintechs invest into acquiring customers in an extremely competitive market, the worst possible outcome is to lose those new customers during the onboarding process. Recent data shows that the onboarding process is responsible for 23% of customer churn, however the process is crucial as it sets the stage for the customer’s ongoing relationship with the company.
In the financial sector, onboarding is particularly complex as it involves several steps designed to verify the customer’s identity, ensure compliance with regulatory requirements, and facilitate the initial interaction with financial services products or services.
When done successfully, an effective onboarding process will ensure that the organization fulfills its regulatory requirements and the customer is set up with the tools, access and knowledge they need to get the most out of their product.
First impressions can often have long-term implications so the stronger the onboarding process is, the more benefits arise from this. For example, a recent McKinsey study found that for every one-point increase in customer onboarding satisfaction on a 10- point Net Promoter Score (NPS) scale, there was a 3% increase in customer revenue.
The onboarding journey needs to reassure the customer that they have made the right decision and give them as frictionless a path as possible to start using this new service. With the need for detailed onboarding like identity verification and banking or income confirmation, fintechs need frequent and time-sensitive touchpoints to guide customers through their journey. This means it is more important than ever that any onboarding complexities are reduced to enable fintechs to deliver an outstanding onboarding experience. But just how is this possible?
Simplifying the customer onboarding process is crucial for enhancing user experience, reducing drop-offs, and boosting conversion rates. We know in the financial sector there are increased regulatory requirements, such as Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols.
These requirements are crucial for maintaining the integrity and security of financial systems but can add complexity to the onboarding process. At the same time, customers want to get up and running as soon as possible, seeking a seamless and efficient onboarding experience that doesn’t delay their access to fintechs.
That’s why choosing the best channel for customer onboarding is key – and businesses are increasingly turning to mobile messaging as the go-to method.
People have mobile devices on them at all times, which enables more frequent touchpoints, increases the speed of onboarding, and makes the process easy and convenient for the customer. By leveraging mobile technology, financial institutions can streamline the onboarding process, ensuring that customers can complete necessary steps quickly and efficiently whilst maintaining a high level of satisfaction. Additionally, SMS currently has the highest open rate compared to other popular communication channels and recent research suggests 55% of all SMS messages are read, with 100% of SMS being viewed.
Mobile messaging can offer several key benefits, including One-Time Passwords (OTP) and Two-Factor Authentication (2FA). These measures ensure that only authorized users can access their accounts, protecting both the financial institution and the customer from fraudulent activities. By integrating OTP and 2FA into the mobile onboarding process, companies can provide a secure yet user-friendly experience that can help to build trust, particularly with new customers.
Two-way communication allows fintechs to ease any challenges or pain points through interactions with customer service teams via SMS. This real-time communication capability enables customers to quickly resolve issues or ask questions, enhancing their overall experience. Whether it’s clarifying documentation requirements or troubleshooting technical issues, direct access to support through familiar mobile channels can significantly improve customer satisfaction and reduce frustration.
Continuous feedback is a helpful tool for both current and future onboarding processes as it makes the customer feel even more valued. By consistently gathering and acting on customer feedback, fintech companies can identify pain points, understand customer expectations, and implement changes that enhance the overall onboarding experience.
By soliciting feedback through mobile messaging, financial institutions can gather valuable insights into the customer experience. This information can be used to identify areas for improvement, streamline processes, and address any recurring issues. Continuous feedback loops help ensure that the onboarding process evolves to meet customer needs and expectations, ultimately leading to better service and higher retention rates.
There’s no doubt that mobile messaging significantly eases the complexity of customer onboarding in the financial sector by ensuring robust security with OTP and 2FA, facilitating efficient issue resolution through two-way communication, and driving continuous improvement with customer feedback. This approach not only meets regulatory requirements but also provides a seamless and convenient experience for customers.
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Julia Applegate, Business Communications Specialist at Esendex.
With more than 6 years of experience in B2B technology businesses, Julia has a wide breadth of marketing experience with an emphasis on growth and demand generation marketing. She is a business communications specialist at Esendex, which has been providing business messaging services for more than 20 years, from SMS online and SMS APIs to voice and data verification services.