August 8, 2022

Mike Tuchen, CEO, unvideo.

As the world emerges from the global battle against Covid-19, industries are beginning to determine what a return to “normal” will look like.

For some, it’s about who’s going back to the office and who’s going to continue remotely. For the financial services industry, it’s about how to embrace the new “digital by default” landscape.

While other consumer-facing industries have long recognized the importance of a seamless digital experience — in many cases, tech leaders like Amazon or Google forced them to move online — financial services have been slower to embrace digital tools. The early perception that fraud risk was greater and that the ability to sell new services severely diminished without personal interaction delayed widespread adoption. Additionally, most banks would not have had a way to digitally verify someone’s identity without personal experience.

Prior to the 2020 Covid-related shutdowns, traditional financial services typically operated in a digital, on-demand model. Banking tools can be accessed via apps and online, but the instinct of most companies has been to continue directing customers to physical branches because it was easier to conduct any in-depth or complex banking in person, and it was easier to build trust with their customers.

The pandemic has acted as a catalyst for both banks and customer demand. One McKinsey Study It stated that shutdown accelerated from digitization for seven years to just two years; else S&P . study It found that 6 out of 10 customers were visiting actual banks less than before, with no plans to return.

As the world opens up again, and banks continue to ponder these fundamental questions about how consumers interact with their services, now is the time for executives to use this digital momentum to understand how they can “Amazon-ify” their services.

The customer is king

If Amazon can teach the financial services industry anything, it’s when it comes to an online experience that the customer is king. Without a salesperson to initiate the transaction, the digital experience needs to be seamless so that the customer can do it all themselves. It’s a lesson Amazon learned two decades ago, and yet the traditional financial services industry is just now tackling it.

Ten years ago, no one would have dreamed of doing something like shopping for a mattress online. Even the idea of ​​buying a pair of sunglasses online without first making sure that they look good on your face seemed risky. But Amazon has helped push markets in a new direction. Instead of driving to the furniture store, testing a dozen or so mattresses, and then having the mattress of choice delivered a few days later, customers are accustomed to the four-click process: add an item to cart, checkout, confirm shipment, and purchase.

In contrast, the financial services industry forces customers to jump through dozens of hoops in their attempt to access simple banking tools. To create an online bank account, potential customers need to answer an endless series of questions trying to verify their identity. Finateq I found that some big banks require more than 120 clicks to open a bank account!

coupled with another Consumer Surveywhich found that 60% of consumers reported abandoning online registration because the process is too long, the process is too confusing or they have concerns about the security of their data, banks that allow a poor digital experience are unlikely to win many fans.

A simplified and free customer experience is crucial – and most importantly, possible.

Instead of forcing customers to submit dozens of questions trying to meet Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements, banks can streamline their digital identity systems in a safe and efficient manner. One of our digital banks did this, and now they are including new customers in just 24 clicks, a fifth of the time taken by their competitors. This speed increases the number of customers on board and reduces the number of customers on board.

How did they do it? Facing the same regulatory environment and fraud concerns as their competitors, they have shifted their product dynamics to focus on their customers – both in the services provided and in the expertise. They have adopted digital tools that enable customers to seamlessly verify their digital identity, resulting in a 12% increase in the rate of customers on board, all while meeting stricter Know Your Customer regulations and creating a smoother customer process.

They have modernized their setup process by meeting customer experience and expectations with the latest KYC and AML technology. It’s a model that can be replicated by other financial services firms – with a capacity that will only grow, especially as digital identity tools, such as wallets and identifiers, become more prevalent.

Banks can play an active role in setting standards for these identifiers, but only if they embrace the values ​​of ease and security that are at the core of these offerings. To set standards, banks must be at the forefront of the digital identity revolution. Every company should know exactly how many steps their customers need to join and where they start experiencing problems. Without this basic knowledge of who’s on board and how, banks are leaving the door open for more adventurous and digitally savvy competitors to pounce on them.

Executives need to be obsessed with their customers, and they need to be open to completely re-imagining their digital experiences. With modern technologies, setup flows can be plotted to provide clear paths around where and how the setup process stops.

In a post-pandemic world, on-demand digital technology just isn’t enough anymore. The new world is digital by default. To truly lead, financial services companies need to prioritize frictionless digital experiences that give users the freedom and power to access their tools but what works best for them. Seamless digital experiences are a requirement for success in this world, just as thousands of convenient branches are in the ancient world.

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