Instant Digital Onboarding – A New Reality, Part III
August 28, 2019
Sample Use Case (New Digital Bank) – Time, effort, investment, and returns (TCO & ROI)
A new digital bank can deliver a full online onboarding in less than 10 minutes, including ID verification, anti-impersonation performed with live video chat, and contracts signed with an electronic signature.
Customers are guided through an online/mobile app with a simple and clear interface:
– Fill in the online application form with basic information and personal details (the simplest possible for this step);
– Provide personal legal information (tax, country, id) and documents (photo or pdf);
– Verify ID (voice/video chat) and proof of life;
– Two-factor authentication provided (SMS) to establish a secure session with a bank account.
After the customer onboarding is concluded, the financial provider may proceed to product (loan or card) onboarding:
– Define the amount and period for the loan using a simulator with a simple graphical interface;
– Provide additional personal information related to income and responsibilities (photo or pdf);
– Verification of document authenticity (OCR plus AI/ML to automate information structuring) and third-party providers for financial information (government; others);
– Verification for internal customer history (API with core systems);
– Scoring for risk and commercial potential (maximize margin and sale probability);
– Inform decision immediately (online), to be verified (conditioned) by back-office due-diligence;
– Request electronic signature for the contract (multi signatures, live, where they are);
– Financial product delivery immediately after the signature.
From the customer perspective, what was best about the experience?
• No requirement for me to figure out which form I need to download as a PDF
• It worked on mobile and laptop
• I could save an application during the process, come back later, and complete it
• It was easy to get support in real-time if any questions required
• There were relevant status updates during the process
• Provision of a handy welcome pack to get me started
“The complete customer experience was seamless and very positive. The overall process took less than two hours, including account opening and loan contracting, with the electronic signature of two co-contractors, one being in London and the other one in Lisbon. The seventy thousand euros were available to the car seller and the customer left the stand with a new Tesla Model 3.”
— financial provider
Some of the key benefits for the financial provider
By significantly reducing the onboarding time, the financial provider can now onboard clients up to 80% faster than with a manual process and improve time to revenue by up to 45%. It also reduced the cost of onboarding by up to 90% and increases the onboarding capacity to four times (clients) with the same back office team. It also reduced the TCO for compliance and KYC reviews by up to 50%.
With an improved engine for scoring and risk analysis, the loan acceptance increased up to 20%, the origination workload decreased by 30%, it brought a verified 45% improvement in profitability, and a 15% reduction in bad debt.
TCO (ref) simulation
Time to Value: 5 months, considering parallel integration with core systems.
Investment (CAPEX): 400K€, being 50K for consulting services, design thinking & UX/UI (including mockups), plus 200K for SW licenses, plus 150K for professional services and SW integration.
Operating expense (OPEX): 1,000K€ for 200K customers/contracts in one year, considering the SaaS components used for digital identification, information extraction from documents and electronic signatures, representing as much as 5€ per contract, added by 100K€/year for SW license/updates on the onboarding platform.
In a four year simulation, the TCO will be: 400K (Capex) + 1,100K (Opex) x4 (years) = 4,800K€ for a total of 800K contracts.
Customers are ready to change the financial provider, looking for simpler and online (mobile) solutions that may be used at any time, everywhere, providing an improved customer experience with financial products “on-demand.” The fast success that Evolut or N26 (1,500 new clients /day) are facing shows that customers are ready and willing to change digital providers and embrace FinTech’s innovative approach for financial services, loans, or insurance without fear.
The redesign of existing onboarding processes is a complex task that involves many different competencies, processes, providers, and systems. Customer expectations are higher than ever and demand innovative approaches that reflect an amazing Customer Experience (UX/UI) and a huge simplification of the bureaucratic business processes. Simplicity by design makes everything much easier and reduces unneeded complexity to the overall solution. With an increasing number of new requests from Financial providers, similar scenarios (requests) will be faster and easier for Regulators to answer, and more often with a positive response. In the beginning, it’s always harder to answer a new request because it’s the first time you’ve encountered that situation. From the second time onward, it gets much easier.
Adopting innovative technology is the right option and, for sure, more fun!
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