The Minutes that Matter

– Building meaningful relationships with Pakistani customers through digital onboarding

Technology innovation has re-shaped the world we see today, making markets more aggressive and customers increasingly demanding. To adapt to the new market “normal,” traditional banks have turned to digital banking tools such as digital customer onboarding to offer optimized and improved customer experiences. While the customer onboarding process can span just a few minutes, these minutes are crucial to setting the tone for the customer-bank relationship.

Customer onboarding or remote onboarding refers to a new customer’s experience setting up and using your product or service. While some might see it as trivial in the grand scheme of banking and finance, the customer onboarding process is probably the most critical stage in the customer lifecycle. A process that traditionally took 3-4 weeks now takes an average of 3 minutes to complete through a customer’s mobile phone or tablet. In addition, the entire process fulfills the necessary internal and compliance requirements such as eKYC, AML, and liveness detection. For example, statistics indicate that banks lose hundreds of millions of dollars annually to fraud; however, using a selfie with liveness detection to verify customer identities can reduce 90% of fraud attempts.

Beyond the cost-saving aspects of adopting digital onboarding, such as reduced time to manually onboard customers, lower cost of operations, decreased dependency on physical branches, and of course the time-saving benefits to customers, digital onboarding offers banks a unique tool to acquire and retain new-to-bank customers. Positive experiences during onboarding make customers more likely to recommend a bank to friends and family, and research has shown that customers who have a positive experience are more likely to become repeat customers. Additionally, digital onboarding sets the foundation for instant lending, card issuance and more, by virtually creating a loan origination application. Digital onboarding coupled with AI-based credit scoring can reduce non-performing loans by 50%, increasing acceptance rates and bolstering a bank’s loan portfolio return.

While digital onboarding has seen broad worldwide uptake, the market in Pakistan is still ripe for banks to reap the most benefits from this capability. Currently, only about 21.3% of Pakistani’s have an account with a financial institution, and with a population of over 220 million, the market for new-to-bank customers is significant. The new “Customers Digital Onboarding Framework” introduced by the State Bank of Pakistan aims to address this challenge and propel Pakistan to the digital forefront. The Framework prescribes the minimum requirements and standards that Banks and Microfinance institutions need to meet to implement digital onboarding experiences for customers. With mobile penetration at 77%, this new regulation will open the doors for banks to reach millions of new customers using digital onboarding.

So how can Pakistan’s banks best leverage digital onboarding to enhance their competitiveness in the market and win with Pakistani customers?

Banks need to make their digital customer onboarding experience a top priority, not just a nice-to-have feature. The process has to be streamlined, seamless and quick to ensure speedy acquisition and product activation. In addition, banks need to ensure that their onboarding experience aligns with their brand. Whether experiencing a financial brand in a physical or virtual space, customer must experience a sense of familiarity that build trust and confidence. This is particularly relevant for customers new to digital banking or those lower on the financial literacy spectrum who need the extra level of comfort to engage with the bank in a new space.

Furthermore, forms, ID verification, eSignatures, and liveness checks need to integrate seamlessly into the overall experience to enhance and build trust in the brand, ensuring an effortless customer experience. Simple features like pre-filling forms with already submitted information and personalizing questions can automatically produce ready-to-submit forms, complete with digital signatures, and ensure each customer’s experience is unique.

Here, banks need to take a mobile-first approach. Not only to capatalize on Pakistan’s 77% mobile penetration rate but also to respond to the global trend of consumers increasingly prefering mobile-based banking services. Up to 30% of account holders confirm they would leave their current bank for one with better mobile capabilities.

As we see banks adapt their businesses and processes to the new regulations set out for the Pakistan banking sector, the future looks promising for consumers across the country. The banks that provide the most comprehensive and memorable onboarding experiences will have a massive advantage in the market as digital reach grows and brings more customers into the fold.

The true winners will be the banks that make the most of the minutes that matter.

The author is a Managing Partner, Codebase Technologies

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