How virtual banks can reduce sign-up abandonment

Over recent decades, a sharp rise in consumerism has paved the way for how businesses rethink and reset their business models. Businesses need to cater to the evolving shifts in mindsets, aspirations, and needs of consumers. A customer-centric mentality is critical for brands to successfully navigate today’s business contours and remain competitive. That’s where certain brands succeed, while others may fall short.

The study of consumer behaviour has resulted in numerous theories around purchasing behaviour. In the 1900s, psychologist Walter Dill Scott suggested that underlying human behaviour influences consumer decisions and deciphered that consumer suggestibility was based on three factors: emotion, sympathy, and sentimentality. Over the years, businesses continue to invest time, effort, and money to understand what influences consumers’ buying decisions.

Staying relevant in a digital-first world

Today, we have largely pivoted to a digital-first world with the digital transformation of products and services accelerating over the last two years due to the pandemic. We live in a world where customers literally have everything in the palm of their hands or at the click of a button. This prominent shift to adopting more online services has shown us how customers make decisions about the services they use – based on ease of use, convenience, and how quickly they can be onboarded to a new service with minimal hassle. This is particularly true for the digital banking sector.

The banking system has been significantly disrupted by the digital revolution, as businesses move away from brick-and-mortar establishments to virtual banking. This is a great opportunity for existing banks to reimagine and rebuild their banking architecture, while new digital-native entrants can define, create, and lead a modern, efficient, and future-proof banking system.

Breaking down roadblocks to success

The long-term success of digital banking will depend on how the industry can securely and seamlessly manage the onboarding of new customers and businesses, and deliver an exceptional digital experience throughout the customer lifecycle. A robust digital identity practice is crucial to the journey.

To provide consumer-friendly and personalised services, banks must first identify who their customers are, what devices they use, and what their preferences are. Plus, all of this needs to be accomplished in a secure and frictionless manner, minimising the number of clicks and logins, while also connecting to downstream apps and services such as credit cards and loan offerings.

Spending on digital transformation projects has seen increased velocity as businesses continue to focus on improving the customer experience. However, one of the key challenges these banks face today is around frictionless onboarding of new customers, especially if the customer is required to visit a physical branch to complete the process. When consumers expect a digital-first approach, this can be a major source of grievance and inconvenience.

According to a report by McKinsey, 70% of consumers across Asia-Pacific expressed an openness to using digital channels for services beyond transactions. However, customers are frequently annoyed by cumbersome applications and convoluted account-opening processes that involve multiple handoffs over several days. Abandon rates for online banking applications are at an all-time high, according to industry analysts.

The process of digitising banking offerings also puts heavy reliance on the quality of the data that is produced. A frictionless onboarding layer that taps into existing customer data can automate the entire process and reduce the need for additional information from the customer.

The doors that technology has opened

Mobile technology has opened the door for innovation in banking and personal finance management. For example, with AI-enabled apps, banks can offer consumer analytics, reminders, and personalised advice – all made possible through the implementation of back-end identity management solutions.

Consumers can now access their banking information from anywhere with the tap of a finger, thanks to new passwordless authentication innovations like biometric authentication, while multi-factor authentication remains a critical aspect for logging into important financial apps and accounts.

Personalisation without breaching consumer privacy can be the key differentiator for new virtual banks while customer identity and access management solutions will be the real dealmaker between adoption and abandonment.

Brick-and-mortar banks are not going away anytime soon, but they must quickly adapt to changing consumer expectations to avoid being left behind in our rapidly changing digital world. Only the businesses most nimble and responsive to change will survive and thrive.