Why is digital onboarding garnering traction within Financial Services?
By Puja Sharma
The process of digital onboarding involves automating the process of introducing new customers to a financial institution’s products, services, and facilities. Traditional onboarding procedures are followed, but done via the internet in a fast, simple, and secure manner. Forms, payments, and documentation submissions can all be eliminated with digital onboarding, according to a report by LoginID.
The digital onboarding process uses the institution’s online platform, either internally developed or outsourced from a digital onboarding platform. Customers no longer need to go to the physical bank to open bank accounts or take out loans with digital onboarding. With this process, the traditional process that can take days or even weeks can now be completed in just a few minutes.
Modern technology and the Electronic Know Your Customer process or eKYC can offer such convenience and time-saving benefits. Companies can establish financial profiles for customers through eKYC. Among other criminal schemes, the KYC regulations of banks prevent fraud, money laundering, and terrorist financing.
Verifying ID, face, and documents is part of KYC in banking. To capture this data, banks use image recognition, biometrics, and artificial intelligence (AI). These tools also protect customers’ access to banking platforms during service delivery.
An onboarding process establishes a relationship between a bank and a potential client. Successful completion of this step determines whether the user will choose the bank or abandon the process and go elsewhere.
Challenges
By automating the onboarding process, financial institutions can introduce new customers to their products, services, and facilities. Typical onboarding procedures are followed, but via the internet and in a rapid, simple, and secure way. Digital onboarding eliminates forms, payments, and document submissions.
As consumers’ banking habits change and e-commerce capabilities increase, banks must also adapt. As the population becomes aware of the benefits of fully virtual and contactless banking, demand will continue to grow. Due to the increase in cyber threats, banks need to be able to facilitate this need in a secure manner.
A number of risks are associated with digital banking, including unencrypted data, malware, insecure third-party services, and spoofing. Poor privacy habits make users a prime target for fraudsters. Criminals mainly target weak passwords and unsecured networks to acquire login credentials. Authentication of a user should not just be left up to the user but also provided by the bank.
Lastly, as digital onboarding also focuses on smooth processing, banks must offer all benefits of security and functionality without technical issues or downtimes. Banking platforms must be able to provide uninterrupted service to maintain reliability and trust in their services.
Way forward
With the level of technology available today, banks can comply with regulatory standards while providing a smealess digital banking solution. Firms can use AI to combat fraud better.
AI-powered systems can help banks anticipate customer needs, like providing 24/7 support and answers to general inquiries, which evaluates customer data more accurately and overall improves customer experience. AI-powered systems can also appraise customer data more accurately, reducing risks and increasing the bank’s potential to personalize customer service.
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November 12, 2024