Whenever you install a new app or sign up for a service, you usually fill out forms with personal data. This process, called onboarding, integrates you into the system. Adding the term “digital” simply means that the onboarding occurs online, eliminating the need for physical visits or paperwork.
In this post, we’ll explore digital onboarding, how the process works, the different types of customer onboarding, and its benefits, especially for regulated industries like banking and fintech.
What Is Digital Onboarding
Onboarding refers to welcoming and integrating new employees, customers, or users into an organization. In the financial sector, onboarding specifically involves registering new clients so they can access services like opening an account or applying for a loan. The goal is to guide new users seamlessly into becoming active customers.
Digital onboarding allows organizations to perform this process electronically and remotely. It leverages tools such as websites, mobile apps with ID scanners, digital signatures, and advanced verification software to streamline data collection and validation. This is particularly critical today, where customers increasingly prefer remote, app-based services.
For example, fintech companies like Revolut and Wise allow new clients to open accounts entirely online without requiring physical branches. This convenience has made digital onboarding essential for businesses aiming to stay competitive.
How Does the Digital Customer Onboarding Process Work?
The digital onboarding process mirrors traditional onboarding but occurs entirely online. It typically includes three steps:
1. Signing Up
New users create an account by providing basic information, such as an email or phone number. Unlike traditional processes that can take up to an hour, digital account creation often takes just a few minutes.
2. Identity Verification
Identity verification ensures compliance with regulations such as Know Your Customer (KYC) and Anti-Money Laundering (AML). Digital methods include scanning ID documents, performing biometric checks, and detecting liveness. These steps reduce fraud risks and enhance security.
3. Product Setup
Once identity verification is complete, guided tutorials or product demonstrations help users navigate the service. This reduces the risk of product abandonment and improves the user experience.
Client Onboarding Types
There are three main types of client onboarding: on-site, semi-on-site, and digital onboarding. Here’s how they compare:
1. On-Site Onboarding
- Process: Clients visit a physical location, fill out forms, and provide documents.
- Advantages: Personalized service and in-person assistance.
- Drawbacks: Time-consuming, costly, and limited to office hours.
2. Semi On-Site Onboarding
- Process: Combines online and physical elements. Clients may start the process online but are required to visit a branch to complete it.
- Advantages: Some level of convenience and reduced paperwork.
- Drawbacks: Still requires physical presence, creating delays.
3. Digital Onboarding
- Process: Entirely remote, using digital tools for data collection, verification, and account setup.
- Advantages: Fast, convenient, cost-effective, and scalable.
- Drawbacks: Requires reliable technology and a robust digital infrastructure.
Benefits of Digital Onboarding
Digital onboarding offers numerous advantages over traditional methods. Let’s explore these benefits in detail:
1. Client-Centered Approach
Digital onboarding meets clients where they are—at home, at work, or on the go. This remote-first approach eliminates the need for time-consuming visits to physical offices, enhancing customer satisfaction. In fact, 78% of banking customers now prefer to use a bank’s website or app for onboarding.
2. Time and Cost Savings
Digital onboarding automates repetitive tasks, reducing the need for manual intervention. A study by Oliver Wyman revealed that it costs only $30 to onboard a customer digitally, compared to $150 through traditional methods.
For instance, Swiss bank UBS implemented digital onboarding with Regula, enabling a fully automated, 24/7 process that takes just minutes to complete.
3. Reduced Error Rates
Human errors in manual processes can lead to inconsistent data and delays. Digital onboarding tools flag incorrect responses automatically and ensure that all required information is captured accurately. Advanced ID document parsing further improves data accuracy.
4. Increased Security
Digital methods enhance security with tools like encryption, secure digital signatures, and biometric checks. These measures reduce the risk of fraud and data breaches, a major concern in regulated industries. For example, DBS Bank auto-approves 98% of new customers, maintaining high compliance and security standards.
5. Improved Customer Retention
Convenient and user-friendly onboarding improves customer retention rates. A Salesforce study found that 35% of customers switched banking providers due to poor user experiences. Digital on boarding offers a seamless experience, increasing loyalty and brand affinity.
Conclusion
Digital onboarding is transforming how businesses welcome and register new customers. By shifting onboarding online, organizations provide a faster, more convenient experience while improving security and reducing costs. This approach not only meets regulatory demands but also enhances customer satisfaction and retention.
As a leader in identity and document verification, Regula has supported companies like UBS and Pearson VUE in streamlining their onboarding processes. If you’re ready to adopt or optimize digital onboarding, we’re here to help you every step of the way.
