Digital onboarding and cost efficiency | PXL Vision

April 19, 2021

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What is digital onboarding & how to optimize it with IDV

This article answers the question of what digital onboarding is and then discusses the process in detail. In many situations, especially in the financial services, digital onboarding also serves the secondary purpose of identity verification. One major issue of digital onboarding is that it adds friction to the overarching online process in play, for instance, when checking out and making payments at an online retailer. You can read more about this in the case study in section 5 below entitled "Costs associated with shopping cart abandonment at the checkout".

  1. What is digital onboarding?
  2. The digital onboarding process
  3. Digital onboarding and identification
  4. Customer abandonment issues with digital onboarding
  5. Case study: costs associated with shopping cart abandonment at the checkout
  6. Fast verification times and the prevention of financial fraud
  7. 5 Ways PXL Vision speeds up / simplifies digital onboarding

What is digital onboarding?

Digital onboarding is an online process whereby an individual signs up with a company or a government/institutional service or, in the case of finance, banks, in order to later access the products and services there. The individual provides their personal data, and if required, some biometric information such as a fingerprint or face scan for biometric authentication. The digital onboarding process allows the individual to be easily and securely identified at a later date. For the purposes of financial services and especially digital banking, there are extra steps involved which fall under the scope of KYC/AML regulations. Read more about the complexity of this on our blog here.

Before the onset of remote and digital onboarding, an individual provided their individual data either in-person or through the mail, which was often an expensive and time-consuming process. As businesses and institutions continue to shift their operations online, the need for a secure and reliable digital onboarding solution has increased. This is all the more true as the Covid-19 pandemic continues to rage, requiring us to minimize person-to-person contact even more.

Importantly, online businesses are benefiting in many ways from the move to digital onboarding. Especially since onboarding customers into a company’s database allows businesses to better keep track of their customers and better target their products and services to their customer base.

The current proliferation of well-designed digital identity platforms on the market, which are simple - especially for the end user - to operate, is turning a once tedious and time consuming process into a more streamlined and faster one. Another overwhelming benefit of digital onboarding is that it allows a company to hire its staff remotely, which opens up the job market to qualified people the whole world over.

The digital onboarding process

For online businesses, the digital onboarding process uses the platform that your company has either developed in-house or chosen from a list of vendors. The platform is used for ensuring compliance (especially when required, as in digital banking and other financial services) and ultimately for converting potential new customers into paying customers; who will eventually form your customer base.

For many online businesses, an email and credit card or PayPal account has long been sufficient for onboarding purposes. However, this rather laissez-faire onboarding method has been proven insecure with high numbers of fraud cases being reported. Thus, there is a concerted effort being led by the digital onboarding industry to add extra layers of security to the onboarding process.

Through this push to make onboarding software and the onboarding process more secure, it is important to remember that the customer onboarding process takes place in the early phases of establishing a relationship with a new customer. Therefore it is crucial to get the process right as the customer already begins to form their opinions of your company at this point. It is still possible, and altogether too often the case (as you will find out below), that the customer decides to abandon the onboarding process, either because the onboarding takes too long or is too difficult to complete.

Digital onboarding and identification

The industry that is growing up around trustworthy digital identities has risen out of a pressing need to make online interactions and transactions safer and more secure. Digital identity platforms are transforming online businesses by adding an important layer of trust and security to the digital realm.

However, global fraud figures reveal a darker side of the digital onboarding process and account-based fraud is now one of the most pressing threats to businesses today.

According to US-based Javelin Strategy, a research-based advisory firm in digital banking and finance, the number of consumers who were victims of identity fraud fell to 14.4 million in 2018, down from a record high of 16.7 million in 2017. However, new account fraud has been on the rise, whereby hackers use a victim’s identification to open new accounts for credit cards, student loans, mortgages, and the like.

Our article on how to prevent cybersecurity attacks provides a number of useful tips for businesses interested in getting the most protection from their digital identity verification platform. It’s especially relevant during the digital onboarding process.

With the technological solutions now in development by regtech companies such as PXL Vision, online fraud is about to receive a serious blow. As digital onboarding technology continues to progress, especially in the areas of facial biometrics, artificial intelligence and machine learning, it might even become possible to create a digital twin of ourselves that exists online to represent our real world selves.

To learn more about identification and digital onboarding, read our article on digital identity verification.

Customer abandonment issues with digital onboarding

Despite the added security that a more robust digital onboarding process offers, a major issue facing the industry is that of high customer abandonment rates. These high abandonment rates are primarily due to poorly-designed digital onboarding processes that are too difficult or too time consuming to complete. Much of this is due to poor UX design (see our previous article on the effect that UX design has on the digital onboarding process) and some of it, of course, has to do with the identity verification process itself which adds friction in any case.

When you dig down further into the figures, some digital ID platforms in the European market have even reported 40-50% customer abandonment rates.

This issue is easily visualized through a simple demand side curve. However, instead of price on the y-axis we will write in the time/difficulty of the digital onboarding process whereas the x-axis will denote the # of customers converted.

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A linear agreement is seen wherein the more time that is needed to complete the onboarding process the fewer the converted customers and vice a versa.

The obvious solution then is to rethink and simplify your company’s digital onboarding process in order to move the point-C downwards and towards the right along the curve.

Case study: costs associated with shopping cart abandonment at the checkout

Similar to the time wasted when standing in line to pay at physical stores, customers do not want to waste time in line when making payments online. The customer who simply wants to make a purchase will not wait around for an onboarding process that takes too much time or is too difficult to complete. An independent web UX research institute, Baymard Institute, found that abandonment rates for online checkout carts average nearly 70 percent for some online merchants.

To be clear, this high abandonment rate is not only due to poorly designed onboarding software. In a survey of approximately 4500 people that asked why they had abandoned their shopping cart, 20% responded that the checkout process was “too long / complicated”.

digital-onboarding-shopping-cart-300x200-1

Cart abandonment is one of the single greatest costs to a business whether for financial institutions or online stores. The bottom line of your business takes a direct hit when a potential customer abandons their purchase or quits their identity verification mid-process. Moreover, the cost can be immeasurably higher when that customer simply switches tabs on their browser and takes their business to a competitor.

Our excellent streamlined digital onboarding software helps reduce high abandonment rates. For starters, PXL Vision’s digital onboarding solution uses passive liveness detection, which increases the speed of the online identity verification process – at less than a minute for the end user.

Fast verification times and the prevention of financial fraud

While the use case for online shopping carts is clear, there are other use cases, such as with online banking and finance, wherein your onboarding solution needs to comply with a regulatory framework in place – for starters KYC / AML guidelines.

For online banking, one would think that the longer the process takes the more bona fide and trustworthy it ought to be. A streamlined and fast digital onboarding process might even appear to be in conflict with fraud prevention. What we have witnessed, not surprisingly, is that low quality and poorly designed digital onboarding platforms increase the risk.

When low-risk customers come across a complicated, time consuming onboarding process they are more likely to take their business elsewhere. High-risk customers, on the other hand, are more likely to complete the processes of an overly complex and time consuming onboarding processes, given that they might have fewer options to choose from.

PXL Vision’s flexible online identity verification platform protects their clients against fraud by complying with the strictest of KYC / AML guidelines all the while maintaining fast onboarding speeds. Furthermore, PXL Vision has adopted the most recent AML5 Directive, the GDPR, as well as a whole host of other standards and certifications into its digital onboarding process, which allows us to provide access to most of the global market.

5 Ways PXL Vision speeds up / simplifies digital onboarding

  •  Overall user experience (UX) – A fully automated UX with reduced screens and need for interaction in the onboarding journey
  • Clear instructions & instant feedback – We follow the KISS acronym: Keep It Simple Stupid! Image too blurry? We inform the customer immediately so they can try again
  • Multiple ID support – supporting a wide variety of ID types – and the multiple variations therein + an ongoing assessment of new versions
  • Cross-platform and architecture support for the perfect fit into existing business processes
  • Compliance – KYC/AML, GDPR and other regulatory legalese taken care of

PXL Vision’s digital onboarding solution is an at once modular and fully-customizable platform wherein your customers will be able to verify their identity in 20 – 30 seconds. Note the time savings from your current process, which are likely substantial, reducing the potential for customer abandonment in the final stages of the onboarding process.

Fast digital onboarding improves the user experience, increases the conversion rate and expands your customer base.

PXL Vision’s digital onboarding platform

The digital onboarding of new customers is the most crucial aspect of your online business. We understand this and understand the time constraints of today’s consumer in an online marketplace with almost endless choices.

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