Glossary Digital Onboarding

Digital Onboarding

Digital onboarding – explained simply:

Whereas forms used to be sent by post, ID cards checked manually and contracts signed on site, nowadays, a smartphone is often all that is needed. This is made possible by digital onboarding. It is a process that has become standard in many industries.

But what exactly does the term mean? This article provides an overview of the definition, process, areas of application, and legal requirements relating to the digital onboarding of customers.

What is digital onboarding?

It describes the digital process of identifying and verifying individuals or companies via a secure online portal. The aim is to register new customers for digital products or services quickly and legally, without any media discontinuity, and without them having to appear in person or send postal documents.

Digital onboarding is particularly relevant in regulated industries, such as finance and insurance, where legal requirements such as KYC, AML and eIDAS regulations must be met. It also plays an important role in enhancing security and efficiency in e-commerce, telecommunications, and online platforms, benefiting both companies and their users.

Note on the use of the term:

The term 'digital onboarding' is also used in the HR sector, for example for the structured digital induction of new employees within companies. In this article, however, it refers exclusively to the digital identification and verification of customers as part of business processes. In other words, it refers to what is often referred to as customer onboarding.

The digital onboarding process works as follows

Digital onboarding usually comprises the following steps:

1. Data entry: Users enter personal data, such as their name, address, date of birth and contact details, via an online form.
2. Document upload or capture: ID documents are photographed, uploaded or read via NFC.
3. Identity check: This is automated using AI-based document recognition, biometrics or additional security mechanisms, for example.
4. Regulatory check: If required (e.g. in the financial sector), an AML/KYC check is carried out to ensure compliance with legal requirements.
5. Confirmation and finalisation: After successful verification, access to the desired product or service is usually activated within a few minutes.

Areas of application and industries

Digital onboarding is used wherever secure and fast online identification is required. Different legal requirements apply depending on the industry, such as the eIDAS regulation or KYC rules, and these must be reliably fulfilled during digital onboarding.

• Banks & FinTechs: Digital account opening including KYC, AML check and QES
• Insurance companies: Conclusion of policies without media discontinuity
• Telecommunications: SIM card registration or contract conclusion via app
• Online platforms & marketplaces: Age verification, KYC, identity verification during registration

Challenges in digital onboarding

Despite numerous advantages, the digital onboarding process is not without its stumbling blocks. The most common challenges include

• Complex user guidance: Too many steps, unclear navigation or non-intuitive user interfaces lead to frustration.
• Long waiting times: Delays in verification or manual intermediate steps reduce the likelihood of completion.
• Technical hurdles: Unsupported devices or documents, lack of mobile optimisation or poor performance impair usability.
• Media disruptions: If the user has to switch to other channels (e.g. email, post) during the process, the user experience suffers.
• Low trust: Unclear communication on data security or unknown third-party providers for individual process steps can deter potential customers.

Therefore, a successful onboarding process relies on powerful technology and user-centred design.

Best practices for smooth customer onboarding

Efficient, user-centred onboarding combines technological excellence with well-thought-out process design. The following principles have proven particularly effective:

Compliance with all relevant regulatory requirements is a key success factor, such as the eIDAS Regulation, KYC guidelines and the GDPR (or rev. DSG in Switzerland). Equally important is multi-level verification, which combines ID documents, biometric features and one-time passwords, for example. This maximises security and fraud protection.

Last but not least, effective user guidance is crucial: a clearly structured, mobile-optimised interface with clear instructions and prompt responses significantly increases user confidence and reduces the abandonment rate.

Legal foundations in Germany, Austria and Switzerland

Digital onboarding presents not only technological challenges, but legal ones too. Companies that want to identify or verify people online must ensure that their processes comply with applicable laws, such as those relating to data protection and AML checks. There are also regulations relating to electronic signatures, which are sometimes also part of digital onboarding.

Different legal requirements and supervisory authorities apply depending on the country. The following overview shows the most important regulations and responsibilities in the DACH region:

Digital onboarding with PXL Vision

This software solution offers companies a highly automated and customisable option for digital identity verification. It can be seamlessly integrated into existing systems and flexibly adapted to CI/CD requirements, offering an excellent user experience.

Thanks to intelligent AI processes, a large selection of supported ID documents and immediate feedback in the event of errors, the onboarding process is significantly accelerated. At the same time, maximum data security fosters trust — a critical factor in sensitive processes such as digital customer identification. Contact us for more about digital onboarding.