According to Gartner Maverick* Research, a byproduct of the pandemic has been a shift from digital-first to digital-only thinking in many aspects of daily living, including grocery shopping, school attendance, doctor appointments and banking. However, questions remain: What consumer segments are being left behind? Will consumers continue their rapid adoption of digital services or will some look to move back offline? And most importantly, can businesses retain digital gains post pandemic?
The Maverick* Research: Reckless Digital Acceleration Fails – Digital Sensitivity Differentiates report highlights the risk that high-effort customer interactions or poorly-designed mobile platforms fuel churn for key financial services customer groups and small business owners. In this context, digital innovation needs to be validated against the needs of different customer groups, and onboarding journeys must flex to cater to different channel preferences.
Consumer financial attitudes and behaviors are putting pressure on onboarding flows
Friction-right onboarding is an industry standard aspiration advocating smoother customer acquisition for increased growth, and promoting enhanced collaboration and efficiency across teams. Optimizing onboarding during applications means balancing consumer expectations against the need for identity verification, fraud prevention, proving creditworthiness and adherence to compliance.
When considering consumer research, streamlining interactions is critical. A TransUnion study found 50% of consumers dropped out of a previous credit application process due to poor customer experience,1 whilst our ongoing Consumer Pulse study reveals just over a quarter of consumers globally still prefer to apply for new or refinance existing credit in person.
Table 2: How would you prefer to apply for new credit or refinance existing credit?
|Online via a desktop computer||Online via a tablet||Online via website on mobile phone||Via mobile app||In-person at a branch location||Via phone|
In addition, there are fraud risks businesses need to detect and identify. TransUnion monitors digital fraud attempts reported by businesses in industries, such as gambling, financial services, insurance, retail and travel, and discovered the rate of suspected digital fraud attempts rose 16.5% globally when comparing Q2 2021 to Q2 2020. The conclusions are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite — TransUnion TruValidate™.
With consumers expecting their discretionary spending to fall at the beginning of 2022 — potentially explained as a mixture of post-holiday belt tightening, an impact of COVID-19 restrictions or caution aligned to a possible cost of living increase — sectors like banking, telco, retail and travel will be highly competitive, prompting businesses to consider the strengths and weaknesses of their onboarding journeys. This can be split into the following two categories.
Consumer-centric priorities — Does the onboarding flow:
- Cater to consumer needs across channels aligned to their preferences, and factor in traditionally vulnerable rural or socioeconomically disadvantaged populations, such as those without internet access, newly jobless or using older digital devices
- Create a sense of mutual confidence and trust in consumer identities and the safety of information shared
- Stand up when validated against consumer satisfaction research
- Offer personalization and rich communications
Business-specific measurement — Does the onboarding flow:
- Deliver optimum commercial returns.
- Stand up when measured against key metrics, such as customer loss, acquisition cost, per-customer profitability, conversion and drop-out rate, fraud losses, brand sentiment.
- Strengthen core business objectives around customer experience and financial inclusion.
- Complement what Gartner terms the ‘digital sensitivity’ of your business (a central tenet of digital strategy) which reflects an organization’s responsiveness to its constituencies’ access to education and adoption of digital tools. Digital sensitivity includes recognizing and addressing whether your constituencies have vulnerabilities across:
Balancing innovation, customer experience and positive outcomes
We may not yet be in the metaverse, but we’re living in the digital age. And whilst digital is the go-to channel, there’s still a substantial number of customers who prefer brick-and-mortar establishments and face-to-face interactions. This leads to a discussion around innovation, catering to different preferences, and a need for consistently outstanding customer experiences.
In terms of digital innovation, our research finds consumers favor advanced identity verification, such as one-time passcodes or facial recognition, in their financial services relationships. And in most countries, there’s a consistent trend of younger generations more likely to want advanced identity verification. The implication is consumers expect businesses to bake robust security checks into aspirational and intuitive customer experiences.
Another benefit for embedding such solutions into onboarding flows is they can act as a deterrent to fraudsters, moving them away from your ecosystem before they do damage.
Facial verification, for example, can reduce the trade-off between fraud and security, and support modernization efforts. If businesses are considering how to streamline the onboarding experience, it’s crucial to:
- Make onboarding convenient and reduce friction
- Provide multilayered identity verification and authentication methods to meet a wider range of consumer needs
- Prevent fraud — deterring cybercriminals (who don’t want to expose themselves) and accurately detecting fraud by being built to robust security and compliance specifications
Personalization of offers and communications are also important considerations. According to Monevo, in financial services, personalized pre-approved offers have a higher initial engagement than personalized non-pre-approved offers, and both have significantly higher performance than offers with no personalization at all. When analyzing the power of offers to inform a decision, Dawn Wood, Monevo’s UK Territory Director, states: “Data shows when presented with an option to connect their bank account during a credit application [to allow product providers access to Open Banking data to make a lending decision], Gen Z were twice as likely to do so compared to Millennials, and over three times more likely than Gen X.”2
But we can also see innovation in physical settings as businesses look to attract foot traffic and create differentiation that caters to consumers wanting face-to-face engagements.
Pre-pandemic, Capital One was a pioneer of the bank-coffee shop branch model (launching its flagship location in 2017), wanting to make banking more friendly and approachable. Other banks have adopted similar approaches as they look to be experiential and encourage new and existing customers to use their services.
In retail, where in-store drives higher profits. UK, brands like George are pushing vintage clothes in an effort to drive foot traffic — strengthening profitability by encouraging in-store over online shopping and emphasizing brand positioning. Amazon, meanwhile, has gradually increased its physical presence with different offerings, leveraging its ability to innovate, customer data and insights, customer experience expertise and brand awareness. The obstacles to delivering these innovations include cost, scale and insights that ensure new ventures are accessible to customers who prefer or need these options.
Get innovations, such as an experiential physical bank or intuitive digital onboarding journey, right and they can support financial inclusion efforts, and the availability and equality of opportunities to access financial services.
Next steps to refining your onboarding flow
The Gartner study and our guide to elevating digital onboarding provides insights on the benefits of reviewing your digital optimization progress. TransUnion fraud and identity data solutions and consultants can support your efforts, helping pinpoint ways to deliver improvements that match or exceed consumer expectations, and help you socialize how these investments can move the dial on key KPIs.
Download a complimentary copy of the Gartner Maverick* Research: Reckless Digital Acceleration Fails – Digital Sensitivity Differentiates report.