Abandonment during digital on-boarding returns to 2016 levels


A study of European consumers has found that abandonment rates during digital on-boarding have returned to nearly the same level as 2016.

The Battle to On-board III’ from Signicat, which was based on a survey of 3,500 adults across Finland, Germany, Netherlands, Norway, Sweden and the UK, showed that European financial institutions are losing almost 40 per cent of applicants during digital on-boarding.

Although this headline figure of 38 per cent was an improvement on 2018’s high of 52 per cent, it is only a minor increase on the 40 per cent from three years ago.

The same report, designed to assess digital on-boarding experience with retail bank accounts, credit cards and insurance, found that consumers are finding applications easier to complete than last year, but report more on-boarding “pain” than in 2016.

In 2016, 13 per cent of applications were said to be somewhere between difficult and painful, a number that leapt to 32 per cent just two years later. While there has been an improvement in 2019, it hasn’t quite made it back to 2016 levels, with 24 per cent of consumers saying that onboarding is difficult to complete or worse.

It is likely that the onboarding process has actually improved more than these numbers would suggest, yet consumer expectations have increased in parallel to the point that technology investment from institutions is barely keeping up with those expectations.

“New providers of financial services such as neobanks and digital-only payments firms, have changed customer expectations by delivering services in a manner akin to Netflix and Deliveroo,” explained Sarah Kocianski, Head of Research at 11:FS.

“Many larger, older financial services firms are failing to adapt to this new reality. Partly because those expectations change faster than some of these industrial giants can comprehend moving, but also partly because they don’t approach the problem in the same way.

“Most of them have invested heavily in the technology that underpins these new onboarding processes but failed to rethink the processes themselves. That is why they are falling behind, and that is why customers are still failing to complete applications.”

Digital identity can reduce the pain when on-boarding a customer by dramatically speeding up the process. In countries with high digital identity adoption rates such as Sweden (91 per cent) and Norway (81 per cent), it doesn’t take nearly as long to on-board customers.

For example, just 9 per cent of applications take less than five minutes in the UK, compared to 23 per cent in Sweden, 22 per cent in Norway, and 27 per cent in Finland. Similarly, twice as many applications take longer than 30 minutes to complete in the UK than in the Nordics.

Meanwhile, the good news for banks is that they remain the most trusted institution to create and maintain the best on-boarding solutions. The report found that almost half (44 per cent) of consumers trust banks to manage their digital identity.

Government schemes came in at a distant second at 25 per cent, while retailers and social media platforms were only chosen by 3 per cent and 2 per cent of respondents respectively.

“Institutions have clearly improved their on-boarding processes,” added Gunnar Nordseth, CEO at Signicat. “But customer expectations have shifted, partly due to challenger banks and fintechs that are laser-focused on perfecting customer experience, but also because consumers are used to better, slicker interfaces elsewhere.

“On-boarding has become a ‘Red Queen Race’ – everyone is innovating and consumers expectations are continually increasing. Financial services providers need to run fast just to maintain the position they have.”