Digital Identity company Signicat has revealed new analysis by P.A.ID Strategies that revealed financial institutions are wasting at least €5.7 billion every year due to poor customer onboarding and abandonment.
It comes off the back of Signicat’s regular report into the state of financial services onboarding, The Battle to Onboard 2020.
This year’s report was the worst for the industry since it debuted in 2016, with 63 per cent of consumers in Europe abandoning financial applications in the past year.
“Customer acquisition is a hot button issue right now—some new banks are especially keen to reference their figures to prove to the market how well they are doing,” said John Devlin, founder, P.A.ID Strategies.
“But much of that spend is wasted. Consumers will simply abandon processes that they see as too challenging, problematic or intrusive. Without dealing with this last hurdle in customer acquisition, the financial services market is squandering billions every year.”
According to the model, around 120 million new accounts will be opened across Europe this year. Signicat’s Battle to Onboard research shows that 63 per cent of people abandon an application. By making conservative estimates of the cost of customer acquisition including advertising, sponsorship and promotion, personnel wages, and customer support — and allowing for multiple applications by the same person – P.A.ID Strategies conservatively estimates that at least €5.7 billion is wasted each year.
“As a result of the pandemic, onboarding customers digitally, securely and seamlessly is vital for organisations to continue doing business,” said Asger Hattel, CEO, Signicat. “Billions are spent on clever marketing and compelling products every year by the smartest people in the business — and it works, with millions of potential customers starting applications for financial products. Yet it is vital that the industry takes note of where they can improve the onboarding experience, in order to turn these applicants into actual customers.”