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Bridging The 40 Percent Gap In Online Banking

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In life, 40 percent of anything is a lot.

In online banking, 40 percent abandonment is … intolerable.

As many as four in 10 consumers have at some point in their journey into online banking found the process frustrating enough to give up, as estimated by Signicat. The survey from that identity assurance provider, conducted across 2,000 individuals, found that when it comes to applying for financial products at a financial institution (FI) — from checking accounts to credit cards — 40 percent of those online applications are never finished. And the frustration level has grown. Consider the fact that 45 percent of consumers say they’ve walked away from the process across the past year, up from 26 percent.

In an interview with PYMNTS, Reinhard Hochrieser, director of Product Management at Jumio, said that a few prominent statistics come to light here. Time is a factor, perhaps not surprisingly. More than a third of abandonments found by Signicat were tied to the length of time it took to get things done through an online channel which proved to be too daunting, a prime mover in pushing people to quit. Simply put, 36 percent said the process took too long, and authentication was too time-consuming, at 20 percent.

The executive said the 40 percent abandonment rate for remote account openings reflects “an industry trend to use a device to conduct financial activity on a day-to-day basis.” The price can be a heavy one to pay, as 31 percent of respondents reported having a negative view of their financial institution after abandoning a mobile banking activity.

The disconnect is one where “the most prominent reason is that financial institutions, and banks in particular, have to be compliant with so many different regulations across AML (anti-money laundering) and KYC (Know Your Customer). And this has a significant impact to the user base as well, as more information is needed.”

The requirements to establish someone’s real-world identity go well beyond name and proof of address, and those added steps and bits of information, unfortunately, cause friction.

Lagging behind digital-only banks, traditional banks must look to streamline and offer a frictionless mobile experience to their user base. According to Hochrieser, “Digital banks are focused on mobile only, and so their only purpose is to provide the best possible user experience.” The challenge is to take a traditional account opening process and transform it into a simple one.

Noting the gap between the 45 and 26 percentages, he said, “almost every year there is another rule which needs to be applied,” and where the number of people using the digital banks has increased. “This is not just millennials or young people in particular who are applying for accounts — it’s everyone,” he said, noting that people above the ages of 40 and 50 sometimes struggle with digital processes and can take minutes laboring over steps (with attendant frustration) that might take younger cohorts seconds.

Manual input can be streamlined, he said, as card and ID scanning can help ensure that consumers are who they say they are. Through products such as those offered by Jumio, said Hochrieser, manual labor is reduced, and the banks — by gathering up the information contained within documents and corresponding selfies — can satisfy KYC requirements, establishing proof of residence through utility bills or bank statements. Banks, of course, want the most recent pictures possible through “document-present transactions … we are able to check, ‘Is this a real person who is performing this transaction, or is it someone trying to spoof the onboarding process?’”

The technology is evolving to the point that countries around the globe are issuing digital identity documents with disparate security features, and, as Jumio views it, “we think that over the next couple of years there will be a transition away from physical IDs issued by countries toward digital IDs,” with conduits that may include blockchain.

No discussion on technology is complete without a discussion of security, and Hochrieser stated that Jumio’s “approach is to store nothing on the device.” The image of the ID, front and back, and selfie are transmitted to the back-end system.

If time is of the essence, as studies have shown, is there a limited window of opportunity to complete the transaction without adverse abandonment? Typically, said Hochrieser, the magic number is around 60 to 120 seconds. To help reduce that time to completion, Hochrieser recommended that banks “provide detailed instructions to the end user what is requested before they start with the application. This ensures they have all the necessary documentation — from their government-issued ID to any necessary documentation (such as a utility bill) — to expedite the online process. And, of course,” he continued, “to use the proper verification solution to securely capture all that information in a timely manner.”

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