Success in Digital Onboarding Requires More Than Just Speed and Convenience
For the last several years, improved onboarding for new customers has been a priority for many banks and credit unions. Unfortunately, by focusing on tech and process to deliver seamless and speedy experiences, many have also neglected a key component: Creating customer delight.
By Sai Rangachari, Chief Product Officer, Temenos
The digital banking landscape is evolving at a breakneck pace. Customers now expect the same frictionless, intuitive experiences they enjoy in other aspects of their digital lives. Fintech disruptors and digital-first competitors continue raising the bar, yet many traditional banks still struggle with outdated onboarding processes, creating a growing gap between customer expectations and reality.
This gap is costly. According to The Financial Brand research, banks lose an estimated 60% of potential customers due to complex and frustrating onboarding processes. Every abandoned application is more than just a lost conversion — it represents missed revenue, increased customer acquisition costs (CAC), and a missed opportunity to build lasting relationships and higher lifetime value (LTV).
Common Barriers to Successful Onboarding
While banks have made strides in digitization, a few common barriers still create friction for customers:
- Lengthy, complex processes: Traditional onboarding often replicates internal procedures instead of optimizing for the customer, resulting in multiple verification steps, redundant data entry, and long forms. Research indicates that customer abandonment rates exceed 50% if opening a new account digitally takes more than three to five minutes.
- Generic, non-personalized experiences: Customers today expect tailored experiences. According to a 2021 McKinsey survey, 71% of consumers expect personalization and a vast majority of those consumers get frustrated when they don’t receive it. Generic, one-size-fits-all onboarding journeys can feel impersonal and lead to early disengagement.
- Limited mobile optimization: A 2023 ABA survey found that over half (55%) of Americans and up to 68% of Millennials prefer mobile devices for banking interactions. Yet, many banks still have clunky onboarding experiences that aren’t optimized for mobile screens.
- Poor communication and support: Customers often have questions during onboarding but receive delayed email responses — or no support at all. A report by ABBYY found that 25% of customers cite "lack of communication" as a reason for abandoning the onboarding process. Real-time assistance can largely prevent this.
- Lack of proactive engagement: Banks that fail to anticipate customer needs and proactively engage them risk losing them to more agile competitors.
The cost of these barriers is real. Bain & Company found that improving customer retention by just 5% can increase profits by 25 to 95%, while acquiring a new customer can cost five times more than retaining an existing one.
Digital Onboarding Done Right
Banks must overcome these barriers by aligning their onboarding process with customers’ digital expectations. Here are some proven strategies that transform onboarding into a competitive advantage:
Yes, simplify for speed and convenience Streamline onboarding by reducing required steps and leveraging features like autofill, biometric authentication, and digital identity verification. This approach not only simplifies applications but also reduces complexity, making them faster and easier to complete.
But also personalize at scale AI enables hyper-personalized experiences for all customer segments. By reinforcing relevant messaging immediately after a customer slows down in the onboarding process, banks can eliminate doubts and motivate completion. Personalized messaging can be a simple, yet powerful, way to reassure and retain customers.
And support with clear, transparent communication Transparency builds trust. By replacing financial jargon with customer-friendly language, banks can ensure clients understand the key benefits of the services they are enrolling in. Enhancing clarity through real-time chat support, video tutorials, and comprehensive FAQ sections further reassures customers, leading to a more positive onboarding experience.
Leverage AI for timely support AI-driven behavioural analytics can detect customer hesitation during onboarding and provide instant assistance. Proactive guidance at critical moments keeps customers engaged and confident. The swift and precise conflict resolution provided by chatbots of timely FAQs dramatically lowers these abandonment rates, elevating the customer experience.
Set clear expectations Clearly communicate how long the process will take and outline the next steps when customers are moving across pages. Setting expectations reduces anxiety and encourages customers to complete onboarding confidently. Highlighting other social proof points around customer feedback or satisfaction can further build confidence and lead to higher completion rates.
Smart follow-ups to recover lost opportunities Abandoned applications don’t have to mean lost customers. A large bank partnered with Temenos to implement proactive follow-up strategies, resulting in 40% of contacted customers completing their applications. Timely and personalized follow-ups show customers they are valued and supported. It is important to create a "Continue" experience for prospects who abandon or save their application so they can come back to finish it from where they left off instead of starting over.
Track analytics closely The onboarding experience is a goldmine of insights and powerful analytics. From journey analytics — tracking when customers start, how long they take, and their completion rates — to engagement analytics that highlight where users spend the most time or encounter friction, every detail matters. Predictive analytics can reveal which products resonate most with customers and can drive personalization of the onboarding experience.
Banks that identify the lifetime value (LTV) of various customer segments and attach customer acquisition cost (CAC) to each of those cohorts can drive hyper-personalization of the onboarding experience and prioritize high-value customers early.
Dig deeper:
- After Onboarding, Banks’ Most Potent Sales Strategy Is Patience
- Fragmented Systems Are Costing Banks More Than They Think
- Banks Must Improve Agility in the Account Opening Process
Getting Onboarding Right is a Game-Changer
A well-optimized onboarding experience isn’t just about smoother applications — it drives real business results. When done right, it can:
- Create a competitive advantage: A frictionless experience becomes a key differentiator, driving preference and loyalty.
- Boost growth: Higher conversion rates and reduced abandonment lead directly to stronger growth.
- Lower customer acquisition cost (CAC): A better funnel reduces overall customer acquisition costs.
- Maximize customer lifetime value (LTV): Not all customer segments have the same life-time value. Identifying the higher value segments earlier in the process can help convert and retain this segment more effectively, increasing long-term profitability.
- Lay the foundation for long-term loyalty: A smooth onboarding journey sets a positive tone for future interactions.
Research reinforces these insights. Studies show that 63% of customers are more likely to continue relationships with banks that offer an engaging and seamless digital onboarding and servicing experience. This isn’t just a trend — it’s a critical strategy for sustainable growth and retention.
The Path Forward: Building Lifelong Customer Relationships
To excel in digital onboarding, banks must adopt a holistic, customer-first mindset. Rather than just externalizing your complicated internal steps or focusing solely on aesthetics, consider these strategies:
- Minimize complexity by reducing steps: Simplify data collection and streamline verification processes with features like autofill and document scanning. Avoid asking for duplicate data.
- Deliver personalized engagement throughout the lifecycle: Use AI and data analytics to offer personalized experiences from initial interaction through long-term engagement.
- Prioritize clear, jargon-free communication to build trust: Simplify language, clarify terms, and provide transparent guidance throughout the process.
- Invest in AI and automation for contextual, real-time support: Implement AI-driven chatbots and virtual assistants to provide immediate, relevant assistance during onboarding.
- Offer proactive support: Provide contextual, real-time assistance and comprehensive FAQs to help customers overcome hesitations, build trust, and reduce abandonment rates.
- Implement proactive follow-up strategies: Re-engage customers who have abandoned applications with timely, personalized messages.
Adopting these strategies can not only improve onboarding completion rates but also growth and profitability. A well-executed digital onboarding experience serves as the foundation for building trust, fostering enduring customer relationships, and achieving sustained growth.
For more information, visit www.temenos.com/engage/onboarding.
