Banks are Failing Users from the Start – Here’s How to Get it Right

Banks are failing users

The other day a lively discussion at my office centered on the terrible experience the daughter of one of my coworkers had when opening her first bank account.

Wanting above all to avoid physically going to a bank, she chose an institution specifically because it offered customers the option of opening accounts online. Once she had filled out a lengthy and tedious registration form, the bank verified her identity by a video call.

Unfortunately, this wasn’t the end of the process. She was unpleasantly surprised to learn that the identity verification process also involved making a payment from another bank account. Since this was her first bank account, she couldn’t do this. The bank had neglected to mention this important requirement when she started the process. In the end, she reluctantly and angrily did what she’d hoped all along to avoid: she went to the bank.

My coworker’s daughter isn’t alone among bank customers, especially younger ones, who will do almost anything to avoid going to a brick-and-mortar bank. And yet, less than 10% of all successfully opened bank accounts were created using only a mobile device. What gives? Why are banks missing the boat on meeting such a clear customer need

Onboarding Pain Points

It’s mind-boggling that many banks are still incapable of creating a convenient customer onboarding process. Why is it so complicated to open an account and enable digital banking?

The onboarding process is the first contact customers have with their banks. A seamless, user-oriented onboarding process cements the bank’s mission statement, brings in new clients, gives banks an opportunity to upsell, and creates loyalty by meeting the needs and expectations of customers who are now already accustomed to smooth onboarding processes in all other spheres of their lives. Today, an effortless onboarding experience is an essential competitive advantage.

UX Pain Points

According to BAI, around 75% of Millennials and 66% of Generation Zs prefer digital channels for opening deposit accounts. However, only three out of five customers who wish to open accounts digitally do so successfully.

This is because many institutions don’t allow customers to open their first account online, due to fraud prevention and the aforementioned identity verification process. Because so many new customers end up, like my coworker’s daughter, going into the bank to open their account, banks wrongly conclude that the majority of consumers prefer to open accounts in a branch. The fact of the matter is that most users don’t actually have a choice.

Banks need to be aware of the demographic sea-changes occurring as Millennials and Gen Z become important customers across many industries. As early as 2015, Millennials dethroned Baby Boomers as the most valuable generation in terms of income and consumer habits. And Millennials are deeply disappointed by the dearth of innovative solutions in the banking sector.

These younger generations like to have services at their fingertips and are prepared to make concessions in exchange for high-quality service. They live in a world of digital solutions and prefer not to have to interact with people when seeking assistance or troubleshooting with a service. They expect to be able to do everything online while enjoying a secure and simple self-service experience.

Banks justify cumbersome onboarding processes by pointing to regulations. However, the truth of the matter is that very little information is really necessary to open a bank account. The law is not so much concerned about shady characters moving their money into accounts as it is about preventing dirty money from moving out of banks.

Good UX as the Solution

The stakes of customer service in every industry have reached an all-time high. Banks need to place themselves in clients’ shoes to look for simple solutions that will enhance their customers’ experiences and allow them to come up with digital onboarding processes that place their needs first.

A quick and smooth authentication process will increase registration rates, leading to increased conversion rates.

And with many available choices, banks can’t afford to have a difficult or complicated onboarding process. Consumers are used to pleasant experiences and easy, intuitive onboarding processes in every area of life. Their expectations are high and growing, and they expect an effortless registration from their bank, too.

They are more than willing to switch to a more convenient service provider regardless of their market share and history. This means that a bank’s previous track record of success means nothing to new young consumers. What do they care about? Their real-time experience now.

Seamless and Secure Authentication is Possible

Consumers live in a world where they can do virtually anything from their mobile devices. A couple of taps on their smartphones and they have a previously unimaginable list of services at their fingertips.

Why, then, has imagination failed in the banking sector? Banks should embrace innovation, following the lead of the many successful Fintech companies that are catering to the needs and way of life of rising generations.

Convenience is the name of the game for young consumers. Successful banks will be the ones that take the time to get a more in-depth understanding of customers’ needs.

Instead of opening more brick-and-mortar branches, banks would be better off allocating those resources into developing digital solutions that improve the UX.

People often wrongly believe that user experience and security are mutually exclusive. At the same time, they think that the goal is to strike a balance between customer experience and security. This way of thinking wrongly asks us to sacrifice one feature in favor of the other.

There is no reason why opening a bank account can’t be quick, convenient, and secure.

Banks can ditch time-wasting procedures by using IPification, which implements a highly secure, cost-effective, credential-less authentication solution for seamless user experience.

Our solution relies on mobile network operators to create a unique ID using users’ SIM and device data. It checks their identity within milliseconds to protect both convenience and security.

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