Open Finance

Using open finance for pain-free customer onboarding

Unfortunately, there are some common problems with the onboarding experience that cause many customers to check out. This article below dives into how open finance is helping address some of these common onboarding issues.

Customer onboarding is often written about as being akin to a first date. On this date, the company finally finds an opportunity to impress the customer with the product or service after a period of marketing courtship. Unfortunately, customer onboarding has a success rate similar to first dates - if it’s a poor experience, about 52% of customers say they’d be less likely to go on another date. And in fact, they may even leave during the date itself - 68% of customers abandoned a financial service app in 2021. 

Thankfully, several of the key problems that damage the customer onboarding experience can be improved with open finance capabilities, such as identity verification, real-time services and more. 

In this article, we explore common problems with customer onboarding and look at how open finance presents companies with solutions. 

Customer onboarding, what is it good for? 

Customer onboarding refers to the process of welcoming new customers to the company and setting them up to start using the offered products and services. After many emails, ads, and demos, the customer has finally made the decision to say, “yes, let’s try it.” But this does not mean the customer has been won - they are still in the process of evaluating the company. 

Ideally, the onboarding process ensures that customers can quickly understand and adapt to the product or service they have just agreed to. It is simple, fast and intuitive. The customer is able to quickly get that “aha” moment where they finally derive value from the company. It’s personalized and automated where it makes sense. Here are some characteristics of high-performing customer onboarding processes: 

  • Customers can get started easily 
  • Customer experiences are personalized 
  • Customers are encouraged to complete the process with automated messages and follow-up reminders 

And yet all too often, customer onboarding at many companies fails to do this. The process becomes cumbersome and long, and too many customers end up abandoning it altogether - perhaps to a competitor. Recurring challenges to successful customer onboarding include:

  • A long sign-up process 
  • Lack of personalization 
  • Lack of support 

The customer onboarding process differs from company to company, and from industry to industry. B2B, particularly B2B SaaS in which the customer onboarding process is quite critical, will perform this very differently from B2C. But in all instances, the company is striving for less friction and more satisfaction. 

Open banking and its promise for customer onboarding

Open banking and open finance present ideal solutions for some of the problems presented in customer onboarding. Open banking refers to a system whereby banks allow secure access to individual customer accounts and transaction information upon customer request. Open finance opens up information access even further by including other financial players. This is particularly important for proof of identity, which is core to many industries, but especially for financial services and thus, fintech companies. 

With open banking, businesses can be connected directly to a customer’s bank account with secure APIs. Using these secure APIs, businesses can get financial data or take a payment. When it comes to customer onboarding, it is the access to financial data that is particularly important. 

With secure APIs, fintechs and other companies can: 

  1. Verify customers’ identity in real-time: This significantly reduces the sign-up time and other frictions that the customer might be facing, like searching for information on their own. 
  2. Pre-filling account, routing and other information: This reduces time, but also reduces error and fraud. 
  3. Reduces insecurity with direct and secure connection: Customers don’t need to scan, email or upload sensitive information which can be a major risk.

The capabilities offered by open banking and open finance are being explored and launched in various industries, especially those with strict KYC and compliance regulations. Growing awareness of the power of open data made available through open banking and open finance has major implications for the lending industry by expanding the sources of risk calculation. 

Open banking still has its limitations, of course. It wouldn’t provide all the data that might be required during the onboarding process, which means the customer still may need to manually fill in some information. Moreover, while open banking, API and data privacy laws are quite advanced in markets like the UK, they’re still nascent in the US and Canada. 

Olive and open finance

However, this does not mean that companies cannot take advantage of the technology’s capabilities. Olive’s platform allows companies to onboard customers quickly and easily through direct integration with Visa and Mastercard using secure APIs, emulating the open data infrastructure. 

Click here to schedule a chat with an Olive expert.

Similar posts

Stay up-to-date with the latest in embedded finance and open finance

Our blog covers topics on embedded finance, open banking, open finance, open data, APIs, rounding, matching, customer loyalty and more.