Financial Institutions worldwide engaged in a comprehensive research sponsored by Kofax. The results of the research do not project a promising picture for banks and traditional financial organizations. The results indicate that there are several opportunities lost where banks fail to engage their customers employing new digital channels.
Results of the Kofax Study on Financial Institutions
In this study, financial institutions provided a report on their ease and ability to help customers to open an account online or with the help of a mobile phone or tablet. They were also measured based on their ability to onboard new account openings and how well they are able to cross-sell their products on multiple platforms.
The exhaustive results of the study indicate that banks and traditional credit unions, regardless of their size and resources in hand are not equipped to tackle the enormous growth of Fintech or Financial Technology start-ups. These Fintech startups ease the journey of the customer at each and every step, making it seamless and hassle-free. The results also crucify several areas of the banking industry that are phenomenally behind the expectations of the digital age customer.
Some of the key points highlighted by the report are:
- The huge majority of banks or traditional financial institutions do not provide customers with the ability to open a new account completely online or from a mobile device.
- The majority of the organizations, who took part in the study, still required verification documents or ID verification that had to be done at the branch physically by the customer.
- Multi-platform account opening is not yet provided by the majority.
- Also, the abandonment rates are very high for banks that offered online or mobile account opening features for new customers.
- Only a meagre 16% of the financial institutions surveyed offered a tablet device based account opening option for customers.
- Only 30% of the credit unions and conventional banks marketed their new products through the mobile app.
- Unanimously, community banks were found lagging behind in the digitisation process.
Significance of a Consistent Digital Experience
A huge majority of the organisations surveyed do not realise the importance of offering a consistent digitisation experience for the customer. It was found that many online engagements required authentication from the bank personnel either at the beginning or at the end of the transaction. Banks and credit unions fail to utilize the vast potential of complete digitisation. It not only improves the customer experience but also helps financial institutions improve their revenue. For this, they must implement a consumer-based design making use of automation and advanced analytics tools.
An important factor that plays a vital role in retaining and winning the loyalty of the digital customer is “Intelligent Engagement”. This is easily achieved with the help of the right analytic tools. Once banks and credit unions get this factor right, they will easily bridge the gap between them and Fintech firms that win over customers by marketing this factor.
The question of “whether digitisation is relevant or not?” has become obsolete. Digital customers now easily switch over to organisations that offer this high level of engagement. So if banks and credit unions are looking to reduce overhead costs and improve revenues, while providing exemplary customer service, then consistent digitisation is the way to go forward.
Options for Opening New Accounts through Multiple Channels
The results of the research clearly point out that customers were far from satisfied with the account opening processes provided by major financial organisations. It was found that a vast majority of banks do not provide customers with an online account opening facility. And among those who provided this facility, a significant number required physical interaction to complete the process.
The results of the survey indicated that only less than half of the banks surveyed provided facilities to open new accounts online and only 15% provided the facility to do it on a mobile device. As predicted, huge financial institutions were more likely to provide users with a mobile opening of new accounts.
The survey estimated that only 43% of respondents recorded that the entire process of opening accounts could be done online, without a customer having to step into a physical branch. It was surprising to discover that more than three-quarters of banks require customers to step into the branch to provide key Know-Your-Customer (KYC) documents. This indicates the lack of initiative to become a truly digital bank, in the wholesome sense.
Facility to Open Accounts On Mobile Devices
While it is true that several financial institutions have taken steps to migrate a part of the process for new account creation to mobile platforms, the results are far from satisfactory. Most of the time, the process was tedious, confusing and imposed an extra burden for the customers. This contributed to the higher rates of abandonment of the process by customers.
Face-to-face interactions have reduced significantly at banks over the years. This has led to the popularity of digital onboarding to attract and retain customers. The channels of communication used for onboarding are as follows:
- Email – 73 %
- Direct one-to-one communication – 61%
- Regular mail – 53 %
- Telephone calls – 52 %
The channel usage statistics reveal that the paradigm shift to digital banking has not yet happened. Most financial institutions fail to explore the potential of new channels like mobile ads, SMS that are highly effective in converting the target audience.
It becomes highly essential for financial institutions to alter cross-selling techniques to be in alignment with the digital era.
The preferred channels for cross-selling are as follows:
- Email – 77%
- Face-to-face interactions at the branch – 68%
- Online Ads – 66%
It was found out that though banks have taken well to emails as their preferred medium of communication, they have failed to utilise other new channels like social media, SMS alerts, mobile apps and personalised texts.
Potential Opportunities Yet Unexplored
The study has made it clear that there is a huge gap between what the digital customer wants and what banks and other financial institutions provide. It is now up to the banks that want to project them as “Completely Digital Banks” to bridge this gap. The cost of technology for implementation is a hurdle that can be easily overcome by major financial organisations.
The survey indicates that for financial institutions to thrive in this era of digitisation, it is vital to provide the best digital experience for customers and to stay ahead of the competition from Fintech firms.