From drop-off to engagement: Rethinking digital banking journeys

Caroline Béguin: Why do you think so many customers abandon banking applications midway, and what does this mean for banks today? 

Hassan Nasser: Well, actually, if you look at the drop-off rates from an onboarding process, it’s anything between forty to sixty percent in the EU. In the UK and the US, it’s similar. In some African countries, it’s even higher. The place where the highest drop-off rate is, is usually at the ID verification because typically the customers are not prepared for that step in the onboarding process in a digital context. So it goes all the way from experiences, their expectations are not managed, that they need to prepare these documents ahead of time so that when they reach this stage, they need to be ready and move on. Because one way is to upload documents, another way is to do liveness check and connect to a government database. But usually the government database part is only limited to a few parts in the world, and this is ideally the seamless process. I remember when we used to do that, even when I was at Fidor Bank, one of the things that we discovered after our research is that some customers go through the ID check, and they are literally sitting at the toilet, and then they stop because they cannot open a video at the toilet. So, you know, there are all kinds of situations. This is a funny one, but in general, you don’t know where a customer is being onboarded and when they are on their phone on a digital process. So what’s really important is to make it as easy, as seamless, as frictionless as possible. The digital ID wallets projects that are upcoming in the EU, they are already up and they live in the Nordics. They are starting in the UK, for example. In other parts of the world, like India, they have it already. So when you have that, it’s simply just like a log in with Apple. It’s as simple as that. And then the bank can collect all the necessary data that they need, like the ID details. They can collect the address, they can collect the contact details, and that makes it really simple for customers to go through the onboarding process. And yeah, that is probably the highest friction area in onboarding that we see, but it drives a lot of drop-offs, forty to sixty percent. It’s huge. 

Caroline Béguin: Yeah, indeed. So I’m wondering, is there a solution to drive growth and compliance? 

Hassan Nasser: First, yeah, I think the digital ID wallets is a huge part of the solution. But there is another challenge because when customers get onboarded, a lot of them, if they don’t transact in the next seven days or so, they often end up dormant, which means it’s not only about onboarding as account opening, they need to actually start using this account. Because remember, this is a new bank, a new device, a new app, a new card, new process. So there are steps that the bank can take, such as once you finish opening the account, you need to activate the card, and you need to make that as seamless as possible, driven as part of the flow from your app. When you finish, the card is there, but you still don’t have any money on the account. So how do you actually use it? You need to add some money to it, and then you need to allow the customer to do that as seamlessly as possible. Open banking is one great option that allows the customer to do that, again, through a simple login process and move on with that. 

Caroline Béguin: And what do you think would help balance compliance and customer experience? 

Hassan Nasser: I mean, there is no getting away from compliance. Compliance exists because as consumers, we need it to build trust with banks. Banks needs to comply, and often people realize that compliance was the right thing to do, but after a while, at the beginning, it’s often challenged. I think the balance is to, from a compliance perspective, really use the right tools and treat compliance as an opportunity or as a potential for competitive advantage rather as something to, to shy away from. So lean in into it, like AML checks should be online, and you should be able to actually quickly identify if there is additional documents needed or additional checks needed. How can you streamline that process and make it automatically part of that journey? And if it cannot be fully streamlined up within that journey of onboarding or with the jet journey of origination, how can you come back to the customer with a notification directly into the app to say, “Hey, we discovered some issues within your application, maybe related to compliance in that situation, and we need you to add additional details. Here are the few steps to do,” and done. Like one, two, three screens, and then you get the additional data that you need, and then you again streamline the process. So compliance, I see it, it can be an opportunityTo differentiate and to deliver better experience compared to what is, what exists today in the market, especially around KYC, not necessarily the first time, but also the perpetual KYC checks and beyond.

Caroline Béguin: It seems that there are a lot of solutions available on the market. So what do you think are the main challenges that banks face when trying to implement a unified origination platform, and how can they overcome them? 

Hassan Nasser: Well, I think there are many challenges that I see when banks try to improve the origination experience, being at an origination for customers or origination for bundles, deposits, cards, or loans. And some of the challenges is the fact that traditionally banks treat these as separate journeys, and they don’t treat it as one customer journey. Again, not all banks do that, but a vast majority of banks that we’ve worked with, and I have had experience, do that. And it’s usually what we would call sometimes they fall into the widget soup trap, where they try to get one vendor for ID, one vendor for document management, another vendor for this, another vendor for that, and they try to hide the broken customer experience sometimes with even more technology. And there are a lot of good reasons why they do that. But again, the customer does not care that different teams, different systems, and different solutions exist. They really need one experience, and this is the widget soup challenge. The second challenge is that when banks sometimes try to do that, I think they try to boil the ocean, which is at a high level, they try to do everything at once and try to go through a huge transformation to deliver the best experiences for everyone at the same time. While this is really noble in its core, a noble intention in its core, these kinds of projects collapse under their own weight because banks today, they don’t need to deliver value in years, but in quarters, and that kind of project will take years to get. And the third challenge that I feel it’s one of the most common challenges is seeing compliance as a blocker. And when compliance and risk teams are brought very late into the conversation, their only option is to say no. They don’t really have another option. But when you bring them in early, you allow them to collaborate easily with other teams in ways they can see and understand, like a visual tool with low-code and no-code capabilities, and if you bring them around the table, you will see that their posture changes. And instead of no, it becomes, “How can we enable safe innovation and compliant innovation from day one?” So these are the three challenges that I think banks mostly face to deliver to that, and these are some of the solutions that we can think of.

Caroline Béguin: So how to reduce friction and improve compliance in banking origination journeys? 

Hassan Nasser: Well, one thing is not all friction is bad. It’s important to highlight that. I have a colleague of mine that told me a story about friction. Unnecessary friction is bad, and my colleague, his dad is a 65 years old man, He really looks like a 65 years old man. He was entering a restaurant, and this restaurant was only for 18 or 21 years and above. But the person at the door asked him for his ID. He looks like 65, but he still asked him for his ID to check, and that is really unnecessary friction applied to all customers equally. But there is a smart friction where only where it makes sense, you actually apply and ask. This person looks like they are underage or maybe looks like 20 plus or 30. Okay, we ask for their ID. And that’s the same thing applicable for banks. You can have a smart friction in banking and not unnecessary friction. And smart friction ones means when, when you see the balance of that transaction is high or outside the traditional activity of that customer, when you see an address change, a directorship change in the business, when you see that they are using a different device than they traditionally use, you can add smart friction dynamically into the process and add that journey where it belongs for that specific one customer, and that is where you change the experience and you change the way you actually engage your customers. And I feel that would be more appreciated rather than the other things around. Yeah.

Caroline Béguin: Do you have an example of a smart friction? 

Hassan Nasser: Yeah. It is basically, you could think about it as a strong customer authentication. When you simply move from a trusted device, which is like your mobile phone that you use every day with your bank, and suddenly you want to use the web banking app, you need to have strong customer authentication in the process. Okay? And this is an element of smart friction that is added only on demand where you need it based on the risk profile of that specific activity.

Caroline Béguin: Okay 

Hassan Nasser: Did I answer your question? I feel I missed one part of your question. 

Caroline Béguin: Yeah. I also wanted to know how to improve compliance in banking origination journeys. 

Hassan Nasser: Well, yeah. The improved compliance part comes with that because that automatically improves the compliance in that sense. But also at a high level, from compliance orchestration, when you are doing like, let’s say if you have a KYC data for that customer, and that customer already entered it recently, then you don’t want to ask the customer to re-enter the data. But some banks, I understand that they want to double-check that this customer data is still up-to-date today, and that is where pre-population of data is key in the customer journeys. However, we’re moving to a world where we will have this data access through real-time databases within the government or private institutions, where we can even get events of this data. So we don’t have to wait for the customer to ask us for this data. All that we need is a consent, and then we go through the process, and we get that data from the right systems where it lives, and it keeps on being updated continuously. And that is what will improve the compliance posture over time. And eventually, having a manual process to collect this data is not as traceable. It’s not as good as having the full process digitalized and automated. So even today, if you follow just entering customer data or pre-populating customer data and updating it, automating the process and having full audit trails around it, your regulator will thank you for a better compliance posture around that.

Caroline Béguin: That makes me wonder what practical steps can banks take to avoid common pitfalls? 

Hassan Nasser: Well, what’s really important is to follow a stepped approach and think about it like crawl first, then walk, then run. So crawl is basically how can a bank, in ninety days, take one product, one journey, and transform that. Let’s take, for example, the SME deposit journeys. It might take weeks at some banks to open a business account, and this journey has a high drop-off rate. How can we take this journey, transform it digitally, add maybe one PKYC, a perpetual KYC event, and also automate that? And how can you say, “In ninety days, I reduce the drop-off by twenty percent”? Okay? And that is a first step. That’s really crawling, and that’s important because one, banks need to deliver value in quarters not in years. And two, you need to build trust over time. So this is number one. And number two is when you walk, you start expanding that capability over time. Which means we started with one product, one journey. Add more products. Address another customer segment, and then take the learnings of that first journey and apply them to the next journeys. And this is usually a six to nine months process, where you take a bit of a larger scope, and you apply it. And finally, you run. This is when you turn this as business capability in my head, where origination as engagement becomes the default operating system at the bank and how you work across all your journeys, okay? And this will help the banks really create what we call a perpetual innovation engine around customer journeys. Because at any point of time, a bank really wants to go to market fast with new ideas, new products. They need to be able to do that relatively rapidly. 

Caroline Béguin: Sure. And looking ahead, how do you see origination as engagement shaping the future of banking? 

Hassan Nasser: As I said today, I see it as a perpetual innovation engine for new customer journeys, which can drive growth. It can drive lower cost to operate and more efficiency because you remove all manual administrative tasks. It allows the bank to be more risk-ready for stricter EU for stricter AML type of regulations. And eventually, it allows the banks to deliver an experience that is personalized enough that the customers demand today. So I think the vision of origination as engagement is encapsulated by all that I’ve just said.

Caroline Béguin: Thank you so much, Hassan for sharing your time and being with us. 

Hassan Nasser: Thank you, Caroline, have a good day. Take care. 

Caroline Béguin: You too. 

Hassan Nasser: Nice to be with you.