How Does Digital Onboarding Work?

During account opening, many businesses have some sort of onboarding process for new clients that requires gathering basic personal information and introducing clients to the product/services they are entitled to.

In the financial sector, onboarding becomes more important because serious security issues are involved. The government carefully regulates financial transactions in order to prevent financial crimes such as money laundering.

In the past, onboarding could be a lengthy and frustrating process for the new customer and the business. Fortunately, advances in software have changed
onboarding for the better.

Digital onboarding is a fast and completely virtual way to add new customer accounts. In contrast to in-person onboarding, this process can provide a frictionless onboarding experience for these new clients while also helping your business comply with anti-money laundering (AML) and Know Your Customer (KYC) requirements.

The right customer onboarding process provides a positive experience and offers a high level of fraud deterrence and AML protection at the same time. If your company embraces digital onboarding, you will enjoy better KYC compliance and AML compliance as well as a streamlined customer experience.

What Is Digital Onboarding?

Onboarding is the process of setting up customers with a product or service when they are opening a new account. It involves verifying their identity through ID verification and can include biometric measures such as selfie matching, fingerprints, voice recognition and iris scans. Onboarding also includes collecting personal data such as their email address, phone number, physical address, and possibly credit card information.

Digital online onboarding simply means that new customers can complete these steps without going into a brick-and-mortar store or branch. Instead, they can open an account from their own homes or other locations with safe online access. Not only is this method more convenient than traditional onboarding, it provides a higher level of account security for your business and your new client.

Digital customer onboarding in banking ensures that new clients are legitimate without compromising their customer experience. Using this method, your business can also more easily stay compliant with AML and KYC regulations.

Who Needs Digital Onboarding?

All financial institutions and financial services organizations, including banks, insurance companies, accounting firms and financial advising firms are required by law to implement a type of banking customer onboarding process to stay compliant with AML and KYC regulations. But unregulated organizations can benefit greatly from digital transformation as well.

In the past, properly identifying new clients and verifying the legitimacy of their businesses made the onboarding process time-consuming and often frustrating for clients. It also led to lower conversion rates as those customers “abandoned ship” due to a poor user experience. Companies needed to find a way to meet their needs while enhancing the customer experience.

Digital onboarding is a great solution for financial services organizations, including online banking, because it means higher conversion rates and increased AML compliance. It’s a winning strategy for customers and companies alike.

What Does the Digital Onboarding Process Look Like?

The digital onboarding journey is a streamlined and customer-friendly one. It includes collecting and processing client data in real-time, which is essential to quickly identifying money-laundering risks. Any delay gives financial criminals the chance to perpetrate fraud.

With digital onboarding solutions, collecting personal data is simplified, as is identity verification. Digital online onboarding is made possible by machine learning and automation, which minimizes human involvement and enhances accuracy. The client can safely provide comprehensive personal data and have it quickly verified.

The process includes various ID authentication methods such as SMS communications, selfie ID, biometrics such as voice recognition, and fingerprints, and other methods that can be completed online, often by simply uploading certain information. In a matter of minutes, your organization can verify that the client is who
they say they are.

What Are the Benefits of Digital Onboarding?

The digital onboarding process offers multiple benefits, including improved AML and KYC compliance. These benefits include:

• Streamlines workflows – Digital onboarding offers quick access to necessary forms and simplifies ID verification by allowing the uploading of government-issued IDs, selfies and other data. You can safely add new clients much more quickly.
• Improves customer experience – The process offers enhanced security for financial institutions while maintaining a frictionless customer experience. Customers do not have to leave home to onboard, and they meet the AML and KYC regulations in a fast and efficient manner.
• Preserves conversion rates – This method simplifies the process enough to maintain higher conversion rates. New customers can complete the process with minimum friction, so they are more likely to complete their onboarding journey.
• More cost-efficient – Because it relies on machine learning, AI and automation, digital onboarding cuts labor costs. You do not have to use multiple employees to correctly onboard your clients.
• Easy compliance – AML and KYC compliance measures are built into digital onboarding, helping companies prevent violations. You will be able to avoid costly fines and other penalties from government agencies and regulators.

Digital customer onboarding in banking is more secure, more effective and more convenient for financial services organizations and new customers. Conventional methods simply cannot keep up with an all-online experience.

Digital Onboarding FAQs

What Does Onboarding Mean in Banking?

When a customer opens a bank account or initiates an account with any banking services institution, the organization must have a comprehensive onboarding process that verifies the customer while introducing them to the product and/or services. A good onboarding process will obtain all the necessary information needed to remain compliant with government regulations while introducing the new customer to their account features and the bank’s policies.

What Is the KYC Onboarding Process?

All financial institutions must implement Know Your Customer compliance into their onboarding process. This means verifying the client through various identity verification processes, identifying the beneficial owners of a business, and creating client risk and financial profiles. Companies need to know who the client really is and where their money is coming from — they cannot claim ignorance of detectable client impropriety.

What Is the Purpose of Customer Onboarding?

Customer onboarding has two main purposes: to acquaint a new customer with the company and the product as well as to verify that the customer is legitimate and who they claim to be. Digital onboarding allows the company to maintain a high level of customer satisfaction with the process while still adhering to AML and KYC regulations. Traditional onboarding methods cannot manage to meet both goals as successfully as digital onboarding.

Ensure Secure Digital Onboarding With Jumio

Your financial services organization will benefit by implementing a secure digital onboarding process in place of your traditional method. With the help of Jumio, you will be able to optimize the customer experience while easily meeting your AML and KYC obligations.

Jumio’s secure, AML/KYC compliant digital identity verification software provides an advanced onboarding digital solution that creates a streamlined customer journey while offering digital identity verification. You spend less time on verification while receiving more accurate and timely results.

Maintain compliance and welcome customers with a friendly onboarding experience. Let Jumio help you avoid fines and raise your conversion rates. Contact us today to receive a free consultation with one of our sales specialists.