Digital Onboarding Requirements of Companies

Blog / Digital Onboarding Requirements of Companies

Traditionally, customers had to physically go to the bank to open an account. However, in recent years, with advancements in technology, digital onboarding methods have made it possible for customers to open bank accounts online. This method saves customers time and effort from having to physically visit the bank. However, despite the convenience and benefits, digital onboarding and ID verification comes with its own set of challenges.

There are two approaches to digital onboarding. The first involves bringing the traditional onboarding process online, which includes completing various forms, training, and learning about company policies. The second approach involves companies acquiring new customers through digital onboarding, which aims to seamlessly integrate them into all the company's services and products. Financial institutions use this strategy to attract new customers and retain existing ones through "win and win back" techniques. The goal is to make the onboarding process quick and easy for customers.

What Is Digital Onboarding?

The companies go through a process of participation to ensure that workers comply with the company and understand the work they do in detail when they make new business purchases. This participation process is rather boring and time-consuming as long as it is done by traditional methods. So this process becomes quite annoying and challenging for both parties (worker and manager). Companies aiming to realize their technological transformations can realize this process quickly and simply online with their digital onboarding processes.

On the other side, It is very important to gain new customers for financial institutions. Ads and campaigns are activities to acquire new customers. You can attract customers this way, but are these activities enough to have regular customers? Customers now demand fast and straightforward interaction from financial institutions. Nobody wants to deal with complicated processes these days when time is very precious. That's why the customer engagement process should be streamlined to turn the customers you attract through campaigns into your regular customers. With Digital Onboarding processes, fast and easier transactions that customers expect from financial institutions can be realized.

Why Do Companies Prefer Digital Onboarding?

There are many reasons companies prefer digital onboarding. The most important reason is that customers prefer this system. While competitors use this system, companies using traditional methods are unlikely to stand out in the market. With digital onboarding, customers can easily handle processes such as application forms, approvals, signatures, and Know Your Customer (KYC) verification via an application or web interface. It recognizes your Customer Information and prevents any possible risks. For example, if your client is a potentially risky person or if the customer will perform money laundering and terrorist financing through his account, these risks are prevented by Customer Due Diligence (CDD) and KYC procedures. With Sanction Scanner's AML Name Screening Software solution, businesses can easily perform KYC and CDD procedures. 

Moreover, Digital Onboarding is preferred because it does not address a single customer profile. That is, it can meet the different needs of different customers. It can visualize the data in your customer processes and create comprehensive reports. Reports can be used to improve performance, and companies don't waste time preparing these reports.

 effective onboarding procedure provides long-term advantages for consumers and organizations

Digital Onboarding Process

The digital onboarding process is the official start of a direct relationship with a customer, and this is the process that decides whether the potential customer has an existing customer for companies. With the digital onboarding process, potential customers are much more likely to return to regular customers for financial institutions. Each customer is different, and these customers' needs can differ from each other. Companies can easily serve different customers with digital onboarding processes.

Digital onboarding processes for the customer:

  • Attract customers
  • Opening an account to these customers in the companies' digital system
  • Enabling customers to discover and interact with the account
  • Sharing valuable texts of finance with customers
  • Motivating customers and getting feedback from them,
  • Improving customers' relationships with companies
  • Providing products and services to customers to make sales

Digital Onboarding Trends

Technological improvements are very important for companies, and these transformations are very important for companies to comply with the agenda easily. Digital Onboarding is also an important part of the technological transformation processes of companies, and Digital onboarding has some trends.

Enhance your customer onboarding process with effective KYC  to establish trust, mitigate risks, and ensure compliance.

Speed and Automation

Customers demand a fast and seamless digital experience from companies. For this, companies must have a quality, simple, useful, and secure participation process. Automation is required for simple and fast processes. Digital Onboarding can automate the scanning of customers' records and transaction documents, face matching, and identify the type of automatic identification document.

Biometric Technologies

People now prefer biometric technologies more in order to protect themselves from cybercrime on the cracking of simple passwords. As a result of the advances in Artificial Intelligence and Machine Learning, it is increasingly reliable in the algorithms used. Companies use biometric facial recognition systems to ensure their customers' confidence in their transactions. They can easily realize this system with Digital Onboarding.

Passive Viability Detection

Passive facial vitality can be used without requiring user interaction. In other words, operations can be performed without interacting with applications such as face detection or voice detection. Thanks to these applications, as the information of the users is registered, the criminals cannot reach their accounts and can not commit financial crimes.

Improve Customer Experience

Companies can perform transactions that are really important to their customers with analytics and artificial intelligence (AI) and respond to customers' needs as accurately as possible. Thanks to this system, the customer experience is highly developed because companies recognize their customers. As a result of the benefits of these systems, customers give positive feedback to the company, and stronger collaborations emerge.

Digital Onboarding Technical Application

Companies can integrate Digital Onboarding processes into their digital infrastructure. Companies should always be in contact with their customers. These days, when everything is digital, this communication can be easily carried out online. For example, this communication can be enhanced by sending messages to customers via e-mails or phones and informing them of new developments. These communications are made to improve customer satisfaction and keep the customer permanent, but the most important reason for communication is to be able to sell online.

In order to sell to the customer online, it is necessary to know what the customer needs or wants. Companies can access custom applications and user history to track customers and provide relevant information. Companies can get real-time insights about customers and perform A/B tests to learn about customer needs and optimize their experience in time. The infrastructure used in the implementation of all these techniques provides API support. With the API infrastructure, companies can easily integrate digital onboarding processes.

Real life case study for e-money and payment services' aml transformation

Digital Onboarding Advantages

Nowadays, the issue of how important time is to people is indisputable, and now the threshold of patience for people is very low. So, when they want to trade with any institution like banks or want to open a new account, what they are looking for is simple and fast transactions. No one prefers slow, long-term, complex processes, so companies try to complete their technological transformations to take advantage of the speed and convenience provided by technology. As we mentioned earlier, Digital Onboarding is one of the technological transformations for companies. With Digital Onboarding, companies can gain regular customers. Digital Onboarding has many advantages for both customers and employees; you can find them below:

For Customer:

  • Provides customers with more flexibility and a user-friendly interface
  • Reduces the burden of manual interventions with automation and increases productivity
  • Provides better user experience, thus increasing customer satisfaction and loyalty
  • Increasing the number of account openings allows for more transactions
  • It reduces the recruitment time of the customer, and new customers can complete their transactions within minutes
  • Financial institutions reduce the risk of money laundering with improved CDD processes

For Employees:

  • Training for new employees can reduce costs as they spend less time online
  • New employees can start work earlier, as they complete their training quickly and easily and also do not waste time filling in documents
  • Provides the most up-to-date version of new hiring policies and forms
  • It can provide reference materials for employees to use their data in the future
  • Companies can comply with all legally required forms with the digital onboarding process, so they are not subject to any penalties

The Challenges of Digital Onboarding

One of the main challenges of digital onboarding is security. With more personal and financial information being shared online, there is an increased risk of fraud and cyber-attacks. Financial institutions must ensure that their digital onboarding processes are secure and that customer data is protected. This requires robust cybersecurity measures, such as data encryption and multi-factor authentication, to prevent unauthorized access.

Another challenge of digital onboarding is compliance with regulatory requirements. Financial institutions must comply with various laws and regulations, such as AML and KYC regulations. The digital onboarding process must be designed to meet these requirements, including verifying the customer's identity and conducting due diligence on their source of funds. This can be challenging, as the process must be efficient and effective while still meeting regulatory standards.

Customer experience is also a challenge in digital onboarding. While digital onboarding offers convenience, it can also be impersonal and lacking in human interaction. Financial institutions must design the onboarding process to be user-friendly and easy to navigate while still maintaining security and compliance requirements. This can be a delicate balance to strike, but a positive customer experience can lead to increased customer satisfaction and loyalty.

Finally, the digital divide is another challenge in digital onboarding. Not all customers have access to the technology required for digital onboarding, such as reliable internet and mobile devices. This can create a barrier to entry for certain segments of the population, leading to potential discrimination and exclusion. Financial institutions must ensure that their onboarding processes are accessible and inclusive to all customers, regardless of their technological capabilities.

Digital Onboarding and Money Laundering

There is cooperation between government and regulatory agencies to combat law, money laundering, and financing of terrorism. Financial industries like banking, insurance or investment must comply with some regulations created by these institutions to prevent ML/CT. While companies working with traditional methods try hard to comply with these regulations through manual processes, they can find it very difficult to improve their customers' experience and retention. Digital onboarding provides convenience for this. It prevents bad practices from alienating your potential customers. When a customer opens an account, the customers present the customer's name, date of birth, address, and nationality to the company and stores this information for later.

On the other side, there is a crucial point that should be considered. Digital Onboarding helps KYC data flow from companies to regulators. Hiring corporate customers is even more difficult due to the implementation of AML processes and the necessary research for the Ultimate Beneficial Owner (UBO). Some corporate customers may have higher risks, and thanks to the digital participation benefits of these customers, companies can reduce risks. As a result, Digital Onboarding is a convenience for companies to comply with AML/CTF regulations. Thus, companies are not subjected to severe penalties imposed by regulators, and they can also maintain the company's reputation.

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