App experts Built For Mars went undercover this summer to find out which banks really had a slick onboarding process. We asked fintech’s Jim Marous, host of the Banking Transformed podcast, and Peter-Jan Van De Venn, Strategy Director at digital consultancy Mobiquity, what we can learn.
When you and banks know they have (or should have) access within seconds to reliable know your customer (KYC) data that has probably been used to authenticate you many times before, why can it still take up to 120 clicks and 36 days to open an account? The answer, in short, is that many banks – mostly, but not all, legacy ones – are continuing to kid themselves that they have fully digitised, according to fintech influencer and author Jim Marous.
“The biggest challenge, not in just opening the account but in onboarding, too, is simplicity,” he says. And a breakthrough survey of 12 UK banks – including neos and incumbents – by app experts Built For Mars, confirms that many have not risen to that challenge yet.
Onboarding new customers in as frictionless way as possible is rapidly becoming the game changer in a world of banking where customer user interface (UI) and user experience (UX) are now critical measures rather than mere buzzwords. Built For Mars used a simple way of benchmarking them: counting the number of clicks it took to register for an account and the number of days for that account to become active.
Report author Peter Ramsey opened an account with digital challenger bank Revolut in 24 clicks, but it needed 120 clicks to do the same at HSBC-owned internet- and mobile-only bank First Direct. Neobanks Starling and Monzo, at 38 and 45 clicks respectively, were also considerably quicker than the best of the traditional banks, headed by Lloyds at 69 clicks, followed by Barclays at 74.
However, Barclays was the only traditional bank to join digital challengers Revolut, Starling and Monzo in allowing an account to be opened solely through their app.
Two-thirds of the banks forced users to go onto their websites at least once during the onboarding process, while the apps used by Metro Bank, Nationwide, NatWest and Santander were not fully responsive on mobile. The survey – which was part of a much bigger UX audit series that explored whether the customer experience with neobanks was substantially better than with traditional banks, whether the latter had moved on significantly and whether the former had substance or were just digital hype – also found that, of the high street operators, only Barclays, Metro Bank, Nationwide and NatWest used digital identity verification like that employed by Monzo, Revolut and Starling. Those three digital challengers also asked fewer questions, relying (in the first instance at least), on a limited address history to enable credit checks.
When it came to counting the working days for an account to become active, with the definition being the ability to use a PIN and card as well as having online access to the account, the running order changed. With Barclays, Monzo and Starling it took two days, while Lloyds, Metro Bank and Revolut made customers wait three. Bringing up the rear were First Direct at 15 days, Nationwide at 22 and HSBC at 36 – an astounding 18 times slower than its best-performing rival.
Monzo, Revolut and Starling were also able to steal a march by allowing users to add their cards to Apple Pay as soon as the account was approved.
“Traditionally, you’d not say that you had an open bank account until you’d actually received your card,” notes Ramsey. “But the challenger banks have rephrased this wait as being ‘your account is open, see, you can use your card right now, we just need to post it to you’.
“This is immensely subtle and clever. That simple change of perspective makes opening an account with Monzo, Revolut and Starling feel instant, even if it really does take a few days to get full access. “You get an immediate feeling of ownership and success.” Marous believes the pressure on the worst-performing banks to up their game will only intensify.
“We are still asking the consumer to fill in every blank on every form as if we’re still doing it by paper,” says Marous. “And when you look at the consumer, who’s becoming more educated on how to interact digitally, especially during COVID, they’re finding that there are much easier ways to engage. “Take Zoom, for instance. Why do people continue to use Zoom when there are possibly some security issues? Because it’s one click. Why do people like to use Amazon? Because it’s one click. Why do people like to use PayPal integrated within payment processes? Because you don’t have to fill in all the details about where you want things to be sent.”
Banks need to wake up to that reality, says Marous. He cites new Digital Banking Report research which found that 70 per cent of organisations said they had online account opening and less than 50 per cent had mobile capabilities.
“When we asked ‘how long does the process take?’, 80 per cent of online openings and more than 70 per cent of mobile openings took more than five minutes,” says Marous. “That’s a lifetime to a digital consumer.
“Our new research for the Digital Banking Report asked financial institutions if they had a multichannel new customer onboarding process. For the sixth consecutive year, roughly 50 per cent stated that they had such a programme, with another 25 per cent stating that they plan to have such a programme within
a year. How do these numbers remain almost exactly the same if any of the planned programmes are created?”
Peter-Jan Van De Venn, strategy director at digital consultancy Mobiquity, agrees that there is an element of self-delusion among many banks when they talk about digitisation. His consultancy works across industries to smooth the customer experience and it has helped build the first Cloud-based, mobile-only bank in the Middle East. The onboarding requires customers simply to take a photo of two IDs and a selfie. They can set up an account in two minutes, after which they are issued with an instant virtual card.
Van De Venn is currently conducting his own research into digital onboarding processes across European banks. “You see the difference between the challengers and the incumbents,” he says. “You sometimes even see exact copies of the old paperwork online – it’s amazing that banks can still get away with it.”
The Built For Mars exercise highlighted how UI and UX should be built around the context in which the customer is accessing the bank. A groundbreaking example of that is Latvia-based startup Zelf, which is launching an app-free neobank that exists solely in messaging platforms (see page 66). It has a two-stage onboarding process. The first gives access to a basic account with a capped deposit, which can be operational in 30 seconds. Only if customers want more facilities will Zelf later take them through the full KYC process. For its target audience – impatient Gen Zers – the initial interface with the bank is as easy and fast as sending a text. Would a high street bank feel comfortable with that?
Maybe not. But both Marous and Van De Venn believe the need for both cultural and technology change that enables that level of responsiveness have been vividly exposed by the COVID-19 pandemic. And, in Van De Venn’s view, it’s the organisational legacy that’s key. “If you don’t have the culture of innovating continuously and adapting continuously, then technology is not a solution,” he says. “Adapting your organisation is, I think, the harder challenge.”
He urges organisations to listen to their customers, get the feedback, incorporate it and adjust. “But you need to have that flexibility within your organisation, it needs to be in your mindset, it needs to be in your culture. This is the key to making it better and getting close to what clients want.”
Marous quotes a J.D. Power study that showed organisations do best when they reach out five to seven times to customers in the first six months. What
was concerning about the Digital Banking Report survey, he says, was that 50 per cent of firms only contact a new customer one to two times. “That’s not onboarding, that’s just saying ‘thank you’,” says Marous.
He believes open banking will put the user interface front and centre as the access points to financial services narrow.
“Eventually, it’s going to be ‘what’s my gateway bank?’,” Marous predicts – the brand that customers will go through to access a range of so-called ‘mistress banks’, other financial providers and lifestyle assistants. “Is my gateway bank Google? Or Facebook? Or some other, where they don’t have to own all the banking services; they are simply the way to get into them?”
In time, it will act as a financial concierge. “I don’t pay attention to my accounts so much as the way they interact. Does my savings account transfer to my loan account on a payment day? If I run low on my current account, does my overdraft account automatically kick in to take care of that?”
The era of the gateway bank might be edging closer. Google has just announced partnerships with eight US banks, using Google Pay as a platform for digital accounts. Big techs are experts at UI. They won’t ask customers to perform 120 clicks and wait three days to open an account. And what of the banks providing the infrastructure and doing the heavy financial lifting behind the scenes? They will likely be anonymous as far as the customer is concerned… The question is, if customers can sign up and have a virtual card in minutes, will they really care?