In my last blog I wrote about the increased need for contactless banking due to the corona pandemic. The key solution for enabling contactless banking is of course digitisation. If customers can do all their banking activities from the comfort of their home through an app or webpage, a branch visit is not needed. I highlighted that onboarding is one of the key processes to digitise since onboarding is the one of the most expensive processes for banks and, depending on the local regulation, can be quite a cumbersome process. Digitising this process makes the customer happy due to the convenience, makes the bank happy because customer acquisition costs decrease and makes regulators happy because automation provides a great audit trail and is always consistent.
One would think that in Western Europe, all banks have already fully digitized all of their onboarding processes and have ensured that the customer experience of these processes is a top priority. Apologies to spoil the optimism there, but reality shows a different picture. In order to have a clearer view of the real status of digital onboarding, Mobiquity has started to research the level of digitization of onboarding processes of banks in Western Europe. Quantitative presentation of this research will follow later, but I would like to give a sneak preview of some interesting findings here.
We have looked at banks of different categories based on asset size in the UK, the Netherlands, Belgium, Germany, Austria, Switzerland, France and Austria. We have assessed the existence of a digital onboarding process for a basic current account for both consumers as well as businesses, particularly small to medium-sized enterprises (SMEs). In this context digital onboarding is defined as being able to open an account, for a new client, without the need to send any physical documents and/or to visit a branch.
There is one conclusion that was immediately clear and also quite consistent across country and bank size: SME Businesses are underserved when it comes to the ability of opening an account online.
One of the explanations of why businesses are underserved in digital onboarding might be local regulation requirements. However, the research also shows that in most countries, there is one or more banks that do provide digital onboarding to business customers, which proves that regulation is not the showstopper. Additionally, some banks have digitized a part of the process by offering to make a branch appointment online or pre-filling forms online to shorten the process once visiting a branch.
So why aren’t banks fully digitizing their business onboarding processes? The consideration of cost vs benefit may have been one of the key reasons. Many banks still suffer from legacy IT applications that make it costly to automate a complicated process like business onboarding. And if all banks in your country don’t move to digitising their onboarding processes, there is no pressure from competition.
Many reports have already been written in the past years about the SMEs being underserved in banking, yet there are still quite some steps to be taken to get digital banking for businesses on par with digital personal banking. Banks need to speed up their digitisation process for SME clients simply because their customers expect them to. SME clients have high standards when it comes to digital servicing. In their daily lives, they have frictionless customer journeys and effortless CX when they use big tech services, like Google or Facebook. Furthermore, personal digital banking standards are quite high, so SMEs’ customers expect similar experience in business banking. And, the competitive pressure is mounting as well, brought on by the challenger banks, like Bunq, Holvi or Revolut, which offer high levels of digitization and onboard their business customers fully digitally.
If you think digitizing your business onboarding is too costly compared to the benefits, think again. Your (future) customers are going to demand it and your competition will bring it to your customers if you don’t. The good news is that, nowadays, there are many off-the-shelf tools and services that can reduce the costs and time-to-market of digital onboarding significantly. Just make sure you get the right CX expertise on board to design a smooth and frictionless process, select the right software and service partners and you’re perfectly equipped to get your SME onboarding process to the satisfying level.
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