How Banks can Simplify the Customer Onboarding Process?

customer onboarding

Customer onboarding is something that each business goes through to start a new relationship with the customer. Banks and financial institutions usually have the toughest customer onboarding process. A customer onboarding experience is the first step in how a customer will view your services. For banks and financial institutions, the customer onboarding process needs to be strict as to not let fraudsters gain access to the system, but not too strict to ruin the experience for ordinary customers. More than 50% of customers usually drop the onboarding process because of complexity.

For banks and financial institutions, the account opening process is crucial. They are legally obligated to follow Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations during the initial sign-up process. The obligation to follow through with these regulations is to prevent financial crime and terrorist funding. 

Unfortunately, most customer onboarding processes are riddled with complicated steps. Steps must be taken to prevent poor customer experience for the customers. A frictionless experience is important because complicated processes are the primary cause of customer drop-off rates. Needless to say that increased customer drop-off rate leads to reduced revenue and hurts brand reputation. Compliance officers and other managers need to ensure that the onboarding process is smooth, secure, and frictionless. Here are the common steps to ensure banks can simplify the onboarding process.

What is the Customer Onboarding Process?

Customer onboarding has a simple definition of “introducing potential customers to your company’s products and services.” Customer onboarding begins when a new sale is made, but it differs from business to business. In the financial industry, the customer onboarding process happens when a customer applies to open a new bank account or for the use of any other service. 

Banks and financial institutions use the customer onboarding process to verify customer identities and build risk profiles for them. This is done using online document verification/offline verification and a credit history check. Banks and financial institutions don’t want to give access to fraudsters who will end up hurting them in the future.

Making Customer Onboarding Easier

Most banks and financial institutions mistake security for complexity. A secure and effective onboarding process can have minimal steps while effectively filtering out the good from bad actors. Here are some steps dictating how to make customer onboarding easier and provide a better customer experience during onboarding. 

  1. Set Clear Expectations for the Sign-Up Process

Most customers feel good when they know exactly what to expect from the sign-up process. Showing prospect customers what your financial institution requires to onboard the customers is an effective way to start the process. Try to make every single part of the process as easy as possible. This will prevent the customers from getting overwhelmed by the sign-up process. Creating brand loyalty and creating brand distrust has a fine line in between and a clean/secure onboarding process usually helps your brand.

  1. An Omnichannel Account Opening Process Works

In this digital age, customers use various devices in a day. Because of the constant switch between multiple devices, consumers expect businesses to provide their services to a huge number of platforms.

Unfortunately, less than 25% of banks have Omnichannel account opening processes in place. Another 40% of banks state that they don’t have digital KYC solutions in place. This means that a huge section of banks doesn’t have a way to allow customers to apply for products and services digitally. After the pandemic, the only way for most customers to interact with banks to apply for products and services is by using digital methods. Digital transformation is crucial for banks and financial institutions to allow customers to apply online. If banks don’t keep up with the needs of the customers they will soon perish to their counterparts who have successfully established a digital environment. 

  1. Instant ID Verification is Helpful

A time-consuming process is another low point in the customer onboarding process. Robust identification procedures must be implemented to make KYC compliance more effective. Nevertheless, the onboarding processes must be quick for customers to complete. For most banks, it takes up to 2 weeks to onboard a new customer. The third-party solution can help businesses to enhance their customer onboarding process. 

Technological solutions like DIRO online document verification helps banks and financial institutions to verify customer documents. DIRO 100% prevents the use of fake and stolen documents by verifying document data against original sources. It is easy to enhance the customer onboarding process by combining technology and manual processes.

Importance of Customer Onboarding

Customer onboarding is extremely important because it helps in setting the tone of the future relationship with the firm. A poor onboarding experience may sometimes cause customers to never use particular services again. Most customers leave if the process is too difficult. Here’s why customer onboarding is crucial:

  • Keeps customer engaged with the business
  • Sets the tone of customer’s future relationship with the organization
  • Helps in detecting and eliminating financial fraud


It’s tough to make the customer verification process easy and yet secure especially for financial institutions. Various steps have to be taken to streamline the process and still keep it secure enough to keep bad actors out. Financial institutions need to create an effective digital sign-up process by incorporating the latest technologies into the process.