The importance of digital customer journeys

Financial institutions will face a variety of familiar challenges in 2023, including meeting compliance regulations and staying ahead of fraud threats. With every institution striving to attract new clients, a strategy that prioritizes digital customer journeys can provide a competitive edge.

To create such a strategy, banks and credit unions need to look at the entire customer life cycle, from the first online interaction to the long-term relationship, to understand customers’ needs and desires. They must optimize onboarding workflows and balance fraud and friction throughout customer relationships, moving any complex, yet necessary, processes to the background.

Offering seamless digital workflows today is mandatory to remain competitive. The past few years have brought explosive digital adoption, with 83 million Americans signing up for online services in 2021 and 94% of them planning to continue using some or all of those services.

With customers spending more time online, their expectations for personalized experiences have skyrocketed. And if an organization slips, a McKinsey report suggests that consumers are quick to take their business elsewhere. In onboarding alone, 93 million Americans abandoned efforts to sign up for new online accounts in 2021, saying the process was too difficult, too time-consuming or untrustworthy.

Mobile onboarding is a prime example of keeping a digital-first mindset. Mobile was the most-used channel in new account openings, with 64% of consumers saying they used a mobile device when signing up for a new account.

Financial institutions are seeing the highest adoption from younger generations, with 88% of millennials and Gen Zers banking from a mobile device. These generations are commonly considered “thin files,” meaning they’re harder to locate in public or credit records because they don’t have a lengthy banking history. Identity verification technology that leverages multiple data sources beyond credit data is essential to win and keep this very important and growing market share.

Retaining long-time consumers is also vital given that more than 35 million Americans are considering switching financial services providers within the next 12 months. And negative experiences have lasting effects beyond abandonment. A report by Dimensional Research found that consumers are vocal about their experiences with brands, especially negative ones. Respondents who suffered a bad interaction were 50% more likely to share it on social media than those with good experiences.

While optimized and convenient experiences are key for a seamless journey, banks can expect greater scrutiny from customers over digital security. As previously noted, customers are leaving difficult and untrustworthy onboarding workflows, and 88% said they would discontinue a helpful personalization service if they didn’t understand how their data would be managed.

Clearly, there are consequences for banks and credit unions that haven’t optimized their digital experiences. Creating convenient experiences requires a delicate balance between fraud prevention and friction management. Institutions can deliver a user-friendly, low-friction experience by keeping identity verification and fraud processes in the background.

When implemented correctly, identity verification technology can empower FIs to locate, verify and approve more legitimate customers faster with nominal friction. And these experiences don’t stop with onboarding. Organizations will need to reverify customer identities when a consumer is trying to log in to an existing account from a different device, requesting a new password or making a high-value transaction, for example.

Multilayered verification technology with automated orchestration allows institutions to provide low-friction workflows and step up security only when risk is flagged. Additionally, relying on details that users may be more comfortable providing, like a phone number or email address, empowers banks to do more with less information.

Modern customers expect fast and convenient digital experiences, so financial institutions are under pressure to deliver. From new account creation to retention, the entire life cycle depends on customer-friendly workflows for customer acquisition and retention. Best-in-class identity verification is critical to win happy customers and retain them, while keeping fraud in check.

The right strategies, processes and technology to verify customer identities safely and quickly will be critical for FIs to create better digital banking experiences and drive growth.

Christina Luttrell is chief executive officer for GBG Americas (Acuant and IDology).

Explore key topics you should be considering as you build your marketing plans for 2023 and beyond in the BAI Executive Report, “Marketing in 2023: Opportunities and challenges”