Credit Card Onboarding
Onboarding a credit card user is usually a pretty complicated and extensive process. The competitive nature of the financial services industry further exacerbates the difficulty of and time spent on onboarding a single user.
Credit card onboarding typically consists of several back-and-forths between the customer and the sales team, confusion with regards to the documents required for onboarding, and a drawn-out customer experience that ends up with a lot of dissatisfied customers. Most of the time banks have to go through this entire process without any revenue at the end, because customers are not charged until they begin using the credit card.
These are all good reasons to consider altering the credit card onboarding process, but first let’s nail down exactly what the challenges are with traditional credit card onboarding.
What are the pain points for credit card onboarding?
In order to fix the problems with the way financial institutions onboard customers for issuing credit cards, we must identify the challenges in credit card onboarding.
Here are the most salient pain points.
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The process is slow and expensive
Marketforce reports that opening a new customer account takes more than 24 hours at 19% of financial institutions.
Deloitte reports that a bank typically spends between $20,000 and $30,000 to onboard a single customer in a process that can take up to 12 weeks.
Since customers cannot be charged until they start using their issued credit cards, banks take a further hit to their revenue if they cannot complete the onboarding process, which happens an estimated 40% of the time.
These problems all come down to a lack of automation in the onboarding process. Deloitte estimates that completely digitizing the onboarding process results in a minimum of 50% increase in efficiency.
SignDesk’s video KYC and digital onboarding solution has allowed several major banks to reduce their onboarding costs by up to 90% and significantly boost efficiency.
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The process lacks structure and is subject to changing regulations
Anyone that’s applied for a credit card will know how fragmented the onboarding process is.
While most banks begin customer engagement on digital channels owing to 48% of consumers between the ages of 18 and 34 using bank applications on a daily basis, the onboarding process rarely follows through digitally.
This is due to a woeful lack of automation in identity verification and a general lack of structure in the compliance process. Most officials interpret compliance regulations in their own way and use paper-based documentation for identity and KYC verification, resulting in a disordered and messy onboarding process.
Further, changing AML & KYC regulations throw a spanner in the works due to the inability of banks to adapt. This has led to soaring compliance costs, reported at $70 million for American banks.
These factors have led to a 40% drop-off rate among customers, 55% of whom say that they would prefer if banks could digitally verify their identities.
This tacitly suggests a solution for banks. SignDesk has taken these factors into account and created an ML-powered identity and document verification solution capable of instantly verifying KYC using standard databases. Additionally, our solution is customizable and capable of adapting to changes in regulations in real-time and according to client requirements.
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The process is vulnerable to large-scale fraud
Fraud is a perennial thorn in the side of bankers the world over. In 2018, the U.S Federal Trade Commission processed 1.4 million cases of fraud resulting in losses of $1.4 billion. Reports also indicate that every dollar lost due to fraud costs banks 2.5 times that, due to hidden costs relating to reputation and loss of trust among customers.
In India, public sector banks saw a 200% increase in reported cases of fraud while private banks saw a 500% increase, according to the RBI’s Annual Report 2019-20.
According to Juniper Research, the retail sector is projected to lose $130 billion dollars between 2018 and 2023 due to Card-Not-Present (CNP) fraud.
Fraud occurs due to the lack of a comprehensive and secure verification system, and the absence of client data security measures. Fraud is reported 82% of the time by automated security mechanisms, and Deloitte’s Banking Fraud Survey 2018 indicates that strong KYC is critical in preventing documentation fraud.
Therefore a digital KYC and identity verification system could help banks significantly reduce fraud.
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The process takes place over several channels
A Marketforce survey reported that over 85% of customers who began onboarding on one channel couldn’t finish it when they switched to another channel.
This, along with other problems, has resulted in 40% of customers abandoning their credit card application, and 39% giving up because the process was drawn out for too long.
But the solution is clear. Several reports are clear in their messaging that customers are more willing to engage with banks on digital channels and would prefer services to be dispensed online. Marketforce reports that the number of people travelling to their bank branch to open an account or conduct a transaction has dwindled to 25%.
Digitizing the credit card onboarding process allows banks to make the onboarding quick, simple, and seamless. SignDesk’s video KYC solution, for example, reduces the turnaround time for onboarding by 99% by offering a completely digital channel for onboarding, which has resulted in 20% fewer customer drop-offs.
Additionally, with customers already on a digital channel, bankers can boost customer engagement and encourage customers to use their credit cards, thus increasing revenue.
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The process puts people’s health at risk
COVID-19 has upended the status quo for the financial sector and banks have had to quickly digitize their operations to comply with health-related regulations.
In a similar vein, digitizing the credit card onboarding process ensures that customers can receive financial services with zero physical contact with bank officials.
RBI, in a decision cognizant of the prevailing conditions, allowed banks to conduct V-CIP for opening accounts and credit card onboarding looks to follow suit.
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The process is not accessible to a large portion of people
Traveling to a bank branch in order to get their KYC and identity verified is simply either too much work or not possible for a lot of potential customers residing in lower-tier cities.
Digitizing the onboarding process will allow customers to obtain these services from the comfort of their homes, and will allow banks to expand into new markets at a small portion of the costs.
These are all the challenges for credit card onboarding. So how can banks optimize this process?
Digital credit card onboarding is the solution that banks need.
Digital credit card onboarding
As we have seen before, digitizing the credit card onboarding process addresses all the pain points of this process, and results in major benefits for banks and customers.
Here’s how an automated credit card onboarding process will potentially go on SignDesk’s video-based KYC product equipped with V-CIP.
SignDesk’s video KYC process is fast, fraud-proof, cost-effective, and a seamless alternative to traditional onboarding.
Award-winning video KYC
If you’re looking for a trusted and award-winning product to onboard your customers seamlessly and with zero friction, you can’t do better than SignDesk.
We use cutting edge AI & ML for facial matching or face verification, KYC and document verification, and fraudulent profile filters to mitigate cyber fraud. We’ve also been awarded the Global Banking & Finance Review’s Best Digital Onboarding Product in India for 2020.
Our solution is cost-effective, customer-friendly, and compliant with major regulations. Here’s what you get with SignDesk’s video-based onboarding product –
- 90% reduction in onboarding costs
- 99% reduction in TAT
- 20% fewer KYC drop-offs
- ML-powered anti-fraud mechanisms
- Industry-grade data security
- Complete compliance with KYC regulations
- Intuitive & customer-centric onboarding
Are you ready to onboard customers right? Book a free demo with us now!