As Millennials and Generation Z continue to grow their share and importance in the marketplace, businesses must adapt to their preferences for seamless and secure mobile services.
In fact, 42.24% of the United States population in 2021 was made up of Millennials (born between 1981–1996) and Generation Z (born 1997–2012), surpassing both Generation X (1965–1980) and Baby Boomers (1946–1964). With the vast majority of these two younger generations using mobile banking apps for various tasks, it's crucial for organizations to perfect their digital customer onboarding and ID verification processes.
At the same time, while younger generations are growing in size, older generations continue to actively contribute to the economy.
Given the different preferences and tech skills across these age groups, businesses must cater to everyone's needs. This means adopting mobile and digital innovations for tech-savvy customers while ensuring convenience for those preferring traditional methods. Striking this balance is vital as organizations optimize customer onboarding to ensure a secure and seamless experience for all clients.
Major challenges of customer onboarding
Whether it's digital customer onboarding or traditional onboarding, the process needs to be fast and efficient to keep clientele satisfied and safe. Manual brick-and-mortar onboarding, though slower and less convenient, can still be improved. For instance, you can use modern data entry automation tools that convert typed or printed text into digital data to speed up the process.
However, digital onboarding has its own set of challenges, with deepfake attacks on the rise (13% up compared to 2021) and reported fraud losses increasing by 30% in 2022.
Moreover, there are risks associated with inadequate identity verification. According to PwC’s Global Economic Crime and Fraud Survey 2022, 51% of surveyed organizations experienced fraud in the past two years, marking the highest level in 20 years of research.
In light of these challenges, identity verification has become a crucial aspect of customer onboarding, often making or breaking the customer journey.
Navigating identity verification challenges in onboarding: Problems & fixes
Striking the right balance between a seamless user experience (UX) and robust security and compliance measures is a major challenge in the ID verification process, particularly for highly regulated industries like Banking, Fintech, and Crypto.
Inadequate ID verification implementation can hinder the onboarding experience for both clients and businesses, as the various challenges we will explore are often tied to either UX or fraud prevention. Let's examine the most critical issues and explore potential solutions that effectively balance user experience with security and compliance requirements.
Challenge #1: Too many forms to fill
Customers can quickly become frustrated if they encounter complex ID verification processes during onboarding. When faced with numerous forms to fill out, especially if they must do so manually, customers may be discouraged from continuing with the onboarding process.
Each additional step required from the client can negatively impact the conversion rate into active users. However, on the other hand, certain industries have compliance requirements, making the collection of specific data mandatory.
That's why it's crucial to optimize the onboarding process by minimizing the number of steps while still adhering to regulatory standards, ultimately creating a more user-friendly experience that boosts customer satisfaction and conversion rates.
By implementing data entry automation for enhancing workflows, businesses can simplify the onboarding process and gather all the necessary data without harming UX. These tools can cater to both online and on-site onboarding scenarios, offering tailored solutions for each approach:
For customers visiting a physical location, businesses can use hardware devices called passport readers. In this case, the operator scans the document, and all relevant data is automatically entered into the system using OCR technology. This eliminates the need for manual form filling, leaving only the signing process for customers.
Additionally, the passport reader also performs authenticity checks, ensuring a secure and reliable verification process. All of this takes just a few seconds, but provides organizations with extra guardrails against fraud.
For onboarding via web and mobile apps, specialized SDKs can create and customize your app with document-reading capabilities. These SDKs utilize OCR technology to automate data extraction and entry from a single document, while also incorporating essential authenticity checks, which are critical for remote scenarios.
By minimizing manual input and streamlining the customer experience, these SDKs provide a secure and reliable data entry and verification process. In the case of Regula Document Reader SDK, when a client takes a picture of their document, it instantly identifies its type; hence, the “Choose your country” and “Choose your document type” steps are eliminated. The software then reads the data and automatically fills in the appropriate fields, while also performing the authenticity checks in the background.
Challenge #2: It takes too long
Lengthy approval and analysis times for submitted forms can deter clients from completing the onboarding process. As a result, businesses may lose potential customers who are unwilling to wait for extended periods.
Even before the spread of 5G Internet, people browsing the web were 32% more likely to bounce off the page if it took more than three seconds to load. Fast forward a few years, and your clients are even less patient. People generally dislike waiting, and in the case of onboarding, this impatience can arise from two main factors:
Documents are sent for manual review by a human, leading to delays in the approval process.
There is an automated system in place, but it operates slowly. This issue can be exacerbated by poor UX design, leaving users confused about whether they should simply wait longer or if the system has frozen and they need to start over.
By addressing these concerns and streamlining the onboarding process, businesses can improve user satisfaction and enhance customer retention.
By delegating basic highly repetitive tasks to technologies, you eliminate a human from the loop and streamline the whole process. As a result, customers are more engaged and less likely to abandon the onboarding process.
To put identity verification on autopilot and accelerate it, you can use Regula's comprehensive solution. Document Reader SDK, which includes a database of over 12,000 document templates, effectively captures all meaningful information and conducts massive cross-checks to make sure all the data, as well as the document itself, are valid. This process takes seconds and allows genuine clients to access services almost instantly, while effectively deterring potentially high-risk individuals.
Challenge #3: It requires too much effort
Traditional ID verification methods often require customers to visit a physical location and complete various tasks, while digital onboarding may involve resubmitting documents due to incorrect formats, sizes, or poor quality of images. In both cases, clients might be requested to provide additional documents, such as bills and bank statements, which can be a significant inconvenience.
Use modern tools that provide an intuitive user experience, making onboarding as simple as taking a selfie for any user. For example, when an app integrates Regula Document Reader SDK, customers only need to present their documents, and the app will do the rest. It automatically assesses the image quality, improves it if necessary (e.g., deskewing a document shot at an angle or removing glare), extracts the required data, and verifies it.
If combined with Regula Face SDK, the system then also automatically conducts a liveness check and compares a selfie with the document's photo to confirm the person’s identity. This seamless process decreases the false-positive rate, without creating additional obstacles and challenges for clients.
Challenge #4: Limited onboarding options
Some companies only offer onboarding online or exclusively via web or mobile platforms. In 2021, there were nearly 15 billion mobile devices in operation worldwide, with the number expected to reach 18.22 billion by 2025. By not providing a variety of onboarding options, including mobile applications, businesses risk alienating potential clients and losing market share.
Customers want to onboard where it is most convenient for them, not just where the company prefers. Offering a single onboarding option may lead to the loss of potential clients who seek more flexible and accessible alternatives.
Businesses must ensure that their onboarding process is effective and accessible to clients across various channels, both online and offline. However, an attempt to level up the workflows on all fronts may result in too many moving parts that are hard to implement and maintain. That’s why it’s convenient when a single provider offers comprehensive solutions that cover all possible touchpoints in the verification process.
Regula is an example of such a one-stop shop which provides document reader devices, web and mobile SDKs, and even the ability to integrate with third-party devices. By offering flexibility and adaptability for different identity verification scenarios, businesses can create a seamless and user-friendly onboarding experience across multiple platforms, catering to the diverse needs of their clients using Regula's solutions.
Challenge #5: Fraud detection issues
A global survey conducted by Regula together with Sapio Research from Dec 2022–Jan 2023 revealed that 26% of banking organizations experienced over 100 identity fraud incidents in the past year, while 17% of FinTech companies faced the same issue.
Both traditional and digital onboarding processes are susceptible to document forgery and scams. Scammers are becoming increasingly sophisticated, using advanced technologies such as AI voice cloning and face morphing techniques to authorize fraudulent transfers. In 2022, the FBI issued a warning about cybercriminals who were employing such technologies to apply for remote IT positions.
In the fight against ID forgery, sophisticated scams, and deepfakes, businesses need to stay ahead by using advanced verification tools. That’s why it is important not to accept the results of any single test, but to conduct numerous tests to ensure reliable authentication.
This is particularly important, as many customers are onboarded remotely using their mobile devices, requiring a robust verification process. For example, it's crucial to cross-check information from the visual inspection zone, machine-readable zone, barcodes, and chips in identity documents. Regula does precisely this, providing comprehensive verification with the added ability to handle chips, even remotely.
Another essential aspect of secure remote onboarding is the "zero trust to mobile" approach, which involves re-verifying the RFID chip on a server in a secured perimeter. This ensures that the information in the physical ID is trustworthy and that the chip has not been cloned or its data manipulated. Regula's implementation of this approach offers added protection against fraud, as verification results cannot be intercepted and modified by fraudsters directly on the mobile device.
Additionally, utilizing biometric verification, such as face biometrics, is essential. Performing liveness checks and comparing submitted photos with those in the documents or your database can significantly improve security. Also, it enhances the process for the customer by providing a more efficient method of verification.
Moreover, certain types of fraud, such as face morphing, are still challenging to detect directly with high confidence. Instead, forensic methods are used to find traces of alterations in documents. Therefore, for physical locations where security is a top priority, utilizing devices like Regula's passport readers is a must. These tools can help businesses identify and combat fraud more effectively by conducting various checks and cross-validations.
By keeping in mind and incorporating these robust measures, businesses can confidently verify the identity of their remote customers, overcoming most fraud detection difficulties, ensuring a high level of security and a seamless onboarding experience.
Challenge #6: The data is not secure enough
Security is a major concern during the ID verification process, particularly in digital onboarding. Hackers may attempt to steal data during form completion, or scammers may create phishing websites to trick new customers.
Ensuring that your verification solution does not collect or store clients' personal data is crucial for maintaining privacy and trust.
It is also important to consider a solution that can operate on-premises, as this approach allows all processes to occur within your secure perimeter, minimizing potential risks. While an on-premises solution may not provide 100% protection from phishing attacks, it significantly enhances data security, reducing the likelihood of breaches and unauthorized access to sensitive information.
Regula's solutions are designed with these concerns in mind, offering both data privacy and on-premises capabilities to ensure a secure and reliable onboarding experience for your clients. With the recent update of Regula Document Reader SDK, the software solution for thorough ID verification, Regula focuses on comprehensive cross-checks of all document data from all sources.
When clients experience unpleasant onboarding processes, they may choose not to use a business's services, resulting in wasted customer acquisition costs (CAC). For instance, CAC for credit cards can range from $200 to $1,000 for cards aimed at affluent, high-spending cardholders.
Proper remote onboarding, utilizing IDV solutions that automatically collect and store user sessions, enables clients to meet compliance requirements. Adhering to these rules not only saves financial organizations money by avoiding fines for non-compliance, but also protects them from potential reputational damage.
By implementing customer onboarding best practices and using technology partners like Regula, businesses can significantly decrease their financial burden. A more efficient and user-friendly experience leads to higher client satisfaction, improved retention, and, ultimately, lower costs for client acquisition.
By adopting the best practices mentioned above and integrating advanced solutions like Regula Document Reader SDK and Regula Face SDK, businesses can offer a seamless, secure, and efficient customer onboarding automation. A focus on user experience, accessibility, and security will not only help reduce the time and cost associated with client onboarding, but also build trust and confidence with their customers.