In the always-on economy, your customers expect a simple and straightforward sign-up process for new services. An inefficient and tedious onboarding process can be a hindrance and inconvenience that drives customers towards your competitors.
Although digital onboarding opens up a world of opportunities, without a proper understanding of the digital onboarding process, your business may continue to rely on manual methods of onboarding, which can be time-consuming and inefficient and can even cost your business money and customers in the long run.
In fact, a 2022 report on the onboarding process found that 68% of consumers have abandoned an application in the last year. That being said, there are great digital onboarding solutions that can help you streamline your process while ensuring regulatory compliance.
In this blog, you will find out what digital onboarding is, why it is important, and why it is beneficial for your business. So let’s dive in!
What is digital onboarding?
Digital onboarding is the process that enables companies to verify their customers’, employees’, or subscribers’ identities digitally. This is typically done through digital channels including online forms, electronic signatures, biometric checks and other identity verification procedures.
With digital onboarding, you eliminate the issue of human error which is a byproduct of manual data entry, while improving and enhancing the security of your ID verification processes. In addition, digital onboarding software can process information faster than a human.
Switching from a manual to a digital onboarding process saves both you and your customers precious time while providing a more secure method of identity verification for businesses but is also essential for institutions and organizations such as banks that need to comply with KYC and AML regulations.
Now you know what digital onboarding means, let’s get into the details of how it works.
How does digital onboarding work?
The digital onboarding process requires an individual to verify their identity remotely and authenticate their ID documents. For example, an individual wants to open a new account at a bank. Typically, this requires the individual to bring documents such as proof of address and ID documents, passport or driver’s license, to a physical location to prove they are who they claim to be.
There, these documents are typically checked and verified manually, by an employee of the bank. This process can be a time consuming and inefficient for larger companies. Not only is this an inefficient use of time and resources but there is also a risk of error when it comes to manual data extraction because human beings are not infallible.
That being said, smaller businesses that process a smaller proportion of documents can get away with manual document verification.
The process of digital onboarding can be performed using an app on a phone for example. This way, the user can scan or upload a photo of their identity document onto the ID verification software.
During this verification process, the important information on the Identity Document can be extracted using OCR (Optical Character Recognition). This includes data fields like the full name, date of birth and expiry date on the document. By automating this process, you eliminate the need for manual data extraction. In the ID verification process, these ID documents can then be cross-verified with external databases to authenticate and verify the documents.
Although this process is typically done with a mobile device like a phone it can also be done with a computer or desktop with access to a camera. This is mostly important for the selfie verification and liveness detection process, to prevent spoofing in the identity verification process.
For businesses like financial institutions, that require a fast, simple and secure way to collect verification information from clients and customers, digital onboarding is the answer.
Benefits of digital onboarding
Digital onboarding is becoming more of an industry standard, with the ability to enhance the customer experience while improving the efficiency and inner workings of a business. There are many benefits to moving towards digital onboarding, however, we are going to examine 5 of the most impactful benefits of digital onboarding. These benefits are most important for achieving many goals set out by businesses across a range of industries.
The most impactful benefits for digital onboarding include:
- Improved efficiency: Time is money so spend it well. With digital onboarding, businesses can onboard users quickly and efficiently. It eliminates the need for manual document processing, the need to maintain and operate physical offices or branches for a person to visit. It reduces operational costs which is better for the bottom line in the end.
- Enhanced security: Digital onboarding provides a range of ID verification methods to ensure that users are who they claim to be. With identity verification technologies (IDVT) like NFC checks, and photo detection, the ID verification process is better equipped to provide a safer, more enhanced onboarding.
- Compliance with regulations: Automatic ID checks are a much more efficient way for organizations to ensure that they meet the regulatory requirements like KYC and AML rules, while cutting down on costs and avoiding severe fines.
- Improved user experience: You provide a seamless onboarding experience for your users with digital onboarding as this eliminates the need for users to visit a branch in person. Therefore, a tedious task like filling in forms takes less time and can be done from anywhere in the world.
- Improved data accuracy: OCR technology in digital onboarding processes eliminates occurrences of human error that occurs in manual data entry. This way, user information is accurate and up to date.
Digital onboarding methods
As technology improves there are more and more methods available to us to effectively automate the onboarding process. In this section, you’ll become more acquainted with these methods as well as their pros and cons to help you in making the most informed decision.
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Selfie Verification
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+ Quick and easy to use.
+ Selfie match with photo on ID for better security. |
– May not work well in low light environments or with poor camera quality.
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Document Verification
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+ Accurate and efficient Identity Document verification.
+ Can be done remotely. |
– Document images taken in low light can make it difficult to verify.
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Age Verification
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+ Enhanced compliance with industry regulation.
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– Not a secure stand alone method of ID verification. An individual can use a fake ID or an ID document from someone else.
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Liveness Detection
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+ Additional layer of security, great for anti- spoofing.
+ Can be done quickly and easily with a smart phone or device |
– May be difficult to use in a low-light space or with a low quality camera.
– More instructions and feedback for the user to follow to complete the check. |
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Proof of Address Verification
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+ Provides a reliable method of verifying the user’s address.
+ Can be done remotely, making it convenient for users. |
– May be difficult to verify users who live in shared or temporary accommodation.
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NFC ID Verification
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+ The safest and most robust verification option.
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– Limited range and physical contact required. ID and NFC reader need to be within a few centimeters of each other.
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All methods have pros and cons and determining which method works best for you and your business will require weighing up these pros and cons. The wisest decision would be to employ a combination of methods in your onboarding processes. The digital onboarding solutions out there will often offer some combination of these methods.
How to set up your digital onboarding process
To create an impactful and goal oriented onboarding process that is beneficial for both your organization and the customer/employee, there are a few steps that need to be taken which will be outlined in this section.
- Goals and requirements: Set up your goals and objectives through digital onboarding. This includes what identification information you want to collect from your employees/customers, the level of security required for this information (e.g. is anonymization needed in this case) and any regulatory compliance requirements for your relevant industry.
- Select your digital onboarding method(s): With the goals from step 1 in mind, you can choose the digital onboarding methods that best suit the needs of your organization and your users. For example, these methods include a combination of document verification, selfie verification and liveness detection.
- Creating a user-friendly process: This is one of the most important steps of the digital onboarding process. If your application is not user friendly, it will be a counterproductive change creating more work and issues for the onboarding process. Design a user-friendly application that guides users through the onboarding process. It should include clear instructions and be easy and straightforward. Alternatively, you could search for an existing solution that can be easily integrated with your systems.
- Integrate with your systems: Integrate your digital onboarding application with your existing systems. This will allow you to streamline and optimize onboarding tasks such as data entry and identity verification.
- Monitor and improve: Observe your digital onboarding process and identify areas for improvements. This way, you continuously improve the process to ensure that the needs of your users and your business are met.
By following these steps, you are more equipped to create an efficient and useful digital onboarding process that complies with goals, objectives and industry regulations.
Get started with Klippa
There are many customer onboarding solutions available on the market today. The best one for you depends on your specific needs and use case. However, Klippa DocHorizon is a serious contender as it is fully customizable to suit your needs.
Firstly, for some industries to successfully onboard their customers online, all that’s needed are a set of documents such as ID cards and bank statements. Our document verification solution will be a great addition to the onboarding process for these industries. This brings with it multiple benefits including lower operational costs, improved and automated data entry and best of all, faster processing times.
Additionally, Klippa DocHorizon includes all the security features required for deeper identity verification. This is perfect for industries that require a full identity verification solution to comply with KYC/AML regulations. This includes security features such as biometric verification, liveness detection, data extraction, validation, and document fraud detection by cross-checking the visual zone with MRZ.
With our solution, depending on your needs, you can easily validate identity documents such as ID cards, driving licenses, and passports which means better security, easier compliance and a more transparent customer onboarding process.
With Klippa by your side, you’ll get the guidance you need to become properly acquainted with the software and the resources to properly integrate the software into your systems. Say goodbye to the inefficiency of a mountain of papers and welcome the digital age.