• Market differentiation will focus on the customer onboarding journey and data-driven engagement right after sign-up.
  • Leading financial institutions provide additional and immediate value beyond instant onboarding.
  • In future, onboarding will become as simple as clicking yes in response to a note from a  financial institution..

In most retail financial services markets in the Asia Pacific and the Middle East, opening fully digitised prime current accounts for new-to-bank customers was impossible. Banks were not able to meet strict compliance with the regulator’s guidelines for security and customer verification. While this is about to change going forward, banks need to pay attention to the entire customer onboarding journey and engagement right after sign-up.

Current account opening processes vary by markets. Previously, even in Hong Kong, account opening at some banks could take up to an hour to complete. In the Philippines, customers are whisked through more than a dozen signatures and more than 80 data fields, including parental particulars.

Things are about to change. In 2019, banks across a couple of mature and emerging markets including Hong Kong, Taiwan, Indonesia and Thailand will begin leveraging on these opportunities. Along with it, a set of new virtual banks will enter those markets too.

In recent years regulators in some countries have begun liberalising account opening regimes by introducing tiered regulations for deposit ‘lite’ accounts such as in the UAE, China or Taiwan.

For instance, in China and Korea, a prime account that has no limits in regards to fund transfers, payments or access to cash can only be opened at the standard counters or by video-chat-based ID verification. At video teller machines in China, branch staff needs to ‘check’ the physical ID on site.

In comparison, a WeChat wallet or Alipay account sign-up can only be used for small expenses and payments. The payment limit for these accounts is $744 (RMB5,000) per day while the balance is $149 (RMB1,000). There are also limits on transfers.

Bank Danamon became the first bank in Indonesia to offer digital current account opening in January 2019 with the verification process through in-app video calls.

A fully-digitised comprehensive current and savings (CASA) account opening is already available in countries such as in Singapore enabled by strong e-government registries. It also eliminates the need to submit ID copies for verification and authentication. DBS Singapore embarked on a digital transformation journey with new streamlined processes and customer journeys being introduced gradually over the last two years. By end of 2017, new to bank customers need to complete an online application in eight to 10 clicks and upload the necessary documents supported by MyInfo, an initiative rolled out by the government. It enables auto population of customers' basic information once customer has given the consent through his/her Singpass login.

In Hong Kong, with the launch of mobile current account opening by end 2018, a bank can potentially now complete the process including e-KYC and form completion in under 10 minutes.

Deposit features are, among interest rates, important drivers to attract customers, but the tactical approach has been shifting in recent years.  Financial institutions have been moving away from offering standard deposit products that include a basic set of no minimum balances and higher rates to features that offer automated savings goals and personal financial savings tools to help customers achieve their savings goals.

Yet, drop-out rates on online and mobile banking remain high. Some banks in the Excellence 2019 programme reported that the dropout rate for onboarding on digital channels can be as high as 80% compared to 15-20% for in-branch sales.

Part of the issue is that the entire cross channel behaviour of users, including offline online journeys are not understood well or banks have trouble to identify the journeys and sub-journeys that matter in digital banking, according to McKinsey. While the relative contribution of sub-journeys (such as app downloading, activating account) in determining overall customer experience varies considerably, McKinsey believes that ten to 15 sub-journeys have the biggest customer-satisfaction impact for most products and should thus be the first priority.

Full current account opening by leading banks for new-to-bank customers

Figure 1. Process flow for digital account opening via mobile banking (for full unrestricted CASA accounts)

Where full e-KYC is not possible yet, banks have launched end-to-end tablet-based processes by front line staff, enabling them to source accounts from new-to-bank as well as existing customers digitally at any location using at least 4G powered tablet solution. Best banks can open accounts instantly and the account number is generated and sent across to the customer by email. Processes are paperless and fully integrated with the bank's bank end systems, and where possible credit bureau via an API integration to fetch the customer credit history. Customers can also submit their documents via the tablet banking app by clicking simply a picture of the document.

To overcome hurdles in onboarding, FIs need to make financial tasks simpler and easier, from the time consumers run product and price comparisons on through to onboarding and usage. Superior onboarding starts with an effective landing page, where research shows that FIs have less than 10 seconds to persuade a consumer to stay on the site. Smart players provide additional and immediate value beyond instant onboarding.

Standard Chartered Bank (Hong Kong)

With the launch of its Mobile CASA end 2018, customers can now complete the entire account opening process including e-KYC and form completion fully digitally in under eight minutes. After download the app, a voiceover guide will lead the customers to scan the different angles of the HKID and take a live selfie by blinking two times to ensure the ID genuineness and liveness. ID information will then be captured automatically via OCR, as well as an additional SMS OTP will be sent to verify the ownership of the mobile number. Lastly, the customer can select their choice of account type and card face by their own preference. They can also have a choice to resume the application within seven days. Once the whole process is completed, a physical ATM card is delivered via mail which may be activated online for immediate use.

Liv by Emirates NBD (UAE)

Liv., Emirates digital banking arm, offers a lower account opening threshold then most banks as a trade of for some deposit restrictions. In 2018, Liv became the fastest growing financial service player in the UAE, on-boarding on average more than 10,000 customers per month including from the most remote areas of the western regions of the UAE. All this was achieved with zero sales force.

While most banks take about eight to 12 steps for instant account opening Liv. does it in six by downloading the app, enter email and mobile, create password, answer a few profile questions and scan national ID. Once this is done there is an intuitive guided journey which asks for user’s lifestyle preferences first that will help power the bespoke home screen and recommendations to the user. In addition, customers are offered to set up a Goal for savings purposes which was launched in mid-2018.  

Liv. Goals is a rules-based, automated, high interest bearing savings product. A customer can determine how much per day, week or month he or she prefers to save according to goal amount set. In addition, customers can set a target date, amount and frequency of saving and the engine calculates how much needs to be moved in a set interval to the goal account to reach the target. There are additional automation rules that can be set such as each time funds are added to the main Liv. account, a percentage of it, chosen by customers, moves to the goal account. This works also for spending; funds move automatically to the goal account each time the customer spends using the Liv card. There is also a nice visual representation of the portion of goal completed with estimated time to reach the goal. Users can personalize the goal by adding a unique goal name and uploading a picture of the goal. As a result, Liv. has seen nearly 30% of its active customer base have a ‘goal’ account. It has also strongly contributed to an increase in the overall deposit book of Liv.

Revolut (UK)

Revolut, a UK based mobile payments application, just asks for basic information from the applicant, performs KYC checks digitally, and gives London-based Onfido customer data plus a selfie, so they can make sure the applicant is the same as the person on the documents. The result is that it only takes about six minutes for a customer to open an account and receive an account number from Revolut’s partner banks. The main difference compared to competitors is that Revolut provides a seamless end-to-end customer experience.

To make onboarding easier, Revolut has done testing along every point of the customer journey, from downloading onwards. It clustered clients into segments based on the data it collected and came up with personas based on in-app behaviour. It then used ideas, research, A/B testing, heat maps, and analytics to make sure it implemented data-driven fixes that have a positive impact. It also makes sure it segregates products for different personas and reaches out with exactly what they need, proactively and reactively, using analytics, AI and other tools that predict the best solution for the client.

Under the hood, they are a sophisticated data-driven machine that allows them to see the client. Revolut, for instance, ensures an intuitive experience in its app, and then scrolls through benefits such as free money exchange and testimonials to reinforce its reliability.

Kredivo by FinAccel (Indonesia)

In Indonesia, Kredivo by FinAccel, a Singapore headquartered digital lending company, is tapping successfully into a market where access to unsecured lending (credit cards and personal loans) is scarce with only seven million credit card holders.  Kredivo’s success is based on addressing several fundamental problems plaguing Indonesia’s retail financial services industry, which is access to credit, speed of onboarding and responsible pricing. By addressing those, Kredivo creates higher customer retention and engagement rates as compared to market averages in Indonesia.

It can take banking applicants two to three months to get a decision on a credit card application, and consumer finance companies in Indonesia lend at an effective interest rate of 4-5% per month. Kredivo lends at 2.95% making it the non-bank lender in Indonesia with the most competitive rates.

To apply for a digital credit card, it takes under three minutes and two clicks to purchase an item on its e-commerce platform.  The company created a proprietary credit decisions and risk management systems to onboard middle-class salary earning millennial with no previous bank credit score. The credit decision management is comparable in quality to banks’ credit decision engine as measured by the GINI coefficient.

The on-boarding experience is 100% digital from downloading the app, to digital document upload and OCR detection. Real-time credit scoring is supported by connecting to social media and banks. After the customer signs with digital signature, the account is automatically opened.

For every customer cohort that starts transacting nearly 50% of that cohort are still transacting 12 months out making it one of the highest of any credit card/payment method in Southeast Asia. Similar, the average Kredivo customer transacts 30-40x per year, whereas the average e-commerce customer transacts 5-10x per year.

Future developments

In future, autonomous AI agents and bots which offer currently limited capabilities operating in narrowly-defined areas will gradually be deployed across channels and applications, including the onboarding journey. Eventually, emerging technologies will strip out all the time customers have to spend interacting with apps, on websites and other banking solutions, including uploading documents, digitally signatures, and even give that time back to them. Onboarding will become as simple as clicking yes in response to a note from a bank.