Success in acquiring new customers typically begins with the onboarding process. Abandonment rates will be high if the experience isn’t quick and simple. Customers also complain about the lack of an ability to immediately connect with a human if they have questions. Other areas potentially needing attention include simplifying the identity verification process, minimizing or eliminating the need to switch to different screens to complete an application, and making verification of any supplemental documents as close to real-time as possible.
Digital transformation challenges for financial institutions are perceived as increasing, due in part to the continued acceleration of the pace of technological change. Intensifying competition is another factor, as is emerging new and more complex banking regulations. Overlaying all of this is the uncertain economic environment which makes companies less willing to commit to investments in new technologies. Success in meeting these challenges will require a continued focus on technology investments, along with collaboration and partnerships with other financial and non-financial firms.
Embedded finance is a subset of Banking as a Service (BaaS) that involves embedding financial services into the offerings of nonbanking companies. This could involve offering loans, payments, cards, or deposits – or some combination – in the name of the client rather than the financial institutions actually providing the service. These services provide an opportunity to expand revenue sources beyond the traditional banking model. When evaluating this opportunity, it’s important to realistically assess a bank’s risk tolerance, its willingness to share revenue with the participating company, and its ability to support the necessary activities from a technology perspective.
Surveys indicate that banks are failing to meet customer experience expectations. Some of the most cited frustrations relate to the lack of 24×7 customer service, cumbersome identity verification processes, poor digital account opening experiences, and the lack of real-time payment capabilities. Many also expect personalized product and service recommendations and are also concerned about the potential for fraud and identity theft.
