Fintech organisations are failing to convert engaged would-be customers due to inefficient onboarding processes with over a quarter of people failing to complete sign up procedures according to research by PIF, the not-for-profit body which represents organisations covered by e-money and payment services legislation.
This variance in onboarding success rates is the central finding from PIF’s Fintech and e-money Customer Onboarding Benchmarking Report which analysed onboarding processes from a sector-representative sample. The report aids better understanding of the different approaches to onboarding used within the sector and explains the pitfalls which erode customer sign-up levels.
Produced in collaboration with customer onboarding and KYC specialist, HooYu, the report reveals that, on average, only 74 per cent of customers are onboarded due to application abandonment during KYC (Know Your Customer) processes – a required step to access regulated services.
Although some organisations convert between 80 and 95 per cent of applications, many fintechs operate a leaky customer onboarding funnel losing as much as a third of all applicants during onboarding, an attrition rate which is thought to cost businesses £billions in lost revenue every year.
Declan Byrne, PIF board director, said: “Onboarding is one of the most expensive parts of customer acquisition and, as such, is the critical interaction stage with customers. Failures here can lead to lost revenues, untold reputational damage and wasted marketing budgets.
“Organisations which are missing out on up to a third of new customers due to ineffective onboarding stand to lose billions over the course of a year as their potential users seek out alternatives with more user-friendly customer onboarding.”
David Pope, Marketing Director at HooYu said, “Regulated firms have started to realise that the onboarding experience can be a differentiator and a means to improve the conversion of hard-won customer applications. KYC technology needs to be harnessed with well-designed UI and UX tools that guide the user through a smooth customer journey.”
Among the findings which drive customers to leave onboarding processes part way through, the report also found that:
- Twice as many fintechs intend to focus on the effectiveness of customer onboarding (86%) instead of driving further traffic to the top of the onboarding funnel with PPC advertising (43%).
- New fintechs place more emphasis on integrating onboarding technology providers and A/B testing than traditional financial services firms
- The greatest application drop-out comes when customers are asked to produce ID documentation. 50% of fintechs report this as the area of greatest abandonment.
The report can be downloaded here.
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Notes to editors
PIF is the not-for-profit industry body representing organisations who are regulated under e-money and payment services legislation and who operate in the high-growth prepaid and fintech sectors. Prepaid technology underpins a vast range of financial products, from everyday payment accounts and challenger bank accounts to corporate incentive and expense management solutions. Driven by a belief that prepaid delivers a wealth of financial and social benefits, PIF works to protect and advance prepaid as a driving force for innovation in financial services.
To learn more about PIF visit www.paymentsinnovationforum.org and follow us @prepaidintforum
About HooYu – for further information, visit: www.hooyubusiness.com
HooYu is a global customer onboarding platform designed to increase the integrity of KYC and maximise the success of customer account opening.
UI & UX features such as dynamic customer prompts, device language detection, reminder messages, customisation options and logic steps to reduce friction are designed to build a smooth digital verification journey.
HooYu is trusted by tier one banks such as NatWest, challenger banks such as Countingup & FinTechs such as Suits Me and blends ID document validation, digital footprint analysis, geolocation and facial biometrics with traditional database checks and PEPS & sanctions screening.
For further information