Monday, 26 november 2018 | Redacción CEU
The accelerated pace of digital transformation is helping to change our world in leaps and bounds. The unstoppable technology development is not only favoring the processes reinvention, but also a change in people's mindset. As the environment changes, individuals demand an experience which is more in line with this new scenario. They want to have their expectations met in the digital field. In the banking sector, the change is evident. Customers no longer feel the need to visit their branch offices. This fact, together with a development of the current regulations, has led to the appearance of new services that seek to please the wishes of this new customers. Digital onboarding stands out among all these services. What does it consist of? Why is it so disruptive?
Digital onboarding enables users to register in a bank through a mobile phone or a computer. They do not need to go to the branch office at any time or spend endless minutes filling in all kinds of forms. They only have to show their ID card in a videoconference in order to complete this process successfully. Therefore, this tool enables people to register from any place, at any time and in a completely digital way thanks to biometric technology.
The reason why this process, whose design is based on digital identification, is spreading widely through the Spanish banking sector, is due to the legislative normalization that the financial world is experiencing in relation to the digital domain. In 2016, the German bank N26 was the first entity to offer the remote identification function in this country. Its initiative, along with the need to respond to the digital transition in which we are immersed, was crucial to paved the way that gave birth to two new rules of the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Infractions (SEPBLAC from its initials in Spanish). These regulations marked a milestone. From then on signing up for a bank could be completely digital.
Although from the perspective of the outside observer this service may seem superfluous, it brings about a very significant change within the financial world. It is the previous step to a full banking digitization. However, this is not the only benefit that accompanies the development of this formula. Digital onboarding also:
It is also necessary to pay attention to what may be the weak points of digital onboarding. Rather than disadvantages, this new type of service involves several issues which its promoters have to think about. Security is crucial in this type of digital identification. For that reason, experts are now working on the development of behavioral biometrics. Nevertheless, many of them say that banking controls can become more exhaustive when they are applied in the digital field. According to these specialist, digital onboarding is safer than the registration processes in traditional banks, since it can detect fraud or identity theft in a quicker and easier way. Among other things, it puts a greater emphasis on the detection of document forgery, makes a more homogeneous data collection and enables to preserve data and improve custody chain.
Another feature of digital onboarding is the loss of face-to-face relationship. Clients are used to receiving this kind of treatment. To achieve loyalty among digital users, this service must know how to stand out, be agile and intuitive and meet the needs of clients as much as possible. In fact, this new virtual relationship should not end here, but it should rather constitute a first contact point. In turn, when these digital clients go to the office, they should receive a treatment that matches the one that they have when they go on their banking platform. If there is no balance between branch offices and digital services, banks can lose a considerable number of clients. They had never had so many rivals as they have now, neither had the offboarding services been so quick.
The reasons why the boost of digital onboarding is so significant is because it represents a great step towards full banking digitalisation. The registration process constituted one of the biggest barriers that banking used to have when it came to being completely digital. However, the development of regulations like the ones mentioned above and others such as PSD2, GDPR or the proposal for the implementation of a sandbox in Spain are paving the way towards a much more digitized banking future.
The integration of digital identification in banking services helps to offer an easier, simpler and quicker experience for users. In addition, this biometric technology can be useful for carrying out new initiatives in the banking field: using voice recognition to replace electronic signatures, creating a database with information about clients that helps improve their experience, fighting against money laundering and terrorism, updating ID cards without filling in forms, developing invisible payments, etc. Digital onboarding, although valuable and relevant, is only a small draft of a digital and disruptive banking future.
At this moment, the financial world offers a multitude of opportunities which are really stimulating. At The CEU IAM Business School we have designed an Executive Master's Degree in Finance which is structured in such a way that provides students with a complete view of the financial world from a business, banking and financial perspective. Thanks to this training they can become the new CFOs of their firms, observe closely the most impressive operations of the financial sector or participate in a company merger, an IPO or a risk capital acquisition.