Digital Onboarding: Definition, Benefits & How It Works
Digital onboarding is the method of establishing a customer within a digital system.
In general, onboarding refers to incorporating someone into a structure. It is often used for new employees, but it also is the process of subscribing and acquiring new customers and users. In all cases, digital onboarding means faster and more secure onboarding, which can help to retain customers or employees.
Other forms of onboarding involve in-person options that can be less convenient than digital onboarding, which is done entirely remotely and online.
Digital onboarding can securely verify a user’s identity and save time and money. It can also help retain clients and improve the overall customer experience.
What is digital onboarding?
Digital onboarding is the method organisations and companies use to bring in and set up new customers. This is the official start of a consensual direct relationship between a client and an organisation.
It needs to be fast, easy, and seamless, or customers will abort the process or decide to go elsewhere. The goal of digital onboarding is to streamline the signup process and integrate customers into the company’s database.
Onboarding is a method of registering with a company to gain access to their products or services. Before the rise of the digital era, onboarding was mostly done in person or through the mail. With the pandemic, even more people are moving to digital platforms.
Digital onboarding gathers a client’s information, including personal identification (often a form of government-issued ID) and biometric information, such as a photo capture, face scan, or fingerprint.
Detailing the onboarding process
Digital onboarding begins the important relationship between a client and a business. As such, it needs to be efficient, secure, and easy to navigate. A clunky system or setup can lead to the loss of a lead or a customer choosing not to continue this relationship.
Digital onboarding is done through an automated process on a digital device. This can be done from virtually anywhere and on most devices with smart capabilities.
The steps are generally as follows:
- Customer data is captured and inputted. This often requires a photo of a government-issued ID, such as a driver’s license. Digital onboarding makes it easy for customers to upload and input data from their own device.
- Identity verification is performed. This can include the use of biometrics, such as a fingerprint, face recognition, or picture.
- Account is approved, and access is granted. This can happen within minutes in most cases.
- The customer can repeatedly access products and services. Once the customer’s identity is authenticated, a copy of the digital ID can be stored on the customer’s digital device, eliminating the need for a paper trail or the potential for a breach. After digital onboarding is completed initially, every time they return to the site or application to access the services or products, they can be verified quickly and easily.
In the early days of digital onboarding, a customer would only need to have a valid email and a PayPal or credit card account. Cybercrime and identity theft are rampant, however, with nearly 5 million identity theft and fraud reports made to the Federal Trade Commission (FTC) in 2020. Additional identity verification tools, such as the use of biometrics, scanning of certified IDs, and multi-factor authentication (MFA), have made this process much more secure.
Types of onboarding
There are three main forms of onboarding.
- On-site onboarding: This is the traditional form of customer onboarding that involves the client visiting the company or organisation in person to provide the necessary documentation and identification.
- Semi-on-site onboarding: This is a combo approach where the company will provide electronic or digital documents to be completed at home, but the client will still need to visit the company in person to submit them.
- Digital onboarding: Also called online or remote onboarding, this can be done entirely from a customer’s home or office with no need to go to a company in person. The entire process is digitised.
How digital onboarding differs
Digital onboarding uses an online company platform that can be either in-house or outsourced. Identification and verification can be done completely remotely and online.
Digital identity verification is secure and uses multiple forms of technology, all while following specific regulations and compliance mandates.
Cybersecurity tools for digital onboarding often involve the use of AI (artificial intelligence) methods, which can offer a guaranteed high level of security. Digital onboarding for multiple regulated industries, such as the financial industry, requires that companies follow specific guidelines to remain compliant, ensuring a high level of safety.
Onboarding is related to the know your customer (KYC) guidelines that are used in the financial sector, along with other industries, as a customer identification tool that can be used in the digital onboarding process.
Why switch to digital onboarding?
Digital onboarding is becoming an industry standard. It can enhance the customer’s experience while increasing the reach of a company and improving the bottom line. Once a new customer is onboarded, they can then begin accessing the company’s services and products, which is the ultimate goal.
These are some of the main benefits of digital onboarding:
- Speed: The digital onboarding process can often be completed in a matter of minutes — much faster than conventional onboarding methods that could take up to three weeks.
- Client-centred approach: Customers’ needs are understood, allowing for enhanced interaction between clients and companies.
- Larger reach: This digital onboarding process can allow businesses to reach customers in all corners of the globe, not just ones that are local.
- Saves time and money: Digital onboarding is much more efficient than manual methods, which can decrease the amount of time employees spend working on it. It can be much more cost-effective.
- Fewer errors: Digitising the onboarding process can result in less chance for human error inputting the documents or information manually.
- User-friendly: Digital onboarding is simple and easy to use.
- Customer retention: Customers who are happy with the ease of the process are more likely to remain loyal and continue to access a company’s services and products.
- Security: Digital onboarding is secure and keeps up with industry regulations, guaranteeing a high standard.
Making the switch from conventional methods of onboarding customers to digital onboarding can drive revenue, better support and draw in customers, save companies money and time spent doing manual data entry, and keep up with industry standards and regulations while promising security and product delivery.
Digital onboarding is even more important in a pandemic world where social distancing is encouraged. As a result, more people are turning to complete digital interactions over in-person encounters.
Additional resources
The National Institute of Standards and Technology (NIST) publishes guidelines regarding digital identity and digital identity services. This defines some of the technical aspects involving identity verification in a digital form.
The Financial Stability Institute (NSI) provides details on digital banking regulations and policies involving fintech platforms. Similarly, the Federal Financial Institutions Examination Council (FFIEC) publishes guidelines for electronic financial services and compliance for consumers.
References
Consumer Sentinel Network Data Book 2020. (February 2020). Federal Trade Commission (FTC).
Know Your Customer Guidance. (2020). Bureau of Industry and Security (BIS).
Digital Identity Guidelines. (June 2017). National Institute of Standards and Technology (NIST).
Regulating Fintech Financing: Digital Banks and Fintech Platforms. (August 2020). Financial Stability Institute (FSI).
Federal Financial Institutions Examination Council Guidance on Electronic Financial Services and Consumer Compliance. Federal Financial Institutions Examination Council (FFIEC).