First impressions are important for any business, but especially so for the banking and finance sector: according to CustomerThink, customer churn rates historically hover around 20-25% annually, while these customer relationships often require one to two years to become profitable. This is why onboarding new customers is one of the most critical parts of these customer relationships.
At the same time, onboarding is a particular challenge in this industry segment. Thanks to regulations such as anti-money-laundering laws and Know Your Customer (KYC) guidelines, new banking and financial customers can face a lengthy verification process – which, in turn, raises the risk of abandonment or brand damage during the signup process.
At the same time, data quality remains a stumbling block in this process: according to a recent O’Reilly survey including many respondents in this industry, nearly half of them feel they have too few resources to address data quality, and 70% lack a dedicated data quality team.
Perhaps most importantly, the overall onboarding experience serves as an important competitive differentiator between financial institutions. Let’s look at how technology can help meet these requirements, retain more customers, and provide a better experience.
Three goals for onboarding new customers
Challenges for bringing new customers aboard in the banking and finance industry involve three key areas that are specific to this industry. Here is how each of these break down:
Regulatory compliance
Financial institutions have unique onboarding issues, in the sense that they must know who their customer really is, as well as show that they are not discriminating (“redlining”) against particular neighborhoods or market segments.
Key tools for meeting these requirements include address verification, geocoding and demographic tools. Address verification ensures that an address is correct and up-to-date with current postal records in an automated and frictionless process. Geocoding translates this address to latitude and longitude mapping coordinates, allowing businesses to verify neighborhoods and geographic areas for compliance purposes, while demographics tools return valuable information about an area such as average socioeconomic and household data.
Fraud prevention
Regulators aren’t the only people who need to know who your customer really is – YOU do too. Losses due to fraud topped $2 billion in the banking industry in 2016 according to the American Bankers Association, with causes ranging from credit card and check fraud to bogus accounts opened with stolen information. Here as well, address validation and contact data quality serve as an important safeguards for stopping fraud before it happens.
Customer experience
While the phrase “Know Your Customer” has a very specific meaning in banking and finance, tied in with identity verification, it is also a critical competitive issue to truly know your customer in terms of their needs, wants and preferences. This allows you to customize the onboarding experience to build a stronger customer relationship from the start, as new clients form their brand impressions of your business.
As the Financial Brand newsletter notes, managing customer experience starts with “putting on your customer hat” as you examine your onboarding process. It starts with making the signup process as automated and frictionless as possible and is enhanced when you can personalize your message and add value for these customers by understanding and proactively filling their needs. In addition, ensuring you have the correct contact information for your customers will make certain they receive important mailings such as bank statements – a key factor in maintaining customer satisfaction.
Customer experience is enhanced by customer knowledge, so this is one area where geocoding and demographics can add critical knowledge to your inbound contact data, including socioeconomic and ethnic data, census information, education statistics, and much more.
We’ve got you covered
For banking and financial clients, Service Objects provides a premier set of tools for all phases of the onboarding process, including:
DOTS Address Validation – US: Our flagship CASS-certified address validation product works with continually updated USPS address data to instantly verify, correct, and append address information to your contact records.
DOTS Address Insight – US: This bundled product provides address standardization, address geocoding, and regional demographics in a single call for compliance, customer visibility and market targeting needs.
DOTS Address Geocode: This is a real-time address geocoding API that translates US addresses into latitude and longitude coordinates, with property-level match rate accuracy up to 99.8%.
DOTS Demographics Plus: This product provides detailed location-specific demographic data for a targeted area, down to the block level. It combines US Census Bureau and USPS data with our proprietary algorithms to provide the most accurate location-specific demographics information in the industry.
Our suite of real-time API tools, combine with industry-leading 24/7 available technical support and 99.99% guaranteed uptime, are a big part of the reason we serve many of the leading firms in the financial industry. Feel free to contact our team of data quality specialists to discuss how Service Objects can help your business improve your onboarding process.
