The first step from which the client's interaction with your product begins and which is worth optimizing is onboarding. Let's explore how the introduction of AI can optimize the customer journey, from the initial sign-on to the first use of a fintech product.
AI adoption is a burning trend in the fintech industry that has already brought a whole wave of changes. Cost reduction, improved customer experience, and streamlined business processes are precisely what AI technology can help with.
However, the first step from which the client's interaction with your product begins and which is worth optimizing is onboarding. A survey prepared by Deloitte highlights that 38 % of customers drop out of the onboarding process, usually due to frustration with the time-consuming process and massive volume of paperwork involved. Let's explore how the introduction of AI can optimize the customer journey, from the initial sign-on to the first use of a fintech product.
The Main Challenges of Customer Onboarding in Fintech
The onboarding process demands multiple steps, including gathering detailed financial and personal data of the client, verifying against various sources across international and government agencies, creating/maintaining accounts, and post-onboarding with continuous monitoring for compliance. Although most fintech product owners want this process to be as quick, smooth, and clear as possible, the challenges of creating a flawless onboarding flow are significant.
Regulatory compliance - Fintech must adopt the appropriate controls to meet ever-changing regulatory requests and guarantee your spotless reputation.
Manual processing - Customer onboarding usually involves a lot of time-consuming manual processes, increasing the chance of error. Manual steps also come with operational and compliance risks.
Lack of personal touch - Without the personal touch of communicating with a real person, digital onboarding comes with the risk of seeming detached.
Data collection issues - Onboarding usually involves collecting tons of customer data, and it’s necessary to keep a fragile balance between requiring too much data and not collecting enough to stay compliant.
Security - Besides high-end encryption and compliance with KYC and AML, more steps to manage security through onboarding are essential.
Let’s take a detailed look at how artificial intelligence adoption can help to overcome these challenges and create a seamless customer onboarding process in fintech.
Process Automation With AI Chatbot Integration
Implementing AI chatbots in the customer onboarding process is one of the most promising financial technology trends with a range of advantages, such as automation, delivering a better experience for new clients, and increased time-to-revenue for the business. Based on engineering and data science ideas, AI technologies can simulate human behavior, work for face/image recognition and KYC procedures, and guide your customers with instructions to improve their onboarding experience.
AI chatbots help to:
Increase convenience: the onboarding cycle isn’t limited by the opening times of the contact place or when human operators are accessible to help.
Add personalization: the onboarding flow can be more flexible by offering the customer the opportunity to start or stop whenever they want.
Make onboarding more intelligent: AI chatbots can robotize routine assignments and work processes, lowering costs and saving time.
You can try to integrate a ready-made AI chatbot and adapt it to your business processes, but the best option is to create a custom chatbot that considers your business needs by design.
Data Extraction from Documents With OCR
Customer onboarding in fintech is deeply connected with compliance, and here is exactly where OCR (Optical Character Recognition) can help. All documents, including text, can be read, and data is collected automatically using OCR powered by deep learning. How does it work?
OCR, with deep learning, scans the ID image and automatically takes a picture of the ID, as well as extracts the necessary data. It can be named, date of birth, gender, photo, signature, etc. The data is then automatically added to the database without requiring the time of a human manager.
There are commercial and open-source OCR solutions. Commercial ones are usually provided as a service and are limited in customization. Open-source OCR can be integrated into your product and adapted to your business needs.
Real-time Compliance Check With Biometrics
Another way AI can help to take customer onboarding in fintech to a new level is biometric authentication. Though fingerprint and facial features are unique, they can be used as the most accurate identity verification technique, preventing ID theft and finally giving businesses confidence in providing services to their clients.
AI algorithms implemented during fintech software development execute a real-time facial check using the device’s camera to confirm that the person registering is present and the same as the one represented in the provided documents.
Biometrics is a very popular solution in financial services. For example, Citi uses voice authentication, and Bank of America has fingerprint authentication and iris-scanning in its solutions. However, when developing biometric software, it’s worth remembering that attackers can use AI tricks against you and try to falsify biometric data. Liveness detection and anti-spoofing techniques will help reduce these risks.
Other AI-Based Solutions for Digital Customer Onboarding
Artificial intelligence is also effectively used in customer risk assessment to offer new standards of increased risk detection, better decision-making, and reduced labor costs. For fintech, more data can be examined faster and in more detail without involving additional sources.
Moreover, AI can not only help to enhance customer experience but also reduce customer dropouts, helping better understand customers’ needs and preferences. With such high-performance technology, businesses can better determine additional products and services that may satisfy customers using the data they transferred during the onboarding process.
The Bottom Line
The onboarding process in fintech can be challenging as there are many requirements to comply with. While customers expect the highest level of satisfaction during onboarding, compliance standards from governmental agencies are changing, and criminals have started using more sophisticated tactics to get around traditional onboarding checks, which means that the adoption of AI can become a real lifesaver.
Implemented correctly with the help of experienced engineers, AI technology can significantly improve your business processes and become your competitive edge.