Online security and user experience: finding the balance
Cybercriminals aren’t going to give up. Recent hacks and data breaches have shown that cybercriminals are tenacious, smart and well resourced. It’s the bane of the banking industry, with millions of dollars going to sidestepping their efforts.
Whether its transaction fraud or money laundering, the spoils for criminals are big. The Payment Forum estimated that card not present (CNP) fraud in the US alone would increase from $3.1 billion to $6.4 billion in 2018. Meanwhile, global money laundering transaction is estimated to amount to $1 to $2 trillion annually.
It’s, therefore, no surprise that financial institutions need to implement effective know your customer (KYC) procedures when opening new client accounts. The challenge, of course, is to make the process as painless as possible, while ensuring the right information and documents are gathered.
The online gambling industry is a good example of where balance is needed. Numerous online casino UK websites like Guts, experience tech challenges in offering faster KYC procedures to their customers. Online casinos spend a fortune on advertising, and they know they may only keep a potential customer’s attention for a few moments. Gambling is a form of entertainment, and it competes with other forms of entertainment. If a signup process starts to feel like work, a potential customer will find something more entertaining to fill their time with.
Financial institutions can learn a lot from such highly competitive industries. Companies operating in these industries are often fighting for a potential customer’s attention. An onboarding process that’s too tedious will often result in a potentially valuable customer finding something else to spend their time, and money, on.
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Most online casinos have a very basic initial registration, followed by the full KYC registration which allows customers to actually play. This breaks the process into two more manageable parts. Until a customer has signed up and begun to successfully use a company’s products, the sales process is still running. A sale isn’t made when a customer begins to sign up, but when they begin to use the product.
Online retailers, especially the smaller ones like Etsy and others, face similar challenges. In fact, in some ways, they face an even bigger challenge. A customer will often only sign up when they decide to buy a product. And if the process is too difficult they might lose interest. One of the ways they have reduced their churn rate is by breaking the process into two parts. The customer provides some information before they select a product, and then provide the rest of the information when they checkout.
An essential feature of the signup process is an indication of how long the process is and how far along the process the customer is. Nobody likes to fill in page after page, without knowing how long it’s going to go on for.
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Another essential feature is to allow customers to skip certain sections and come back to them later. The last thing you want is to lose a new customer because they didn’t have certain information available at the time.
Finally, only information that is really needed should be gathered. Every extra item of information is an opportunity to lose a customer. If you don’t need their telephone number, then don’t ask for it. The objective of KYC procedures is to know everything you need to know about a customer – but nothing more.
Banks are facing fierce competition from a host of fintech start-ups. Many of these companies put the customer experience at the center of their business. They sell an experience rather than a product or service. Banks must adapt to this way of thinking if they are to compete. The very first part of the customer experience is the onboarding process and the KYC procedure – so it’s worth making it count.
By Rachel Hart, freelance writer
