There's a paradox at the heart of customer acquisition in banking and lending. A great deal is invested in getting a person to say "yes". Yes to marketing, campaigns, channels or sales teams. And then that person is lost at exactly the moment they've already said yes.

Onboarding, the process between a customer's decision and the moment they actually become a customer, is the point where the most customers are lost. Not because they're rejected, but because they give up before there's a decision.

It's an invisible problem, because it doesn't show up in rejection statistics. It shows up, if someone goes looking, in the abandonment rate midway through the process. And few organisations measure it.

The customer who already said yes and gets lost waiting

Picture the typical journey. A person decides to apply for a loan, they filled in the form, submitted the documents, they're ready to proceed. From their point of view, the decision is made, all that's left is for the institution to confirm.

Inside, a process then begins that they don't see and that, often, drags on:

• Documents are received and enter a manual validation queue;
• An analyst verifies identity, by inspection;
• Politically exposed persons and sanctions lists are checked manually;
• Information passes between departments;
• Risk analysis is done, often while waiting for data sitting in another system;
• In some cases, a committee approves.

Documents are received and enter a manual validation queue;
An analyst verifies identity, by inspection;
Politically exposed persons and sanctions lists are checked manually;
Information passes between departments;
Risk analysis is done, often while waiting for data sitting in another system;
In some cases, a committee approves.

Each step, on its own, seems reasonable. The problem is the sum. A process that crosses several departments and depends on several manual validations can take and during those days, the customer is waiting, with no idea what's happening.

With each day that passes, some give up, they found another offer, they changed their mind, they simply got tired and each one who gives up is revenue that was all but secured, now lost.

Why this cost stays hidden

The reason this problem persists is that it can't be seen where people usually look.

Institutions measure rejection rates carefully. They know how many applications they reject and why, but abandonment midway through the process, that customer who wasn't rejected, who simply gave up, guess what? Falls into a blind spot. It's not a rejection, it's not an approval, it is simply a non-decision, and non-decisions are rarely counted.

The result is that heavy investment goes into attracting customers and very little into not losing them at the most fragile moment of the relationship. The top of the funnel is optimised and the hole in the middle is ignored.

When an organisation finally measures the abandonment rate in onboarding, the number is usually uncomfortable.

The tension between compliance and experience

Part of onboarding's slowness isn't inefficiency, it's compliance. The requirements for identity verification, due diligence, KYC and AML are real and non-negotiable. An institution can't simply speed the process up by ignoring them.

This is where many organisations resign themselves: they assume that rigorous onboarding has to be slow onboarding. That their choice is between compliance and experience.

It's a false choice, the slowness of most onboarding processes doesn't come from rigour, it comes from the manual, fragmented way that rigour is carried out. Identity verification can be done in seconds, automatically, more reliably than visual validation, like sanctions-list checking can be automatic and integrated, and for that due diligence can be just as rigorous and much faster.

What makes onboarding slow isn't doing things well, It's doing them by hand.

What changes with an integrated process

An onboarding process designed not to lose the customer has different characteristics:
Data capture through digital channels, without unnecessary friction.
Automatic identity and document authenticity verification, with optical recognition.
Automatic, integrated checking against compliance lists in the moment.
A decision engine that automatically approves the clear-cut cases, which are the majority, and routes only those requiring it to human analysis.
Communication with the customer throughout the process, so they know where they stand.

The effect in the cases we've observed is of another order of magnitude. A process that took days can come down to hours. And abandonment falls in the same proportion, because the main cause of abandonment, the wait, ceases to exist.

There's a secondary effect that tends to surprise: the analysis team doesn't shrink. It stops validating documents and starts handling the cases that genuinely require human judgement. Machine work goes to the machine, people work goes to people.

The point

Onboarding is the most fragile moment in the relationship with a customer. It's when they've already decided but aren't yet sure, every hour of waiting is an opportunity to give up.

Most organisations treat onboarding as an internal verification process. Those that treat it as an extension of the customer experience like fast, transparent, without ceasing to be rigorous, don't lose customers they had already won.

The question isn't how many applications your organisation rejects, it's how many give up before there's a decision. And if no one knows the answer, it's probably because no one has measured it.

Ablewise develops AFS 360, whose Onboarding module integrates data capture, identity verification, KYC and AML in an automated process that reduces onboarding time and abandonment.

If you want to understand where you're losing customers in your process, talk to us.