UK banks drop the ball in digital onboarding of customers

Traditional banks in the U.K. are losing ground to challenger banks when it comes to digital banking services, according to the new report, UK Bank Accounts: A Survey of True Digital Capabilities in Customer On-boarding, by P.A.ID Strategies.

The report scored the digital bank account opening process of 10 banks and found that most still require consumers to go through manual steps, such as visiting the branch, rather than onboarding them via digital identity technology, a press release said.

The report reviewed Barclays, HSBC, Lloyds Banking Group and RBS (including NatWest) as well as challengers Atom Bank, Monzo, Revolut, Starling Bank and Virgin Money. 

Mobile-first bank Starling scored highest for its identity verification and account activation process, while HSBC scored the lowest. RBS was the only incumbent bank that allowed applicants to submit proof of identity electronically, though not via smartphone or tablet.

"We were surprised to see [that] so few traditional banks had made progress towards a 100 percent digital experience through the mobile channel," P.A.ID Principal and report author John Devlin said in the release. "Many failed to offer a fast, secure and digital account application and activation process, including verification of the applicant's identity. This means the banks aren't truly digital, degrading the user experience at first point of contact and increasing the chance of abandonment." 

Additional findings in the report:

  • Challenger banks scored 9.2 out of 15 on average; traditional banks scored only 7 out of 15. 
  • Two challenger banks, Monzo and Starling, scored highest thanks to 100 percent mobile-first digital account applications that took less than 10 minutes to complete.
  • Challenger bank Virgin Money requires customers to visit the branch to open an account, diminishing its role as a digital disruptor.
  • Barclays and HSBC did not require a formal ID with applications, but did require an Equifax credit history or details from an existing account.

The report measures account opening time to determine how quickly a new applicant could begin transacting once signed up. Delays due to the need to mail documents, cards and PINs caused banks such as Barclays to score lower than competitors. 

The report found that the majority of banks fail to use digital technologies such as biometrics that can enable KYC- and AML-compliant mobile onboarding. 

"Any customer will prefer taking a selfie and snapping a photo of an ID credential using their mobile, over a manual process that means taking documentation to a branch," Devlin said. "The banks who are succeeding are offering identity capture and biometrics that allow customers to verify their identity remotely. Banks that don't adapt now risk new customers abandoning the application process altogether in favor of a challenger bank using this technology."

Download the report.

Topics: Bank / Credit Union, Omnichannel Banking, Trends / Statistics

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