How seamless customer onboarding is reshaping the growth of fintech
How seamless customer onboarding is reshaping the growth of fintech
According to McKinsey, Nigeria now has over 200 fintech companies operating independently. And, as smartphone penetration increases, many of these services are available via apps. Many of these apps invest heavily in marketing in order to increase user growth. Abeg app and Patricia have recently been announced as sponsors of Big Brother Nigeria.
Apart from marketing spend, there is another straightforward way for fintech startups to ensure that people want to use their products: onboarding. Onboarding is the process by which a new user is introduced to your app or product.
Onboarding is critical for a variety of reasons; it can result in customer drop-offs if the process is too difficult or complicated, or it can be so enjoyable that customers spread the word about your app.
On Friday, May 21, VerifyMe Nigeria and TechCabal hosted an event titled "Digital Identity Matters" to discuss the importance of onboarding and the nuances that surround it. Babs Ogundeyi, CEO of Kuda Bank, Dayo Ademola, managing director of Branch Nigeria, and Esigie Aguele, co-founder and CEO, attended the event.
One of the most critical aspects of customer onboarding is the Know Your Customer (KYC) requirement.
How does the Kuda bank's onboarding process work?
According to Babs Ogundeyi, Kuda has varying levels of onboarding because not everyone in Nigeria possesses the same type of identification, and some people lack identification altogether. In June 2020, Aliyu Aziz, Director-General of the NIMC, stated that only 38% of Nigerians possess any form of identification.
“Our thinking is that we need to do enough to capture and onboard everyone. As a result, we have three customer tiers, which corresponds to the Central Bank's guidelines for microfinance banks.”
For Kuda, the bare minimum requirement for KYC is that the bank knows your appearance; thus, while it requires users to take a selfie as part of the onboarding process, it uses technology to verify that the person taking the selfie is the account owner.
Additionally, it utilizes the Bank Verification Number (BVN) to compare account holders' photographs to what is stored in the system. These verification levels are critical in preventing forgeries, fraud, and attempts to circumvent processes.
In a nutshell, the more documents you require for verification, the more effective your onboarding process will be. Additionally, it helps to think of them as an endless process, as bad actors never stop attempting, and fintech startups must stay one step ahead of them.
What would make customers' lives easier?
While BVN has revolutionized the process of verifying customer information, there is still some work to be done. According to Dayo Ademola, a critical component of onboarding should be verifying customers' addresses.
“Typically, you would request a utility bill, but at the most advanced level of KYC, someone must physically verify the customer's address. What we are attempting is to demonstrate that if we claim to be a bank in your pocket, we must find workarounds to accomplish this.”
One workaround is to compare a customer's BVN address to the address listed with a commercial bank. This is because commercial banks frequently verify their customers' addresses physically.
It already sounds inconvenient in an industry where customers expect instant gratification. “It's critical to be able to onboard customers quickly; how quickly can they download your app, verify their information, and become an actual user, rather than having gaps where the app needs to verify.
“The primary requirement for new users is speed. Another pattern we observe is that customers begin to leave when you begin to request a great deal of information; we observe a high rate of drop-offs.”
“Also, if you require costumes to wait 24-48 hours before being verified, this creates an issue.”
Finally, bank customers will continue to face lengthy wait times while a bank conducts background verification checks. Nigeria remains a low-trust environment, and despite rapid changes to our financial ecosystem, banks and their customers agree on the critical nature of the KYC process in preventing fraud and cybercriminal activity.
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