Unlike other consumer-facing industries, the financial services sector has been comparatively slow to embrace the digital-by-default model.

Even before the pandemic hit, sectors like retail, gaming or e-healthcare moved quickly to embrace the speed, convenience and experience of digital services – led by technology pioneers like Amazon or Google.

Traditionally, conventional banks and financial institutions have encouraged customers to visit in-branch, despite the availability of online tools and support via apps or chatbots.

This approach came from a perception that fraud was harder to detect in the virtual world, since many lacked the means to digitally authenticate a person’s identity securely. In addition, they had a natural desire to leverage their large investments in physical presences to generate strong customer trust and loyalty through in-person interactions.

But in the last couple of years, the pandemic has served as a digital catalyst, both for banks and customer demand. Financial services could no longer afford to hesitate on the digital landscape – anyone who delays will find themselves falling further behind in a rapidly transitioning world. In fact, a McKinsey study showed that the lockdown accelerated digitalisation by seven years while another by S&P Global found that 60% of customers don’t visit physical branches as much as they used to.

As banks consider how to build trust and interact with customers in the digital world, it’s imperative that they look towards leaders in creating digital experiences, like Amazon, as an example of best practice to follow.

Putting customers first

One of Amazon’s defining attributes is its customer obsession. It focuses intensely on every aspect of its customer experience and streamlines it relentlessly with continuous experiments and A/B tests.  Without a salesperson there to usher a transaction along, the digital experience must be seamless so the customer can do it all themselves. It’s a lesson that Amazon learned two decades ago, yet one the traditional financial services industry is only just now addressing.

Ten years ago, no one would have dreamed of doing something like shopping for a mattress online. Even the idea of buying a pair of sunglasses online without first making sure they look good on your face sounded risky. But Amazon helped push the markets in a new direction. Rather than driving to the furniture store, testing out a dozen or so mattresses, then having their chosen mattress delivered a few days later, customers got used to Amazon’s four-click process: add item to cart, checkout, confirm shipping, buy.

In contrast, the financial services industry forces customers to jump through dozens of hoops in their attempt to access simple banking tools. To set up a bank account online, would-be customers need to answer an endless series of questions that attempt to verify their identity. Finanteq found that some large banks require over 120 clicks to open a bank account. When you compare that to the Amazon experience… How many people would buy anything if it took 120 clicks?

A recent consumer survey we carried out reinforced the importance of seamless customer experience. It found that 60% of consumers reported abandoning an online registration due to the process being too long, the process being too confusing, or having concerns about the security of their data. Banks that allow a poor digital experience aren’t likely to win many fans.

A streamlined, frictionless customer experience is critical—and importantly, it’s possible for everyone that makes it a priority.

Approaching a frictionless journey

Banks are now seeking to emulate the Amazon experience, and in doing so – focusing intensely on their customers – many have found that a modern onboarding process can be the gateway to trust, security, and an enhanced user experience. Rather than forcing customers to submit to dozens of questions and jump through various hoops in an attempt to satisfy anti-money-laundering (AML) and know your customer (KYC) requirements, banks can streamline their identity verification processes in a way that’s both secure and efficient.

How? Many are choosing to embrace a new model grounded in digital identities. Powered by the latest technologies, such as AI and biometrics, digital identities meet the strictest KYC regulations and at the same time reduce onboarding times and create a smoother process for customers. This is the customer-obsessed journey that will allow financial services to follow in the footsteps of Amazon.

But these tools are not just for the first movers, they are ready to be embraced and deployed industry wide. Banks who do this will participate in the digital identity revolution, simultaneously improving their customers’ experience and increasing the security of their onboarding process. But this is not possible if banks do not understand how many steps their onboarding process currently requires, and where along the journey they lose customers. This knowledge of who their customers are, how they are onboarded, and where friction lies is how digitally savvy competitors are winning the war.

In addition, the financial services industry must be prepared to completely reimagine the digital experience and put the wants and needs of customers at the heart of digital roadmaps. By using modern technologies, banks and other institutions can track onboarding flows and understand exactly where and how the customer acquisition journey is being delayed, and relentlessly experiment with A/B tests that improve the experience and remove obstacles at every step. This is how Amazon would do it.

In today’s post-pandemic world, digital is the default and customers prioritise ease and convenience. To truly win customer loyalty and trust, financial services must focus on creating frictionless digital experiences that provide users with the freedom, control, and security to access their finances in a way that suits them best.