Why Customers Abandon Online Bank Applications (and How to Prevent It

Recent research on bank activity shows that over three applications are typically dropped in the middle of the process for every completed digital account, and this ratio has hardly improved year over year. 

Onboarding is key to revenue, retention, and trust, yet it is one of the most common reasons for churn. Bank account opening abandonment occurs when potential clients start the registration or identification process but don’t finish it. In the digital age of communication, this is a pivotal moment for the development of your business.

The reason that most customers abandon the process is not that they had second thoughts.  Rather, they faced lengthy forms, confusing instructions, technical issues, or verification delays. The rise in preference for digitally opening an account instead of going to a branch makes simplicity all the more essential.

Why is Customer Retention Important? 

When it comes to choosing an online banking facility, customers now have many more choices. Customers have very high expectations for the quality of the experience, and banks risk losing business if they fall short.

A smoother digital account opening process, better guidance, and faster support can help customers complete their applications with confidence. Customers who have left not only mean lost money but also increased costs to acquire new customers. 

The Hidden Cost of Dropping Off During Onboarding

When a user abandons the onboarding process, what you are losing is not just one sign-up but the overall value generated by their entire relationship with your brand. 

About 68% of people give up on digital banking apps during onboarding due to their length and complexity. The average abandonment rate for the onboarding process is somewhere between 60%-80% based on the amount of verification required.

Let’s figure out why customers are abandoning the bank application and how to prevent it.  

Why Customers Abandon Online Application Forms

1. Long and complicated registration process

You can be sure that lengthy forms and days of manual approval are something your customers dislike. On top of that, a complicated registration process results in more people dropping off before completion. What’s more, in most cases, your customers do not even know how the process works. They are confused and thus make mistakes.

2. Delayed eKYC verification and bad user experience

The delays in verification may lead to frustration among your customers. As such, any delay can lead to the loss of customers who can switch to competitors who offer faster verification. Just think about how many customers you might be losing daily; for instance, 20-30 customers daily.

A study shows that 70% of users abandon KYC flows that take more than 3 minutes. 

3. Issues with Trust: What Makes Customers Afraid Midway Through 

Financial transactions are an intimate matter. The financial institution where one’s money lies needs to be trusted. When a website is dated, buggy, and confusing, people become wary. They begin thinking, “Am I safe here?” And because of that, many customers leave the site and close the page.

A study says that 37% of consumers are simply not comfortable opening accounts online due to fear of fraud. 

Here are some factors that drive customers away while opening an account digitally:

• Legal language no one can comprehend
• No justification as to why personal information is required
• Absence of security or privacy symbols or statements
• Pages that take time to load and thus look unsafe
• No way to contact a customer care executive

4. When There is No Human Touch: Customers Feel Alone

Completing forms on their own might be a lonely process, especially since the customers might not get immediate answers to their questions. In such a case, the customers will simply give up. 

How to Retain Customers in Banks

So, we have acknowledged the problems. Now, how do we fix them? Let’s take a look at some high-level approaches.

1. Personalized and Tailored Experience 

Personalized experiences generate value for customers. Begin to recommend relevant products, services, and financial advice. Personalization may result in greater satisfaction of the client, engagement, and, finally, loyalty. Apply a customer data platform (CDP), marketing automation systems, and artificial intelligence (AI) systems.

Your objective is to achieve hyper-personalization on a massive scale. It entails personalizing experiences for millions of customers individually.

2. Customer Experience & Service Excellence

Customer experience refers to the customer’s perception of all encounters they have with your bank. Positive experiences create loyalty. Negative experiences lead to attrition.

You should monitor experiences systematically. 

• NPS (Net Promoter Score) measures customers’ likelihood of recommending you. 
• CSAT (Customer Satisfaction Score) gauges customer satisfaction with the encounters. 
• CES (Customer Effort Score) shows how much effort the customer puts into getting the job done.

First-contact resolution is crucially important. Customers want problems resolved during the first phone call. Any transfers, callbacks, or explanations diminish customers’ trust.

Digital onboarding determines the nature of future relationships. The smooth process of opening an account indicates professionalism. Difficulties in onboarding indicate problems in the future.

Omnichannel servicing enables customers to switch between channels while completing the same task without restarting it. Customers start on the mobile channel, continue on the web channel, and complete the process in the branch channel. Context travels with the customers.

Self-service reduces friction in simple transactions. Customers want to manage their finances, transfer funds, and resolve disputes quickly.

3. Enhanced Security and Fraud Protection

By using the AI-based verification system, biometrics, and digital ID cards, you protect your system against the possibility of fraudulent activities. Thus, even if there is any unauthorized access, you can always report it and prevent it.

4. Seamless Digital Onboarding Process

The eKYC solution ensures an easy mobile-first experience for your customers. They can onboard themselves in just a few clicks. And that is the level of convenience you must give to your customers; that is what they want from you.

What Are Ways that AI Enhances Customer Retention in Banking?

Models using machine learning algorithms analyze huge amounts of data and discover patterns. They recognize when clients will churn. They recognize what type of offer would be relevant for customers. They optimize timing and channels. 

According to BCG, optimized cross-sell and retention prompts help increase revenue by more than 8% annually.

Using NLP to understand client intent, banks can provide conversational services and give customers an answer in a matter of seconds.

Some AI techniques for enhancing customer retention in the financial industry need to have unified data sources. Fragmentation of data leads to fragmentation of insights. Your AI capabilities are limited by data quality.

The Final Verdict 

Opening a bank account online should be an easy process. It should be fast, friendly, and frustration-free.

Right now, banks are losing billions of dollars because their digital applications are broken. They are attracting people with big promises and then letting them down with confusing forms and scary security checks.

But banks can fix them easily. Banks can prevent bank account opening abandonment by shortening forms, adding progress bars, and using approachable language.

Ready to stop losing customers at the finish line?

Coconut Software helps banks and credit unions fix broken onboarding with one connected platform. No more confusing forms. No more lost customers. See how easy digital account opening can be. Try Coconut Software today.