Grace Ashiru
In the era of evolving mobility, the pursuit of a competitive onboarding process is undergoing a significant shift. 3 out of 4 millennials are ready to switch banks for a better mobile onboarding experience, and Gen Xers are increasingly leaning towards digital methods for opening bank accounts. The game has changed, and South African financial institutions and corporates need to embrace this new outlook.
Today’s users want the flexibility to open a bank account whenever and wherever they please. Yet, there lies a challenge – most banks need to up their game in technical flexibility to meet this demand. And it’s not just banks; large corporates, retailers, and payment providers are also in the mix. The key to a smooth customer experience for South African consumers? Effective digital onboarding technology. South Africa has positioned itself as a thriving tech hub, boasting a landscape that hosts over 600 startups at its forefront.
Within this dynamic environment, certain companies have dedicated their efforts to streamline digital onboarding, aiming to make it a hassle-free process for any local business. Furthermore, there is an urgent need for collaboration among these startups to collectively combat fraud, propelling the nation towards achieving comprehensive financial inclusion.
Unravelling the layers, it’s not just about streamlining processes; it’s about understanding the dynamics and joining forces to create a robust, inclusive financial landscape in South Africa.
Customer onboarding dilemma
With a population exceeding 1.4 billion, establishing a robust identity infrastructure is crucial for Africa’s digital economy. However, in 2020, 500 million Africans still lacked access to a legal identity document, highlighting the critical need for identity verification tools to bridge this gap. The potential of Africa’s digital economy is significant, projected to reach $180 billion by 2025. Secured digital identities are pivotal for this growth, underscoring the importance of addressing the existing gap to unlock the continent’s economic potential. In the age of digital transformation, the efficiency of digital onboarding processes is non-negotiable.
Unfortunately, many financial institutions, large retailers, and corporates are grappling with the challenge of streamlining these processes.
A complicated onboarding process can drive away 74% of customers, and for South African businesses, cumbersome document collection procedures act as a stumbling block, turning away potential customers and leading to missed business opportunities.
Frustration with document submission procedures causes 70% of potential clients to abandon the onboarding process midway. This not only impacts customer acquisition but also tarnishes the reputation for some financial institutions, eroding trust and credibility.
It doesn’t end there though, the customer onboarding dilemma in South Africa extends to companies attempting to emulate a traditional onboarding process onto a digital platform. Going digital doesn’t mean replicating complex paper-based forms in a web or mobile interface.
Instead, it involves applying a customer-centric design approach rooted in empathy and an understanding of consumer behaviour. This proven approach is streamlined, brief, and user-friendly, validated through multiple prototypes and tests.
KYC trailblazers
Addressing the inefficienciesIn 2022, financial services took centre stage in Africa, representing 67% of total ID verification checks. This prevalence stems from a legal requirement for financial institutions to perform KYC procedures for identity verification and risk assessment. Despite the widespread necessity for ID checks across numerous financial institutions, a significant challenge arises from inefficient verification and onboarding processes within these establishments. This challenge is often intensified by outdated infrastructure. in digital onboarding is where KYC solution providers emerge as the unsung heroes. These startups are not merely adapting to change; they are actively combating the challenges head-on.
Customers also include businesses, which need verification during the onboarding process. For instance, if a small business is seeking a loan, solutions like Gathr are designed to help with CIPC and business affordability checks.
These KYC solution providers provide a crucial safeguard for financial institutions and corporations. It’s more than just being efficient; it ensures legitimacy and acts as a strong deterrent against the increasing wave of fraudulent activities.
Fintech is revolutionising onboarding, turning it from a complicated process into a smooth, secure, and efficient experience. The incorporation of AI further boosts the precision and speed of identity verification, ensuring that the onboarding process is not only streamlined but also robust in maintaining security standards
Combating fraud & driving financial access
Hand in hand with a seamless onboarding journey and requiring equal attention — is the ever-growing need for businesses to combat fraud. Sub-Saharan Africa witnessed a staggering 50% increase in fraudulent transactions in 2023, contributing to an annual loss of approximately $1.59 billion to telecom fraud across the continent. In South Africa, where fraud challenges persist, collaboration becomes the linchpin for effective solutions.
Specialised tech companies, ranging from those focused on biometrics to AI, cybersecurity, and KYC, must come together to pool their technologies for an effective defence against fraud.
In South Africa, notable solution providers such as Gathr, The Good People Data Company, Direct Transact, JUMO, and Entersekt offer vital support for businesses navigating the challenges of customer onboarding and fraud prevention.
Gathr, in particular, stands out by not only addressing fraud but anticipating and countering it with sophistication. One standout feature is the incorporation of advanced bank statement fraud checks for PDF uploads, introducing an additional layer of security for companies in the onboarding process.
The collaborative approach extends further by partnering with institutions like Nedbank and MTN, elevating the level of security and safeguarding against a spectrum of fraudulent practices.
Fintech companies geared toward collaboration are the architects of change, reshaping the landscape and driving financial access with heightened security, efficiency, and inclusivity.
