The Changing World of User Experience in FinTech [2022]

User experience in banking and FinTech is undergoing a revolution, which has only been accelerated by the onset of the recent pandemic. 

The days of having to go into a bank branch in order to withdraw or transfer money are long gone, with customers all over the world being able to perform such transactions at the click of a button. 

But that doesn’t mean that all online banking operations are as smooth as they could be, and there is still a lot to be done in order to improve user experience in this field. So what changes are already taking place and what can we predict about the future of this sector? 
At 10Clouds, we have experience of a number of FinTech products, and a long-standing relationship with Trust Stamp, one of the global leaders in biometric recognition technology. We’ve recently been looking into solutions that are likely to shape the future of this industry.

KYC and AML…Why Do They Matter

As we know, Anti-money laundering (AML) and Know your customer (KYC) are important and prevalent terms in the financial world. But how do they relate to one another and what are the differences between them?

Knowing your customer (KYC)

KYC, or ‘Knowing your customer’ is a standard business practice for financial institutions across the globe. In a nutshell, it is the process of identifying who your customers are, checking whether the sources of their funds are legitimate and that they are legitimate users of the platform that they are trying to access. 

Anti money laundering (AML)

KYC is only one part of AML which is a much broader practice referring to measures used by financial institutions and governments to prevent and combat financial crimes which include the financing of terrorism and money laundering.

Main Associated User Experience Challenges

Fully digitized KYC processes unfortunately still provide a number of challenges, which are mainly associated with user experience. 

It’s tricky to strike the right balance between managing risk and ensuring that the on-boarding process isn’t overly complicated or long, so as to be off-putting to current or prospective customers.

Some of the key User Experience challenges to tackle are: 

1. A lengthy on-boarding process

Research from Thomson Reuters showed that customer on-boarding time increased by 18% in 2017 and was set to continue to do so. 

The same research found that a bank spends on average 24 days to complete the customer on-boarding process and 89% of clients have reported a bad KYC experience. 

This of course often results in customers deciding to change providers. At the same time, only 30% were proactive in providing material, when their company’s or their personal KYC status changed.

2. High costs

The report The Cost of Compliance and How to Reduce It, published by Mitek Systems in September 2019, shows new EU Anti-Money Laundering and Counter-Terrorist Financing rules have increased the cost of non-compliance fines to almost four million dollars per bank per year in the States. 

As Financial journalist Chris Burt points out, in addition to fines and fraud losses, “businesses can also suffer reputational loss, and in some cases the loss of a license to operate or personal liability among senior management.”

3. Out of date software

Unfortunately in a number of cases, banks and fintechs don’t use the most up-to-date technology. A KYC Market Report by CEB shows that the systems by which banks identify their customers are often outdated. 

With general anti money laundering technology, the situation is often even more serious, as AML software is often regarded as the most outdated in banking IT infrastructures.

What is Needed for an Effective Onboarding Process?

1. Compliance

It goes without saying that compliance is a must. Understanding regulatory requirements such as GDPR, Anti-Money Laundering and Terror Funding legislation is a key component of any customer identification process.

2. Speed

A lengthy customer onboarding process is no longer acceptable in the current age, but fortunately, the right tools can improve the situation considerably. 

Alex Valdes from Trust Stamp, explains that their tool, On Board, uses “a series of custom onboarding flows based on our experience in the field. These preset flows have the necessary procedures to assist in collecting and storing all the data needed to meet those regulatory requirements. These flows use tools such as AI-powered biometrics and ID validation to determine the true identity of the person in question.”

3. Ease of use

As with any digital platform, the user interface is important, because it engages your customers (both existing and prospective) with your platform and has a huge impact on retention. 

With a banking or fintech on-boarding program, ease of use is paramount, and a simple, step-by-step journey guides users towards the goals that you’ve set for them.

4. An effective managerial dashboard

It goes without saying that the best, user-friendly onboarding platform means nothing without an effective system of management that backs it up.

A central managerial dashboard enables administrators to securely review all identity and compliance data that has been captured, including facial images, images of documents, watchlist results and more.

FINAL THOUGHTS

In case you want to explore more about the role of user experience in FinTech and you can always connect with 10Clouds that can help you to build a robust KYC platform? Reach out to them today on hello@10clouds.com and a friendly member of the team will get back to you as soon as possible.