Almost 40 per cent of all financial services applications in Europe are abandoned, despite massive investment in digital transformation by institutions, according to new research.

Although this figure is an improvement on 2018’s high of 52 per cent, it means that abandonment rates have returned to nearly the same level as 2016 (40 per cent).

The third edition of Signicat’s study is based on a survey of 3,500 adults across Finland, Germany, the Netherlands, Norway, the UK and Sweden about their digital on-boarding experience with retail bank accounts, credit cards and insurance.

When digitally onboarding customers, institutions are required to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, meaning personal information must be shared and identity proven.

The ease with which consumers can complete an application mirrors the rate of abandonment. In 2016, 13 per cent of applications were said to be somewhere between difficult and painful, a number that has reached 32 per cent just two years later. In 2019, consumers feel that while the application process has improved, it hasn’t quite made it back to 2016 levels, with 24 per cent saying that onboarding is difficult to complete or worse.

Signicant stated that while the onboarding process has improved, consumer expectations have increased in parallel to the point that technology investment from institutions is barely keeping up with those expectations.

“New providers of financial services such as neobanks and digital-only payments firms, have changed customer expectations by delivering services in a manner akin to Netflix and Deliveroo,” said Sarah Kocianski, head of research at 11:FS, adding that many larger, older financial services firms however are failing to adapt to this new reality.

“Partly because those expectations change faster than some of these industrial giants can comprehend moving, but also partly because they don’t approach the problem in the same way – most of them have invested heavily in the technology that underpins these new onboarding processes but failed to rethink the processes themselves.”

Digital identity can reduce the pain when on-boarding a customer by dramatically speeding up the process. In countries with high digital identity adoption rates Sweden (91 per cent) and Norway (81 per cent) it doesn’t take nearly as long to on-board customers. For example, just nine per cent of applications take less than five minutes in the UK, compared to 23 per cent in Sweden, 22 per cent in Norway and 27 per cent in Finland.

Similarly, twice as many applications take longer than 30 minutes to complete in the UK than in the Nordics.

The good news for banks is that they remain the most trusted institution to create and maintain the best solution to onboarding woes — reusable digital identity schemes. The report showed that almost half (44 per cent) of consumers trust banks to manage their digital identity. Government schemes come in at a distant second at 25 per cent, while retailers and social media platforms aren’t trusted as at all, only chosen by three and two per cent of respondents respectively.

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