The findings from Signicat show an abandonment rate increase in financial applications of 23 points from the 40% seen among consumers in 2019, the worst since the identity services provider’s report debuted in 2016.
During the Covid-19 pandemic, consumers have been found to find the onboarding process with financial institutions difficult, with companies needing to ask for personal information in order to comply with know your customer (KYC) and anti money laundering (AML) rules.
Due to lockdown, uses of physical branches has been declining across Europe, with customers increasingly using digital channels to manage their finances.
Lockdown restrictions has meant 41% of consumers were unable to access financial services, while two-thirds (68%) see pandemic-driven change as inevitable, and expect 100% digital onboarding to be introduced.
Regarding onboarding with traditional financial institutions, 26% of consumers argued that the process was “difficult”, while 28% feel the procedure is longer than previously expected.
Difficulties with onboarding are proving more prominent among Gen Z (18-24 year old) consumers, with over a third (36%) finding the process to be longer than expected.
In addition, over two-thirds (69%) consider mobile-first providers to be better than their traditional counterparts, and the overall findings are showing that consumers are refusing to put up with substandard options, an occurrence that Signicat is calling the end of “learned helplessness”.
What is learned helplessness?
Learned helplessness is a phenomenon that involves consumers believing that they cannot change a negative situation, even if better options become available. This attitude is being shifted due to the increased use of digital brands.
47% of European consumers, according to Signicat’s research, are now using a mobile-first financial service, which is up from 30% in 2019.
70% of those with a digital-first account say that convenience means they are more likely to use it every day, while only 4% are unhappy with their new mobile first provider.
“In the time since Signicat started the Battle to Onboard series of reports, we’ve seen some indications of improvement, with traditional financial institutions running as fast as they can to keep up with growing consumer expectations,” said Asger Hattel, CEO of Signicat.
“Institutions have clearly improved their onboarding processes, but customer expectations continue to outpace reality — largely due to the digital-first onboarding experience offered by challenger banks and fintechs.
“Financial services providers simply need to run much faster to avoid losing out on new customers.”
What traditional banks must do to withstand Fintech competition
Sarah Kocianski, head of research at 11:FS, commented: “This year, we have all been forced to start doing everyday tasks differently. For many, that has meant managing the entirety of their financial lives using remote channels for the first time, and this is where some financial service providers’ offerings have been found lacking.
“Onboarding, in particular, is crucial. If customers can’t or won’t open new accounts, these organisations will struggle to cope with further economic turmoil. And it’s not just the pandemic that providers have to get their heads around; other, pre-pandemic factors which have not been addressed are exacerbating potential customers’ failure to complete onboarding.
“In short, providers should prioritise ensuring customers can apply, open, and start using accounts quickly and digitally if they want to compete in today’s environment.”
The ‘The Battle to On-Board 2020‘ report from Signicat, research for which was conducted by Sapio Research in May and June, surveyed 4000 adults with a bank account, credit card and an insurance policy — 1,000 in the UK, and 500 in each of Belgium, Germany, Sweden, Norway, Finland and the Netherlands.