Onboarding is the process of integrating a user with your app or software. You do this by gathering data on their needs and familiarising them with the key functions of your product. In fintech, onboarding is crucial to both your app’s success and your business’s integrity.
In this article, you’ll learn the importance of onboarding in fintech, how to improve an existing onboarding journey with user research, and how to design a better onboarding journey from scratch.
Fintech is a lucrative industry for big brands and emerging startups alike. Fintech businesses have received enormous investments over the past decade, peaking at 226.5 billion USD in 2021 despite a brief slowdown during the COVID-19 pandemic.
Fintech’s popularity is mainly due to its necessity. As consumers adopt more digital products, banks and challenger brands have launched more ways to support customers with financial products. Managing your finances is now easy, made possible by teams tasked with building technology that protects users’ data and privacy whilst offering intuitive experiences. Fintech brands must do everything they can to keep their customers happy or face dissatisfaction, abandonment or even financial action.
Building the tech isn’t enough. In fintech, the onboarding process is crucial to your success, not only in terms of customer appeal but for security and privacy purposes.
“I think with fintech it’s important to make the language used during onboarding as accessible and transparent as possible. Both by avoiding financial and technical jargon and always explaining why certain information is needed from the user, especially if it’s sensitive data.” (Catrin Orr, UX/UI Designer at Komodo)
Considering a recent case in which the Plaid app was forced to pay over $58 million for data privacy concerns, you simply cannot afford to take risks.
What is onboarding in fintech?
Onboarding refers to the series of steps a user takes when they first use an app. For some applications, onboarding can be as simple as a quick registration; for others it must be more in-depth and tutorial-driven.
In fintech, and specifically in banking, great technology has had a sizeable impact on users’ lives by reducing the friction of traditional banking: visiting the branch, submitting documentation, proving identity, filling out forms. Done well, your fintech app cuts down those frustrations and the user’s time commitment.
Fintech occupies a unique position in the onboarding world. As a user begins to interact with your product, you must balance your need to capture user data against the highest standards of security and privacy. Essentially, fintech onboarding means collecting enough user data to make the app experience more tailored, without frustrating the user or exposing them or your business to risk.
Typically, you’ll need to use onboarding to gather key user data such as location and date of birth, verify customer identity via KYC, and demonstrate features and functionality.
Ultimately, the goal of your onboarding process is to unlock the ‘aha’ moment for your customer: a genuinely positive reaction to an input or choice they’ve made. In fintech specifically, this must balance against security and compliance concerns.
The importance of good onboarding in fintech
- Good onboarding helps you retain users: 38% of customers will abandon a fintech app if the onboarding process takes too long.
- Digital onboarding is now the norm, so competition is high: 9 out of 10 banks use digital onboarding to increase customer acquisition.
- Digital onboarding is more cost-effective: a traditional bank must invest $150 to onboard a customer, versus $30 for a fintech competitor.
- Rates of digital onboarding will continue to increase: by 2025, nearly 330 million new bank accounts are projected to open through digital onboarding, compared with 184 million in 2020.
- Smart digital onboarding techniques can reduce fraud: something as simple as selfie identification with AI tech can reduce fraud by 90%.
The concepts behind great fintech onboarding
To design optimal onboarding experiences in fintech, anchor your product around some core strategic design concepts:
- Clear: it should be clear and accessible to all.
- Streamlined: the faster you can onboard a customer, the better.
- Secure: all data and privacy information must be protected.
- Personalised: where possible, onboarding should be designed around specific user types and groups.
- Compliant: your onboarding process must meet the compliance standards expected by the regulators in your geographic area, such as e-KYC, AML5 and the eIDAS Act.
Fundamental UX onboarding concepts
Before digging into data or customising for specific users, establish the best practices. Our team audited the most popular fintech apps to create a baseline of shared concepts. Review your own onboarding process against these ideas:
- Prioritise a user’s time and attention by designing onboarding to be as simple and clear as possible.
- Allow a way out of any onboarding process and make sure the exit is obvious.
- Explain why you need each piece of information, and don’t request anything that isn’t necessary to your app.
- Consider benefit-based onboarding: show the value of the app and how it benefits the user during the process itself.
- Ensure you’re compliant with standards such as Know Your Customer (KYC) and Anti Money Laundering (AML).
- Use security and safety features that users are already familiar with and trust: two-factor authentication, automatic logout, captcha.
- Display a visual indicator of progress to prevent burnout or abandonment. A progress bar or checklist is helpful. One of our UX team even suggests starting the progress bar at 10% to stimulate satisfaction, carrying through whatever information you already have from the download.
- Be aware that gamified progress bars can also frustrate. As one of our UX leads put it: “It works to some extent, but it just annoys me more than anything. If my profile isn’t 100% complete and the app is telling me that, I’ll complete it. Not because I want to but because I can’t bear it being at 74%. So it works, but the intended behaviour probably isn’t to make me hate it.”
- Where complex flows are required, provide visual walkthroughs that guide users through the process. These should be replayable, cancellable and repeatable at any point during onboarding.
The end goal of all of these steps is the same: design an experience which establishes value but prioritises trust through security.
Seek the ‘aha’ moment
Discussions around fintech onboarding often mention the ‘aha’ moment: the moment a user gets the value you’re offering and even delights in the interaction. While it may seem far-fetched to want users excited about a banking app, the ‘aha’ moment is really about sudden comprehension. It’s the point at which they feel capable of using your app.
For fintech, designing simple form completions or one-click tasks that satisfy this sense of capability is more effective than chasing novelty. Some designers describe this as time to value (TTV): the time it takes for a user to grasp value. As part of your design process, establish what the ‘aha’ moment looks like, then optimise to shorten your TTV.
Tailor onboarding via user research
One of the main powers of digital technology is that it provides genuine, data-driven insight into customer behaviour. Even if you’re yet to launch an app, you’ll likely have an asset that collects user data, like a website or a social media page. All of these sources will enhance your onboarding experience: with unique data, you can design to meet each audience’s needs.
Your data lets you spot moments of frustration and abandonment, which you can feed back into the project roadmap to reduce friction. However, these abandonment points aren’t always clear through data alone. As Dr Shaun Jerdan, Senior User Researcher at Komodo, puts it: “Step one: understand where the blocking points are in the onboarding process by using analytics. Step two: understand why the drop-off is happening by conducting moderated usability tests, with an emphasis on users describing the experience as they work through it.”
While your data may tell you when a user is dropping off, usability tests help you extract why they’re losing interest. In fintech, the depth of your user research may be restricted by compliance and data privacy rules, but you can still extrapolate key user types and their journeys.
Personalised onboarding based on user type
Once you have a better idea of your users’ behaviours, customise your onboarding experience by user type. Consider designing specific flows for each type: a short flow for a younger, tech-savvy user; a more hand-holding approach for a less technical one.
A lack of personalisation is a glaring issue for many fintech apps, and it could be the most impactful change you make: “Providing a slightly different onboarding experience depending on user type can be a very powerful way to retain that user throughout the onboarding flow and into the app. Ask some initial questions to decipher the user type, then show the user the main functionality of the app in the context of their user type.”
Customisation doesn’t mean every part of the journey should be unique. One feature that should always be shared is the ability to skip parts of the process, especially during tour moments. There must always be a way out, even when it’s highly customised.
Gather information more efficiently
Digital onboarding is as much about engaging your user as it is about gathering key information. In fintech there’s a specific onus on your business to gather the right information to meet compliance requirements and ensure safety and privacy.
Newer capabilities such as selfie uploads for identity verification have slashed fraud rates, but they’re less familiar to users and may be met with doubt. Onboarding’s role is to alleviate that doubt so the user completes the verification.
Know Your Customer regulations keep changing, requiring more and more information from the customer in what can be a laborious process. A smart onboarding journey alleviates the fear and doubt caused by KYC, as long as you request only the most crucial information at the start. Once a user is more comfortable with your technology, you can capture the rest.
Standard personal details such as name and date of birth are unlikely to cause hesitation. As you request more specific qualifying information, such as financial position or credit checks, a user is more likely to exit. So always request only the most essential information, and show why you need it: when asking for a selfie upload, a tooltip explaining ID verification and its benefits (less waiting, no posting passports, fraud prevention) does real work.
Summarising an ideal fintech onboarding experience
- Define user needs through a combination of data and user interviews.
- Find the ‘aha’ moment you want a user to encounter and design around it.
- Minimise frustration by removing unnecessary information requests.
- Consider a progress bar or indicator, and allow users to exit at any time.
- Include a pre-completed task when onboarding begins to encourage users.
- Put users with different goals on different paths; each flow should be specific to a user type.
- Show feature tips in context and explain key information requests where needed.
