In a world with increasingly fast and seamless technologies, many people expect opening a bank account to be as simple as logging into a social media platform. Consumers are becoming more demanding, especially Generation Z, who have grown up in an instant, always-on environment.

To avoid users saying, 'I expect nothing from the bank and still end up disappointed,' it's essential to minimize friction points that increase abandonment rates. The question is how to achieve this. The answer may lie in Open Banking and Open Finance technologies, which have emerged to streamline processes in the financial industry.

‍

Let’s Look at Some Data…

A 2020 study by Signicat revealed interesting insights into banking customer behavior. The report surveyed 4,000 consumers from the UK, Germany, Netherlands, Belgium, Sweden, Finland, and Norway. Here are some key figures:

• 63% abandoned banking applications in 2020.
• 68% expect a fully digital onboarding process due to COVID-19.
• 32% refuse to start an application if they are required to bring documents to a physical branch.
• 36% of Generation Z feel the onboarding process takes longer than expected, leading banks to lose them as customers.
• 60% would consider using their digital identity to access international services.

A key point is that this study was conducted during the height of the pandemic, reflecting the sentiments of people who saw digital channels become virtually their only option. There is a growing demand for banks to respond quickly, securely, and efficiently—especially during times of economic recession.

‍

The Importance of Onboarding

This rising customer demand is one of the challenges that Open Banking and Open Finance technologies aim to solve—especially in the critical service of customer onboarding.

Open Banking allows users and companies to share data with third parties under their consent, digitally and without the typical frictions that cause applicants to give up before completing forms.

For instance, instead of requiring a person to submit a folder with their tax situation, the bank can connect in seconds with the national tax agency to quickly analyze whether they meet the requirements.

This results in a better user experience, as financial institutions can onboard clients efficiently without tedious paperwork. The process is smoother, users leave with a positive impression, and conversion rates improve. Additionally, since the data is obtained directly from the source, errors and fraud are minimized, enhancing security.

‍

More Inclusion, More Conversion Opportunities

One of our pillars as a Fintech is to promote financial inclusion in Latin America. We believe there is still a massive gap in the reach of financial institutions' products and services.

We refer to segments of the population that remain underserved because they have a blemished financial history or no credit history at all. Financial institutions like banks and credit unions should consider these users as opportunities for new conversions.

We’re talking about, for example, creditworthy individuals such as working students, immigrants who lack a financial history in the country, or small businesses and entrepreneurs who don’t qualify for traditional microenterprise banking.

‍

Risk Assessments

Another area where Open Banking can make a difference is in risk assessments. In this evaluation process, institutions aim to understand whether a potential customer poses a risk—using concrete data.

By evaluating a user with Open Banking technology, financial behavior can be accessed via an API connected to various market institutions, such as banks, tax authorities, and pension funds.

The most interesting part is how this changes the role of credit bureaus, which traditionally only report negative information like defaults and active debts. With Open Banking, positive data such as active loans, saving capacity, and investments are also included, creating a more complete picture and enabling more accurate, reliable risk assessments.

‍

Bank Reconciliation

Another solution that makes life easier for you and your clients is bank reconciliation. Automating accounting processes can simplify your month-end closing and help you provide better service.

Floid offers ready-to-use products such as:

- Bank reconciliation via API: Enable access to bank statements for your clients or automate the setup of accounting documents directly from your business bank account.

- Tax and regulatory statements: Digitize the processes to report to the relevant governmental or tax authorities.

‍

Floid’s Conversion Rates

With Floid’s technology, you can enhance your evaluation and onboarding flows with zero friction. Through an API, you can know and authenticate your users in seconds, evaluate them with positive data, and improve your conversions.

The widget integrates directly into your platform, connecting you with your consumer’s financial and personal data sources. This allows for a quick, reliable, and secure analysis of their situation.

As of May 2022, out of all user sessions, 88.5% interacted with the widget form, and 86.2% completed the process by entering their credentials—representing a very high conversion rate.

‍