Digital Onboarding Is Being Widely Adopted in Germany after BaFin Introduced Directive to Regulate the Process in 2014

Digital challengers such as neobanks and various other Fintech service providers are beginning to transform many traditional business activities through the digitalization of many different services that previously required laborious manual processes (like accounting).

Customer or user experience (UX) has become a key differentiator when it comes to providing a seamless digital onboarding process. Digitalization has become increasingly common with today’s consumers who are looking for more seamless, all-digital onboarding experiences.

Digital customer onboarding makes life easier, especially in a post COVID world in which many physical business locations, globally, were shut down to prevent the further spread of the virus. Online registration to access digital financial services is more convenient than traditional account opening, which requires people to visit brick-and-mortar locations. People can sign up for new accounts from their home PCs or mobile devices, without having to wait in long lines at physical bank branches.

Last year, research conducted by Signicat found that 38% of all financial services apps in Europe were abandoned before being complete (during the course of a year). Most customers gave up because it was taking them too long to provide the required information to begin accessing services.

But many Fintech solution providers are beginning to seriously focus on making their products more intuitive and user-friendly, and their new approach appears to be working. The majority of the 30% of consumers who are accessing financial services mainly via mobile devices have said that the service is better than before (according to Signicat research).

Mobile-first financial services could begin to appeal to more consumers, as long as their digital onboarding experience is not frustrating, the report noted. Germany was notably one of the first countries in the world to allow consumers to complete KYC or other verification via video back in 2014. The nation’s Federal Financial Supervisory Authority (BaFin) had introduced a directive (in 2014) which aimed to ensure that digital onboarding service providers would maintain a high level of security. As first reported by Fintech News, the directive was last updated in 2017.

Digital customer onboarding is becoming an established financial sector service in Germany.  The country’s direct banks and private institutions are leading the charge for now, according to a report from Big Four auditing firm, PwC.

Germany’s IDnow, which has offices in Munich, is providing an identity-as-a-service platform that is able to check users’ IDs in real-time. IDnow has a patented video identification and digital signing platform that’s reportedly being used by major banks and Fintech service providers such as Fidor Bank, N26, Smava, and SolarisBank.

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