How to create a great digital onboarding experience

Digital onboarding is the online process new customers go through to begin using a company’s products and services. Businesses use onboarding to learn more about their customers, to serve them better, and to identify cross- and upselling opportunities.

Onboarding could be as simple as creating a username and password. However, many businesses, especially those within highly regulated industries like financial services and healthcare, have to comply with Know Your Customer (KYC), Know Your Business (KYB), anti-money laundering (AML), and data privacy regulations. 

These organizations may need to collect, verify, and keep users’ identity information safe. Doing this online can be challenging, but digital onboarding also presents several opportunities. 

What are the advantages of digital onboarding?

Digital onboarding offers many potential benefits, including allowing companies to onboard new users at any time and from any location. 

Online identity verification can also be faster than manual verifications, which may increase conversions and allow companies to scale with fewer staff and expenses. Additionally, digital identity verification (IDV) can use risk signals that aren’t available during an in-person process, such as email, phone, and behavior signals, to detect fraud. 

For new users, digital onboarding may offer more privacy by limiting how many people can see and access their information. Automated systems may also reduce errors that could result in delays or denials. 

The digital onboarding process

The specific steps that a user takes to onboard can vary, but the process often looks something like this:

• Account creation: The person chooses a username and password and may need to verify their age, email address, or phone. 
• Identity verification: When organizations want or need to verify new customers’ identities, an electronic IDV process could involve the user entering their personal and contact information, uploading verification documents (such as a photo ID), and behind-the-scenes document and database verifications. 
• Fraud checks: Fraud checks often overlap with IDV as mismatched identity information and can be a red flag. But organizations may also incorporate fraud-specific solutions into their onboarding, such as passive signals for spotting suspicious users or activity and link analysis to identify relationships between entities. 
• Product-specific steps: The next step may depend on the type of organization and why the new user is creating an account. For example, an online marketplace might ask a new user what types of goods they plan to sell and then offer specific suggestions based on the response. 
• Welcome new users: New users may be welcomed with a page or tutorial that explains how to navigate their account and the company’s products and services. 

Organizations that may require IDV at some point could choose to start with a simple digital onboarding experience to get new users into their system. 

For example, online marketplaces and cryptocurrency companies might let someone create an account without verifying their identity. However, they may require the user to go through electronic KYC (eKYC) if they try to take a specific action, such as converting crypto to fiat or listing high-value items for sale. 

Digital onboarding as an opportunity

Designing the digital onboarding flow may be a collaborative process that requires input from developers, compliance teams, copywriters, and designers. After all, this could be a customer's first experience with your brand. You want to get it right. 

Finding the right balance between customer experience and risk management is a difficult and ongoing process. Too much friction may result in users dropping off. Too little could allow bad actors to easily access your platform — and you have to continually review the results to optimize your onboarding process. 

However, onboarding also presents an opportunity. This likely isn’t the first time the new user has created an online account, and this could be your chance to stand out with an easy and pleasant experience.

At a minimum, try to remember:

• Less is more: Focus on having users complete one action per step. 
• Accessibility is important: Make sure users can follow the requirements regardless of their device, location, language, and accessibility needs. 
• Personalization builds trust: Brand the process to help reassure the user that you’re going through it with them. 
• Dynamically adjust friction: Use risk-based segmentation while adding extra steps to identify and stop bad actors.  
• Automate what you can: Fill in forms based on what you know about the user and automate identity verifications to streamline the process.

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Optimizing identity verification in digital onboarding 

The identity verification stage may be the most complex and potentially time-consuming part of onboarding for a new user, but it doesn't have to be bothersome. Here are several ways you can create a low-friction IDV process. 

Implement progressive risk segmentation

Flexible IDV solutions allow organizations to dynamically segment users based on various risk signals, including: 

• Active signals: These can come from the new user and may include their name, phone number, email address, Social Security number, a selfie, and identifying documents. 
• Passive signals: Data that you can detect about the user, such as their location, IP address, and information about their device. 
• Behavioral data: Behavioral signals come from how the person interacts with your website and the application. 
• Third-party data: Organizations can incorporate data from various third-party lists and databases, including watchlists, phone risk reports, adverse media reports, and PEP lists.

Choose the right type of verification during digital onboarding 

Understanding the different types of digital verification can also be important when designing an onboarding process. 

• Database verification: A database verification may be the least intrusive because it uses the information from an application to verify identity via an authoritative third-party database (such as a credit bureau) or issuing databases (such as the DMV or IRS).
• Document verification: Document verification requires users to input verification documents, such as a birth certificate, Social Security card, bank statement, tax returns, or utility bill. The document is validated and the extracted information is compared to what the user entered on the application. 
• Government ID verification: Government ID verifications similarly involve uploading a picture of a government ID, verifying its legitimacy, and comparing extracted information with what the person submits. Supporting multiple types of identification — a driver’s license, state ID, national ID, and passport — can help prevent dropoff and frustration during onboarding. 
• mDL verification: Some states issue mobile driver’s licenses (mDLs), which you can use instead of a picture of a physical government ID. Supporting mDL verification can further reduce friction during onboarding. 
• Selfie identity verification: Selfie identity verification and liveness detection are sometimes combined with government ID verification to help stop bad actors. 

You can adjust the types of verification based on the risk signals from your identity and fraud checks. 

For example, an organization might verify a low-risk user with a frictionless database verification, but if any signals raise red flags, the user could be asked to upload a picture of a government ID. Higher-risk users may also have to take a selfie while the organization runs additional database checks behind the scenes. 

How Persona powers digital onboarding 

Persona’s identity platform gives you the building blocks you need to customize your digital onboarding. Use our verifications, reports, and fraud-prevention tools on their own, or integrate third-party data sources into Persona to further power identity, risk, and business data decisions. 

You can also connect common SaaS platforms to Persona — including Slack, SFDC, Zendesk, and Hubspot — to bring all your information into a single space and continuously monitor customer needs and identities. After all, identity verification isn’t a one-time transaction that ends after onboarding — it’s an ongoing relationship. 

Start for free or get a demo today.