The biggest challenge in banking customer onboarding today

In India’s rapidly digitizing financial ecosystem, the first impression a bank makes on its customer is increasingly shaped by its onboarding process. Yet, despite investments in mobile apps, AI-driven tools, and digital KYC, banks continue to face a core challenge: delivering a seamless, fast, and personalized onboarding experience—without compromising on regulatory compliance.

In short, the biggest challenge in banking customer onboarding today isn’t technology adoption—it’s the ability to balance experience with ever-evolving compliance requirements.

Why Onboarding Matters More Than Ever

Customer onboarding is no longer just the start of a relationship—it’s often the defining moment. Whether it’s a savings account, credit card, personal loan, or a co-lending partnership, the onboarding journey sets the tone for customer engagement, trust, and stickiness.

According to industry estimates, over 40–50% of digital banking applications in India are abandoned mid-way, largely due to friction in onboarding workflows. Long turnaround times, repeated documentation requests, or unclear communication often push customers toward more agile fintech competitors.

In a world where 73% of Indian customers now expect same-day approvals for financial products, the stakes couldn’t be higher.

The Root of the Problem: Fragmentation and Rigidity

Despite digital strides, most banks still suffer from:

• Siloed systems where data from onboarding, KYC, credit assessment, and account activation are scattered across departments

• Rigid workflows hardcoded into core banking or legacy systems that make it difficult to adjust processes or comply with new RBI circulars

• Manual interventions in due diligence, risk profiling, and documentation validation—leading to delays and inconsistencies

• Inadequate personalization for varied customer segments such as gig workers, NRIs, senior citizens, or MSMEs

These issues create friction and confusion in onboarding journeys and make it nearly impossible to deliver a consistent, real-time experience.

The Compliance Factor: A Constantly Moving Target

From evolving KYC requirements to AML (Anti-Money Laundering) obligations, the compliance landscape in India is becoming increasingly complex. The RBI’s recent updates to KYC norms now emphasize biometric Aadhaar authentication, online due diligence, and periodic re-KYC for account holders—all of which must be implemented swiftly and accurately.

Yet, many banks struggle to make these updates quickly. Hardcoded workflows often mean that any change to a compliance process involves lengthy development cycles, QA testing, and deployment delays—leaving business teams helpless and exposed to regulatory risk.

What Customers Want: Simplicity, Speed, and Transparency

Modern customers—especially millennials and Gen Z—expect onboarding to be as easy as signing up on an e-commerce app:

• One-click document submission via DigiLocker or Aadhaar XML

• Real-time verification for PAN, address, and income

• Pre-approved offers based on minimal input

• Instant feedback if something goes wrong

• A consistent experience across web, mobile, and in-person channels

Meeting these expectations means not just digitizing onboarding but intelligently orchestrating it with agility and real-time decisioning.

The Way Forward: Configurable, Compliance-Ready Onboarding Journeys

To solve this challenge, banks need onboarding platforms that:

• Offer modular, no-code configurability: So business users can adapt journeys and rules without developer support

• Integrate with 100+ APIs and external systems: For seamless document verification, bureau checks, risk profiling, and fraud detection

• Support intelligent routing and risk-based segmentation: So different customer types follow appropriate due diligence paths

• Enable real-time dashboards and audit trails: To satisfy internal compliance and external regulatory audits

In essence, banks need composable, scalable onboarding engines—not static workflows.

The real battle in banking today is not between traditional banks and fintechs—it’s between agility and rigidity. Customers will gravitate toward institutions that make onboarding fast, transparent, and personalized—while still remaining fully compliant. The winners will be those who can continuously adapt onboarding journeys to regulatory changes, market shifts, and evolving customer expectations—without compromising on speed or scalability. By investing in no-code, rule-based onboarding engines that bring together compliance, decisioning, and personalization, Indian banks and NBFCs can turn onboarding from a challenge into a strategic edge.

Because in today’s market, experience is everything—but compliance is non-negotiable. You shouldn’t have to choose.