User Onboarding

A properly built user onboarding process improves user adoption, decreases churn, and helps customers see value quickly in the services offered. Companies with effective digital onboarding measures often see higher engagement and long-term loyalty. So, even in regulated industries, where stricter rules on onboarding apply, businesses need to manage efficiency and security; otherwise, they risk losing to their competitors. 

Identity verification ensures that users are who they claim to be during onboarding. 

This step is crucial for:

• Preventing fraud
• Meeting compliance requirements (like KYC/AML)
• Creating a secure onboarding experience without adding unnecessary friction

An example of a KYC or Know Your Customer onboarding process consists of a few steps created around verifying a person’s identity online. 

For example, a user onboarding that’s designed to comply with KYC requirements can look something like this:

1. Data collection. Gathering essential customer details and required documents.
2. Identity verification. Checking if the provided information is correct, often through official ID documents (such as passports or driver’s licenses).
3. Document and data cross-checks. Ensuring document authenticity and cross-referencing customer data against multiple sources, often official government databases and trusted databases (for example, through credit bureaus for financial data verification).
4. Biometric verification. Using technologies such as liveness detection and selfie matching to confirm a user’s presence and identity. This works well for preventing deepfakes and other emerging AI technologies when they’re used for fraud and bypassing KYC onboarding. 
5. Criminal background check. Reviewing historical records, often as a deeper due diligence practice, to detect suspicious behavior and links to illicit activity and crime. 
6. Risk assessment. Analyzing collected KYC information and assigning a customer risk profile, which, in practice, means the customers are categorized from low to high risk. High-risk customers go through a more complex onboarding process due to their elevated risk of financial crime (in cases when it’s detected that the customer is a PEP or was found on a criminal watchlist). 

The best onboarding experiences are quick and intuitive. Depending on the industry, user onboarding should ideally take only a few minutes while still covering key steps like identity verification, account setup, and feature introduction. 

For example, iDenfy’s identity verification solution, used as part of the onboarding process, takes less than a minute on average to complete for the end-user, which makes it an efficient tool for the account opening process in industries where this step is mandatory, yet still needs to cater to the high demands of the users in terms of convenience. 

There are a few challenges that businesses face regarding onboarding, and it all boils down to finding the right balance between a quick onboarding process without damaging security or missing regulatory compliance requirements. 

A proper user onboarding process should help businesses overcome these challenges and:

• Eliminate clunky, slow, or repetitive processes that frustrate users, causing them to drop off. 
• Reduce manual work for in-house specialists who are responsible for managing KYC data as a way to boost efficiency and retention. 
• Accelerate revenue and improve scalability, which is especially relevant for global businesses that are coming into new markets and are dealing with competition. 
• Strengthen KYC verification without adding unnecessary friction to the onboarding workflow, preferably using custom flows and personalized processes that include multiple automation tools (for both onboarding and monitoring later in the customer journey). 

Screening customers against various lists and databases can also be a part of user onboarding or used as an ongoing measure for periodic reviews to stay compliant with KYC and Anti-Money Laundering (AML) compliance requirements. Often, screening involves structured data (sanctions lists, PEPs, watchlists) and unstructured data (adverse media, or negative news).

Ultimately, screening helps companies improve user onboarding and:

• Identify high-risk customers with elevated risk factors, such as sanctions or a PEP status.
• Apply Enhanced Due Diligence (EDD) and extra checks where risks of such criminal activity are detected during screening.

This ensures that businesses use a risk-based approach to AML and manage their reputational risks better, as they spot early signs of fraud in real-time and can better remain compliant with suspicious activity reporting and other compliance-related tasks that are required at the user onboarding stage and throughout the whole business relationship.