5 Ways to Reduce Customer Onboarding Time with Open Banking in the UK

Customer onboarding is a critical process for financial institutions in the UK. However, traditional methods often result in long wait times, abandoned applications, and compliance hurdles. Onboarding delays are costly—both in terms of lost customers and operational inefficiencies.

Recent reports show that up to 40% of UK customers abandon onboarding processes that take too long or require too much effort. This creates a significant revenue loss for financial institutions.

Open Banking offers a way forward by enabling faster, more efficient onboarding through real-time data sharing and automated verification. This blog explores how Open Banking can help financial institutions cut onboarding times by up to 50%, ensuring smoother customer experiences while meeting compliance requirements.

In this guide we will explore:

What’s Wrong with Customer Onboarding in the UK

Average Onboarding Time

Traditional customer onboarding in the UK banking sector can take anywhere from 14 to 26 days, especially for financial products requiring manual KYC checks. This prolonged timeline not only frustrates customers but also leads to higher abandonment rates and increased operational costs.

Common Pain Points

Manual Document Checks: A significant portion of onboarding time is spent collecting and verifying physical or scanned documents.

Repetitive Data Entry: Customers often need to input the same data multiple times, increasing frustration.

Operational Bottlenecks: Traditional onboarding relies heavily on back-office teams to review and process applications. This dependency often creates bottlenecks, especially during peak periods or when processing high application volumes.

Customer Expectations

The onboarding process is often the first interaction customers have with a financial institution, and it sets the tone for the entire relationship. A smooth, hassle-free experience can build trust, while a slow or cumbersome process can drive customers away.

According to a research, 40% of UK consumers abandon onboarding processes because they take too long or require excessive effort. This growing dissatisfaction is fueled by key barriers:

• 39% of abandonments occur because the process takes too much time.
• 34% of customers give up when asked to provide extensive personal information.

The impact of outdated onboarding methods is clear. In just one year, the abandonment rate for financial applications increased from 26% to 45%, highlighting the urgency for institutions to streamline their workflows.

Customers don’t want to be forced offline to verify their identity or submit documents. The same research found that:

• 55% of consumers would be more likely to apply if onboarding were 100% digital, including online identity verification.
• Over 50% of customers would even consider purchasing additional services if paper-based identity checks were eliminated.

These figures reveal a clear trend: customers want a fully digital experience. With 97% of UK consumers having access to documents like driving licenses, passports, or utility bills, the foundation for digital identity verification already exists. Financial institutions must embrace Open banking to meet customer expectations, reduce friction, and build trust.

How Open Banking Improves Onboarding in the UK

Open Banking offers financial institutions in the UK a way to improve onboarding processes by securely accessing customer data in real time. Through APIs, it eliminates the delays caused by manual verification and simplifies compliance with regulations.

Key Benefits of Open Banking for Onboarding

• Real-Time Data Access:
  Open Banking APIs allow financial institutions to retrieve verified customer data instantly, such as income, identity, and transaction history, with the customer’s consent. This reduces reliance on slow, manual document processing.
• A UK lender reduced onboarding time by 75% by using Open Banking APIs for income verification (source).
• Simplified Regulatory Compliance:
  By automating data sharing, Open Banking ensures that processes align with PSD2 and FCA guidelines for KYC and AML requirements. This reduces the risk of errors and ensures businesses meet necessary standards without extra manual effort.
• Improved Customer Experience:
  Open Banking allows customers to connect their bank accounts digitally, removing the need for manual uploads and repetitive form-filling. This streamlined process helps lower drop-off rates during onboarding.
• Research shows that 63% of customers prefer simple, digital-first onboarding methods.

How Open Banking Works in Practice

1. Customers give consent to share specific financial data.
2. Open Banking APIs retrieve this data directly from the customer’s bank.
3. The financial institution uses the data to verify identity, check income, and ensure compliance.

By using Open Banking, financial institutions can significantly reduce onboarding times while providing a smoother experience for customers.

📚 Learn more about Open banking KYC

5 Ways Open Banking Reduces Onboarding Time

Open Banking transforms the onboarding process by addressing common bottlenecks with practical, efficient solutions. Here are five ways it helps financial institutions reduce onboarding time:

1. Real-Time Customer Data Verification

With Open Banking APIs, financial institutions can instantly verify critical customer information such as identity, income, and transaction history. This eliminates the need for manual checks and reduces errors.

• Example: A UK-based lender reduced income verification times from three days to less than 30 minutes using Open Banking solutions (source).

2. Automated KYC and AML Checks

Open Banking automates Know Your Customer (KYC) and Anti-Money Laundering (AML) processes by securely sharing data from a customer’s bank account. This reduces staff involvement and ensures compliance with PSD2 and FCA regulations.

• Benefit: Fewer delays caused by manual reviews and improved accuracy in meeting regulatory requirements.

3. Elimination of Manual Data Entry

Instead of requiring customers to fill out long forms and upload documents, Open Banking enables pre-populated data fields through direct bank account connections.

• Impact: Reduces the time customers spend on applications, improving completion rates.

4. Instant Bank Account Linking

Customers can connect their bank accounts instantly, allowing institutions to validate account details in real time. This speeds up processes like setting up direct debits or verifying payment histories.

• Benefit: Faster onboarding for products such as loans and credit cards.

5. Improved Transparency for Customers

Customers can see exactly what data is being shared and why, increasing trust in the process. This transparency often leads to fewer hesitations and higher completion rates during onboarding.

By leveraging these five key features, Open Banking helps financial institutions achieve faster onboarding while maintaining compliance and delivering a better customer experience.

Vodafone’s Success with Open Banking

Vodafone partnered with Moneyhub, an Open Banking platform, to streamline the eligibility verification process for its VOXI For Now social tariff. This initiative aimed to help customers on low incomes gain access to affordable mobile plans. The traditional method of eligibility checking involved manual documentation, leading to delays and customer frustration.

Results After Implementing Open Banking:

• Verification Time: Reduced from a manual process to near real-time verification, allowing customers to access services faster.
• Customer Experience: Improved significantly as customers could securely share financial data via Open Banking instead of providing physical proof.
• Efficiency Gains: Vodafone could process applications more quickly, improving operational efficiency while maintaining compliance with regulatory requirement

Affordable Open Banking Verification with Finexer

When it comes to reducing onboarding times and improving customer satisfaction, choosing the right Open Banking partner is crucial. At Finexer, we specialise in providing reliable and cost-effective Open Banking Verification APIs tailored to the needs of financial institutions, fintechs, and businesses in the UK.

Why Choose Finexer?

1.Cost-Effective Solutions for All Businesses

Whether you’re a growing fintech startup or an established financial institution, Finexer offers pricing plans that scale with your business needs. Our affordable APIs ensure you get the best value without compromising on quality or compliance.

2.Seamless Integration

Finexer’s Open Banking APIs are designed for easy integration with your existing systems, ensuring minimal disruption during implementation. You can be up and running quickly, reducing onboarding times from weeks to just days.

3.Regulatory Compliance Guaranteed

Meeting PSD2 and FCA guidelines is a top priority. Our verification solutions are fully compliant, automating KYC and AML checks to reduce operational burdens and ensure your processes meet legal standards.

4.Secure and Real-Time Data Access

Finexer provides instant access to verified customer data, such as identity, income, and transaction history. This not only speeds up verification but also ensures accuracy, reducing errors and enhancing customer trust.

5.Proven Track Record

Our clients have reported significant reductions in onboarding times, improved customer retention, and streamlined compliance processes. By partnering with Finexer, you gain access to industry-leading expertise and technology.

How Finexer Can Help Your Business

With Finexer’s Open Banking Verification API, you can:

• Simplify onboarding: Reduce manual steps and deliver a frictionless experience to your customers.
• Save time and resources: Automate data collection and verification to cut costs and improve efficiency.
• Enhance customer satisfaction: Offer a quick and secure process that meets modern customer expectations.

Get Started Today

Finexer is committed to making Open Banking accessible and affordable for all businesses. Contact us today to learn how our solutions can transform your onboarding process, reduce costs, and help you stay ahead in the competitive UK market.