TL;DR:
Customers abandon Video KYC because of unintuitive flows, delayed feedback on errors, inconsistent platform experience, and interruptions in the journey. The good news? These drop-offs are preventable with the right design and tech.
Here’s a scenario many of us recognize: You’ve invested in a solid Video KYC solution, your compliance team is satisfied, and you’re ready to onboard customers seamlessly. But then the numbers come in – more than half your customers are abandoning the process midway through.
If this sounds familiar, you’re in good company. Recent studies show that 68% of consumers abandoned financial applications during onboarding in 2021 (up from 63% in 2020). At Digitap, we see this challenge across the industry, from established banks to innovative fintech startups.
The good news?
Most of these dropouts are actually preventable once you understand what’s happening behind the scenes.
Let’s dive into why customers are hitting the exit button and, more importantly, what you can do about it.
The real reasons for Video KYC drop-offs
Customers aren’t dropping off because the VKYC process is inherently flawed. They’re dropping off because the experience feels broken to them.
Lack of intuitive VKYC solutions
Consider their perspective for a moment. They’re likely applying for your service while multitasking – perhaps during a lunch break, while commuting, or late in the evening after work when there are no distractions. What they’re looking for is a smooth, intuitive process that respects their time and context.
Delayed document correction
Another major fact you must remember is that you cannot stop customers from submitting incorrect or unusable digital documents. That’s just reality. But you can inform them about it in the first session itself. The delay in doing so causes them to drop you and go elsewhere.
This is a tale as old as time. A customer uploads a blurry Aadhaar photo, hits submit, and then receives no immediate feedback or guidance – just a “we’ll get back to you” message. By the time your system processes the document and sends feedback hours later, that customer has already explored alternatives that provided instant guidance.
Roadblock in the Video KYC onboarding
This one’s a killer, and we see it everywhere. Your customer successfully passes the initial database checks – great! But then, instead of smoothly moving to document validation, they get hit with: “Please complete your KYC journey later. We’ll send you an email.”
Here’s what typically happens next: they close the app, life gets in the way, and when that email finally arrives, they’ve either moved on to other priorities or explored other options. In India’s competitive fintech landscape, asking customers to return later can inadvertently create opportunities for competitors.
The solution requires the use of automatic step-ups to secondary KYC processes. When someone passes initial checks, immediately guide them to document validation. This will keep the momentum going.
Inefficient and slow processing
We’ve all heard this time and time again: speed really matters. Your customers live in a world where they can order food, book a cab, and transfer money in seconds. When your Video KYC process takes longer than expected, it can create a disconnect with their usual digital experiences.
This is especially critical in India, where access to financial services dramatically affects lives. A young, tech-savvy customer might be okay delaying their purchase for a slightly longer onboarding process, but for someone who needs financing options for their treatment and is using digital financial services for the first time? They need immediate, intuitive experiences right from onboarding.
The platform inconsistency problem
Many financial institutions have excellent user experiences on their native apps but less polished experiences on browser-based journeys. This inconsistency can impact conversion rates.
Imagine someone who may not have too many access to resources, including a fully functioning smartphone. They might not necessarily distinguish between “app vs browser” – they simply want to complete the Video KYC process as soon as possible.
Having excellent onboarding across platforms can eliminate unnecessary friction.
What actually works for Video KYC
After working with hundreds of companies across India’s financial services ecosystem, here’s what we know works:
- Make it feel like a conversation, not an interrogation. Guide customers through each step with clear, friendly instructions. Think WhatsApp-level simplicity.
- Give immediate feedback. Whether it’s document quality, photo clarity, or process status, customers should know where they stand in real-time.
- Keep the momentum going. Don’t break the flow with “come back later” messages. If someone passes initial checks, immediately move them to the next step.
- Make it consistent everywhere. Whether they’re on an app, mobile browser, or desktop, the experience should feel familiar and polished.
- Adapt to your audience. What works for urban millennials might not work for customers in smaller towns. Build flexibility into your user experience.
Video KYC for Banks and NBFCs
Customer acquisition costs continue to rise, competition remains intense, and every abandoned Video KYC session represents a missed opportunity. Beyond the immediate impact, in India’s financial services market, the onboarding experience can significantly influence long-term brand perception.
The positive side? Companies implementing thoughtfully designed user experiences helps banks grow 3.2X faster than their competitors who don’t. This represents more than just compliance – it’s a genuine competitive advantage. And when implemented in VKYC, this can make the process even better.
The bottom line
Your VKYC process is often the first real interaction customers have with your brand. It sets the tone for everything that follows. Get it right, and you’re not just complying with regulations – you’re creating positive first impressions that translate into long-term customer relationships.
At Digitap, we’ve had the opportunity to work with companies that have significantly improved their onboarding success rates by focusing on user experience alongside compliance requirements. The technology exists to make Video KYC smooth, efficient, and even pleasant.
The key question becomes: how can you implement these improvements to better serve your customers’ needs? Because in today’s market, providing an excellent experience isn’t just good practice, it’s essential for sustainable growth.