CUSTOMER ONBOARDING

How to improve the onboarding flow, compete and

win in the new digital economy
What you need to know:
Auto dealers, and finance and
insurance companies face rising
fraud threats as digital channel use
increases due to COVID-19.

Significant money, time and resources

are spent attracting consumers to
websites and applications, so digital
channels must offer a positive
onboarding experience.

This means balancing friction

reduction with fraud prevention during
the application process to minimise
abandonment and increase loyalty.

Next-generation, fully compliant fraud

and identity verification solutions
enable dealers to start and drive
conversions, develop hybrid models
for better fraud capture, understand
customer behaviour, and discover new
marketing and sales opportunities.

2 DIGITAL ONBOARDING GUIDE

Digital acceleration presents strategic challenges and new opportunities
The early 2020s have marked a new watershed in digital. Lockdowns and travel bans in In the late 20th century and early 2000s, facial recognition was a futuristic fantasy
response to the COVID-19 crisis altered consumer behaviour, pushing more to bank, — the preserve of science fiction films like 2001: A Space Odyssey and Minority Report
buy goods or access services online. (which portrayed retina scanning as an identifier for targeted out-of-home ads).
Even as we begin to emerge from the worst impacts, the behavioural changes of Fast-forward to Apple’s launch of Face ID on the iPhone X in 2017 — when Google Trends
consumers pursuing digital and omnichannel purchasing options looks set to captures increased consumer interest in the technology (as shown in Figure 1).
continue and grow. Meanwhile, Figure 2 demonstrates adoption; the spike reflecting increased consumer
interest in its functionality as they used the tool during the pandemic. In just four years,
As consumers opt for digital channels, they’re increasingly adopting new technologies, a piece of revolutionary technology has become a trusted way for consumers to transact.
such as facial recognition and digital wallets, and demanding better capabilities from
the platforms and tools they use.

Figure 1: Google Search Trends: Facial recognition system Figure 2: Google Search Trends: iPhone facial recognition with mask

100 100

75 75

50 50

25 25

0 0
17 Jul 2016 14 Jan 2018 14 Jul 2019 14 Jan 2021 17 Jul 2016 14 Jan 2018 14 Jul 2019 14 Jan 2021

Source: https://www.google.com/trends Source: https://www.google.com/trends

3 DIGITAL ONBOARDING GUIDE

 TransUnion research (Q2 2021) (Table1)1 indicates one in three consumers globally are planning
to apply for new credit or refinance existing credit (e.g., mortgage, auto loan/lease, credit card,
personal loan, student loan) within the next year — with digital the dominant go-to channel for
these transactions (Table 1). Critical for dealers, the TransUnion Auto Team has secured
approval from most of the top banks for Auto Digital Onboarding outputs to stand as valid
eKYC criteria. Integrating this solution now will give dealers a major competitive advantage in
the future environment.

Table 1: Are you planning to apply for new credit or refinance existing credit (e.g., mortgage,
auto loan/lease, credit card, personal loan, student loan) within the next year?

Total 37%
Brazil 36%
Canada 21%
Colombia 42%
Hong Kong 40%
India 56%
Philippines 47%
South Africa 33%
United Kingdom 31%
United States 33%
Source: TransUnion Consumer Pulse Survey Q2 2021

4 DIGITAL ONBOARDING GUIDE 1 TransUnion Consumer Pulse Survey Q2 2021

Table 2: How would you prefer to apply for new credit or refinance existing credit?

Online via Online via In-person

Online via Via mobile
a desktop website on at a branch Via phone
a tablet app
computer mobile phone location

Total 18% 7% 19% 20% 26% 10%

Brazil 17% 6% 28% 20% 22% 7%

Canada 27% 7% 17% 13% 25% 10%

Colombia 14% 2% 15% 13% 49% 8%

Hong Kong 20% 12% 14% 22% 22% 10%

India 13% 8% 17% 28% 22% 11%

Philippines 11% 3% 22% 21% 33% 11%

South Africa 19% 4% 18% 17% 33% 9%

United Kingdom 24% 11% 19% 20% 13% 12%

United States 21% 9% 21% 18% 19% 12%

Source: TransUnion Consumer Pulse Survey Q2 2021

To capitalise on this opportunity and drive growth, businesses need to focus on their onboarding flow (an integral part of the
overarching digital customer experience (CX)) — as first impressions are critical. One study found 50% of consumers said
they’ve dropped out of a previous credit application process due to poor CX.2
This guide explains how to create a smooth, seamless onboarding journey using rich data solutions, innovative technology,
resilient infrastructure, and with an emphasis on a more traditional aspect of transactions — trust. Additionally, it suggests
how transforming the onboarding experience is not an isolated activity, but one that unlocks business-wide collaboration
and growth.

2 TransUnion Consumer Pulse Survey Q2 2021

5 DIGITAL ONBOARDING GUIDE

 Make gains with friction-right design
Optimising onboarding during applications means balancing consumer
expectations against the need for identity verification, fraud prevention,
proven creditworthiness and adherence to compliance.

A 2020 Economist Intelligence Unit global

report found 85% of business leaders believe
85% smooth transactions are “essential to survival”
rather than merely a competitive edge.3

“These executives recognize the importance of ‘friction-right’ experience

that reduces drag on good consumers and minimizes frustration during
acquisition,” explains Shai Cohen, SVP – Fraud and Identity at TransUnion.

In the emerging economy, optimising onboarding processes will help

businesses positively identify more good customers first-time in a secure,
fast and customisable way. Equally, the tech stack should provide better
insights to more accurately detect and act on fraud risks, and deliver cross-
department benefits depending on the type of business and maturity of the
market you operate in.

3 New Dimensions of Change: Building trust in a digital consumer landscape, The Economist Intelligence Unit Limited, 2020

6 DIGITAL ONBOARDING GUIDE

The power of friction-right design: Five ways to boost acquisition efforts and performance
A friction-right approach includes layers of protection for businesses and consumers, and solutions and technology that analyse consumer data to calculate risk level. This allows
businesses to tailor their fraud checks to the risk level, resulting in more secure, user-friendly customer interactions.
The objective is to optimise the onboarding journey, letting as many good customers as possible pass through in a minimal number of steps whilst simultaneously identifying
potential risks, including fraud.

Great friction-right design helps businesses:

1 Identify more good customers the first time 3 Enhance CX by delivering the same or better outcome
with less effort
Modern identity verification solutions incorporate personal and device data. To support When there’s confidence in application onboarding verification methods,
acquisition strategies, businesses should fixate on being able to ID more good consumers CX can be strengthened with customer-centric solutions, such as
quickly and effectively the first time by minimising friction and building trust quickly. If fraud document verification or facial recognition, which lower friction and
signals are present, customers should be shifted to different routes with appropriate friction. accelerate users through the onboarding flow.
An imprecise identity proofing process can result in higher review costs when consumers are The digital ‘fraudemic’ is a media talking point, and through news stories
referred for risk. Whereas superior fraud controls and processes can result in higher pass and education efforts, consumers are becoming more aware of risks and
rates, higher revenue per customer, better consumer experiences, and in turn, more loyalty the level of scrutiny and friction they’ll encounter if they want to take out
— leading to higher balances transferred to new accounts. a loan, apply for a credit card or set up a new phone contract.

2 Better detect fraud threats

In terms of digital innovation, our research found consumers favoured
advanced identity verification, such as one-time passcodes or facial
recognition, in their financial services relationships. And in most countries,
With around 17 unique TransUnion Africa datasets managed, TruValidateTM offers there’s a consistent trend of younger generations more likely to want
exclusive protection through our fraud prevention model. Together with POPIA- advanced identity verification. The implication is consumers expect
compliant data on every SIM card and mobile device in the country, this allows us businesses to bake robust security checks into aspirational and intuitive
to provide insights and services not available to other providers. customer experiences.4
Leveraging a suite of identity solutions and fraud analytics to create onboarding Another benefit for embedding these solutions into onboarding flows is
flows that match risk requirements deepens insights into fraud threats and they can act as a deterrent to fraudsters, moving them away from your
associated cost. ecosystem before they do damage.

4 Maverick* Research: Reckless Digital Acceleration Fails — Digital Sensitivity

Differentiates, Gartner, June 24, 2021

7 DIGITAL ONBOARDING GUIDE

 4 Automate processes and redistribute resources
Table 3: In which situations would you want to be asked for advanced identity verification,
such as facial recognition or one-time passcodes delivered via email or text?

Solutions that enable a smooth and seamless onboarding flow present

Onboarding Login N/A an opportunity to automate some manual processes. For example,
Creating an
Logging in to Changing a hybrid model that uses automated document verification checks can
an existing account speed up the application process, removing drag and improving the
Applying for online account
online account information None of
a financial at a financial fraud capture rate. The additional benefit is this may enable resources
product online services at a financial at a financial the above
services service and budget to be deployed elsewhere.
company
company company

5
Total 39% 43% 38% 38% 24% TruValidate is designed to enable services through
Brazil 41% 46% 38% 38% 18% the same API
Canada 34% 36% 33% 40% 36%
Even after the initial development. This means even if budget is a
Colombia 45% 36% 34% 30% 20% concern today, or there’s a new security threat later, automated
components can be added or configured for the existing integrated
Hong Kong 39% 33% 32% 30% 29%
solution. This drastically reduces design and deployment time and
India 42% 48% 38% 39% 13% enhances management flexibility.
Philippines 33% 46% 34% 27% 19%

South Africa 42% 49% 47% 43% 16%

United Kingdom 42% 44% 42% 45% 22%

United States 38% 43% 38% 43% 30%

Source: TransUnion Consumer Pulse Survey Q2 2021

8 DIGITAL ONBOARDING GUIDE

Not all CX-friendly
solutions are built equally
Facial verification is a relatively new addition to the
onboarding flow — it can reduce the trade-off between
fraud and security, and support efforts to look and
feel like a leading technology brand.
Research in 2020 points to the influential role biometrics
(fingerprint, facial or voice recognition) will have; 85% of
executives believed they’ll be used to authenticate the
majority of payments in the next 10 years5.
With lifelike 3D masks, deepfake video and photo
editing software readily available, it’s essential a facial
recognition solution:

Makes onboarding convenient and doesn’t

create too much friction

Is inclusive

Prevents fraud — deterring fraudsters

(who don’t want to expose themselves)
and accurately detecting fraud by
being built to robust security and
compliance specifications

5 New Dimensions of Change: Building trust in a digital consumer

landscape, The Economist Intelligence Unit Limited, 2020

9 DIGITAL ONBOARDING GUIDE

TransUnion’s approach
to building a facial
recognition solution
TransUnion’s facial recognition solution uses an inhouse
SDK; its architectural design is vendor agnostic, working with
Android, iOS (across the last three versions) and web to offer
large consumer coverage. It supports the uploading and
checking of:

1 Static selfies

2 Real-time image capture — that enhances

mobile-first onboarding design

3 Video capture using visual and audible signals

Our product teams’ vision was to set a new benchmark

for a truly low-friction solution with single frame checks.
We identified the fraud risks associated with static selfies
or video (it’s simple to copy, spoof or intercept photos or
modify metadata, videos can be manipulated, and lifelike
latex masks can be used). As well, checks should be rigorous,
ISO compliant and completed in under five minutes. We also
wanted to offer an alternative to a multi-frame approach
which places greater demand on and friction for consumers,
potentially causing drop offs.

7 TransUnion blog: How to Identify Total Cost of Fraud to Optimize your Fraud Prevention Strategy

10 DIGITAL ONBOARDING GUIDE

 The advantages of using the same image are:

Zero extra effort for the user, reducing abandonment

Zero extra code for image capture, simplifying

complexity of the UI

Zero extra data to transmit, reducing network traffic

and associated costs

Zero information for a fraudster on how the liveness works

Detecting liveness by applying additional checkpoints to the existing

selfie image allows incorporation of robust and verified liveness
detection controls — often missing from processes for fear of
overburdening the end user. This approach, however, allows the user
experience to remain as friction-right as possible.

To quantify the completeness of single frame checks, it uses ISO

accreditations for passive liveness detection — compliance in Level 1
and Level 2 of ISO 30107-3 should be the minimum requirement
and verified by NIST approved laboratories.

In today’s mobile-first world, the importance of compliance that

covers iOS and Android, and integrates seamlessly into web flows,
cannot be overstated. We’re proud our single frame solution
successfully reached Level 1 and Level 2 compliance with an
Attack Presentation Classification Error Rate (APCER) of 0%
during certification. This next-gen solution gives businesses
confidence in great, friction-right experiences that deliver
positive consumer outcomes.

11 DIGITAL ONBOARDING GUIDE

Configurable fraud and ID solutions add
a new dynamic to optimisation efforts
During acquisition, different products or services require different levels of fraud and identity checks to
ensure as many good customers are accepted the first time.
Configurable fraud and identity checks have the potential to move the dial for conversion rate optimisation
—often seen as the domain of CRO or UX experts. Fraud and identity solutions offer performance
transformation at scale through test and learn opportunities, and the chance to uncover previously hidden
consumer trends and automation. Considerations when assessing solutions should include:

Performance optimisation
The ability to change workflows (directly or working with the vendor) rules and scorecards, and choose
components to iterate and optimise performance.

Differentiated insights
Data and analytics connectivity should be maximised with advanced analytics and machine learning
capabilities. Solutions should offer checks against global fraud databases across device intelligence, AML
watch lists and document verification, and local fraud or credit datasets depending on market maturity.

Streamlined, flexible and future-proofed services

A single API connection allows easy and quick integration with existing infrastructure. This should enable the
right solution, such as an ID check, AML check, email verification or document verification, to be delivered at
the right moment in the customer lifecycle and strengthen (not disrupt) the customer journey.

Decision-makers 7 believe there will be a consolidation in companies offering

4 in 5 fraud and security services in the next 10 years — taking a long-term view on
your vendors approach should be part of procurement considerations.

7 New Dimensions of Change: Building trust in a digital consumer landscape, The Economist Intelligence Unit Limited, 2020

12 DIGITAL ONBOARDING GUIDE

 Thinking ahead – the future of onboarding
The COVID-19 crisis drastically changed our world and sparked new behaviours that continue to evolve.
Then, as now, technology was at the forefront — both shaping and being shaped by those new behaviours.
As consumers moved online, a positive onboarding experience became business critical. Those dealers
and associated service providers that shifted gears, changed direction and accelerated their digital
transformation gained pole position.
But merely adapting and accommodating is never enough. To constantly convert more good customers,
satisfy emerging needs, cultivate long-term loyalty and successfully compete in a digitised world, your
onboarding process must deliver:

Seamless, friction- Mutual confidence and Improved fraud capture

right, device-agnostic trust — in consumer rate as the threat of
experiences identities and the safety digital fraud evolves
of information shared

Onboarding experiences vary across countries due to market maturity around credit, compliance and
demographics. For South African auto dealers, speeding customers through the application journey whilst
meeting affiliate business partner and regulatory demands requires a sophisticated hybrid of world-class,
global technology and on-the-ground, granular insights.
The rapid adoption of mobile and Open Banking in South Africa demonstrates the power of digital
experiences to be more socially and financially inclusive. It also underscores the enthusiasm of
South Africans to chase and embrace the opportunities of leapfrog technologies.
As a leader in the auto industry seeking to protect your lead and pull ahead of the competition, you must
consider the importance and potential of digital onboarding to transform experiences, exceed
expectations and enhance long-term customer loyalty.

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Make streamlined experiences and happy
customers a reality
Do you want to unlock the potential of our onboarding flow
and make your first impression count? We help businesses
transform their onboarding flow through innovative data
solutions and analytics. Work with us to realise your
customer experience ambitions, improve fraud capture rates,
and discover new ways to drive improvements that benefit
teams across your business.

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company
that makes trust possible in the modern economy. We do
this by providing a comprehensive picture of each person
so they can be reliably and safely represented in the
marketplace. As a result, businesses and consumers can
transact with confidence and achieve great things.
We call this Information for Good®.
A leading presence in more than 30 countries across
5 continents, TransUnion provides solutions that help create
economic opportunity, great experiences and personal
empowerment for hundreds of millions of people.

@ 2022 TransUnion LLC All Rights Reserved | AF-22-2231279