Customer drop-off during onboarding is the point at which a person who intended to become your customer abandons the signup process before completing it. They wanted the account. They started the application. Something in the process stopped them, and they left.
The cost is described as hidden because it never appears as a line item. A failed transaction generates a record. A compliance breach generates a penalty. An abandoned application generates nothing at all. The marketing spend that acquired that person has already been paid, the revenue they would have produced simply never arrives, and because the loss is invisible in the accounts, it is rarely measured and almost never budgeted for.
For South African businesses there is an additional dimension that most international commentary misses entirely, which is that a meaningful share of local onboarding failure is caused not by process design but by verification infrastructure being unavailable at the moment of signup. This guide covers the scale of the problem, its real cost, its causes, and what can be done about it without weakening compliance.
How Many Customers Actually Abandon Onboarding?
The most widely cited measurement of this problem comes from Signicat's Battle to Onboard research, which has tracked financial services onboarding abandonment in Europe since 2016.
The trend is the finding that matters. Abandonment stood at 40 percent in 2016, rose to 63 percent in 2020, and reached 68 percent in the 2022 edition, based on a survey of 7 600 consumers across 14 European markets. In other words, more than two thirds of people who began a digital financial application did not finish it, and the figure has worsened over time rather than improved.
That is counterintuitive, because onboarding technology has advanced considerably across the same period. Signicat describes the reason as an expectation paradox. Every time someone signs up for a streaming service in thirty seconds or authorises a payment with a fingerprint, the baseline for acceptable friction shifts. Improvements in onboarding are outpaced by the rise in what customers consider tolerable.
Patience is also contracting. The average time consumers spent on an application before abandoning it fell from around 26 minutes in 2020 to under 19 minutes in the more recent research. The window in which a business must complete verification is narrowing.
These figures describe European financial services and should be read as indicative rather than as a South African benchmark. The underlying dynamics, however, are not region-specific, and South African businesses operate with verification constraints that European businesses do not face.
Why is the Cost Described as Hidden?
Drop-off is expensive in four distinct ways, and only the first is obvious.
The acquisition spend is already sunk. Advertising, promotion, sponsorship, referral incentives and sales effort are all paid before the customer completes onboarding. An abandoned application is a fully funded acquisition that produced nothing. Research commissioned by Signicat estimated that at least €5.7 billion is wasted annually across European financial services on abandoned onboarding processes, and a separate industry estimate put the annual cost of abandoned KYC processes to the banking sector at around $3.3 billion.
The lost revenue is the lifetime value, not the first transaction. The true cost of losing a customer at signup is every product they would have taken, every transaction fee, and every year they would have stayed. For a bank, an insurer or a lender, that figure is orders of magnitude larger than the acquisition cost.
The damage extends beyond the individual. Signicat's research found that after a poor onboarding experience, more than half of consumers were less inclined to use that provider in future, and around a third would actively warn others away. The person who abandoned is not neutral. They are a detractor who has told you nothing about why they left.
The loss is silent. A customer who is declined generates a decision record. A customer who abandons generates an incomplete session. Unless a business deliberately instruments its onboarding funnel, it has no idea how many people it lost, at which step, or for what reason. Most organisations can state their approval rate with precision and cannot state their abandonment rate at all.
What Actually Causes Customers to Drop Off?
The causes are well documented and, encouragingly, most of them are fixable.
The customer does not have the document you asked for. In Signicat's research, 38 percent of consumers who abandoned said they did not have the required identity credential to hand. This is the largest single cause and it has nothing to do with user interface design. Asking for a document the person cannot produce in the moment is a design decision, not a regulatory requirement.
The process takes too long. Around 21 percent cited duration as their reason for abandoning, and with average patience now under nineteen minutes, the tolerance for multi-session processes is very low.
You asked for too much. A further 21 percent abandoned because they felt they were being asked for excessive personal information, and around 30 percent found the process complicated. This intersects directly with POPIA's requirement that personal information collected be adequate, relevant and not excessive. Over-collection is both a compliance risk and a conversion cost.
Document capture fails. Blur, glare, wrong document type and repeated rejection without explanation are among the most common stall points in any upload-based flow.
The customer is left in silence. A person who has submitted their information and receives no confirmation of status frequently assumes failure, even when the submission was received and is processing.
The verification could not be completed at all. This is the cause that is specific to the South African market, and it deserves its own section.
The South African Cause Nobody Budgets For: Verification Downtime
South African identity verification depends on the Department of Home Affairs. When a business verifies a South African identity number against the National Population Register through the HANIS database, it is dependent on that system being available at that moment. When it is not, the verification cannot complete, and the customer is either told to try again later or left watching a process that does not finish.
The scale of that dependency is now a matter of public record. In response to a parliamentary question in August 2026, the Minister of Home Affairs reported that working hours lost to system downtime at Home Affairs front offices fell from 35 426 hours in the 2024/25 financial year to 13 867 hours in 2025/26, an improvement of approximately 61 percent.
That headline figure has been widely reported, and it is genuine progress. But it describes downtime at Home Affairs offices, which is not the system most businesses depend on. The figure that matters for private sector verification is downtime on the National Population Register itself, and that fell by only 22 percent, from 14 720 hours in 2024/25 to 11 479 hours in 2025/26.
Two conclusions follow. The first is that the system underpinning commercial identity verification in South Africa still recorded more than eleven thousand hours of recorded downtime in the most recent financial year. The second is that it is improving considerably more slowly than the headline number suggests, so businesses planning on the basis of the 61 percent figure are planning against the wrong metric.
The Minister has himself acknowledged the commercial consequence, noting that when the Home Affairs verification system is down, slow or returning errors, it damages the ability of banks, insurers and other financial service providers to verify clients and conduct business. The Department and the State Information Technology Agency are reportedly assessing a move towards a 99.999 percent availability service level, and the trajectory is clearly positive, but that is a target rather than a present state.
For a business, this reframes the problem entirely. A share of your onboarding abandonment is not caused by your form, your copy or your user experience. It is caused by an external dependency failing while a customer is waiting, and no amount of interface optimisation will recover it.
Why Loosening the Checks is Not an Option
The instinctive response to onboarding friction is to reduce it by deferring verification, and in a regulated business this is the one solution that is unavailable.
Accountable Institutions under the Financial Intelligence Centre Amendment Act (FICA) must establish and verify a client's identity before establishing a business relationship or concluding a single transaction. In some sectors the Financial Intelligence Centre has stated this in explicit terms, having made clear that accepting client funds before identification and verification is complete is a contravention of the Act rather than a commercial judgement call.
The relevant question is therefore not whether to verify, but how to verify without losing the customer while you do it. Refer to our guides: What is an Accountable Institution? FICA Obligations Unpacked and What is KYC (Know Your Customer)?
It is worth noting that the trade-off is less severe than it once was. In 2017 ThisIsMe reduced digital FICA compliance from a two-week process to roughly three minutes, and the intervening years have removed most of the remaining tension between compliance and experience. Where onboarding still takes days, that is now a function of process design rather than of what the regulation requires.
How Do You Reduce Drop-Off Without Weakening Compliance?
Six changes address the causes above directly.
Verify against authoritative data instead of asking for documents. The largest single cause of abandonment is the customer not having the document you requested. Verifying an identity number directly against Home Affairs records removes the document from the equation entirely for most South African customers. Refer to our guide: What is Identity Verification (IDV) and Why Does it Matter?
Build in automatic failover so downtime does not reach the customer. Verification that fails over to cached identity data when the Department of Home Affairs is unavailable, and resumes live verification the moment it returns, converts an outage from an abandoned application into an invisible event. Given that the National Population Register recorded over eleven thousand hours of downtime last financial year, this is the single highest-impact change most South African businesses can make.
Tier your checks by risk rather than applying one process to everyone. FICA's risk-based approach permits simplified due diligence for lower-risk clients, and your Risk Management and Compliance Programme is where that tiering is defined and justified. Applying an enhanced process to every customer is not more compliant, it is simply more expensive and more lossy. Refer to our guide: What is a Risk Management and Compliance Programme (RMCP)?
Collect only what you need. Every additional field is both a POPIA exposure and a conversion cost. If you cannot articulate why a data point is required, removing it improves compliance and conversion simultaneously.
Run checks in parallel and automate the sequence. Identity, address, contact, screening and account verification do not need to be sequential, and a customer should not be waiting on a human to move the process forward. Refer to our guides: Manual vs Automated FICA Compliance: Which is Right for Your Business?
Provide a route for customers your standard flow cannot verify. Foreign nationals, asylum seekers and thin-file individuals frequently fail standard verification and are written off as abandonment when they are in fact unserved demand. Refer to our guide: How to Onboard Refugees and Asylum Seekers with NIIS.
How Do You Work Out What Drop-Off is Costing You?
The calculation is straightforward, and most businesses have never done it.
Take the number of applications started in a period and subtract the number completed. Multiply that figure by your cost per acquisition to establish the marketing spend wasted. Then multiply it again by the average lifetime value of a customer to establish the revenue foregone. The second number is the real one.
Then break the abandonment down by step, so that you can distinguish between customers lost at document upload, customers lost waiting for verification to return, and customers who never started. Those are three different problems with three different solutions, and a single aggregate abandonment rate conceals all of them.
Businesses that instrument this properly are frequently surprised by two things: how large the total is, and how much of it sits in a single identifiable step.
Onboarding and Verification Solutions for South African Businesses
As South Africa's leading provider of world-class identity verification, KYC, AML screening and due diligence solutions, ThisIsMe helps businesses verify every customer without losing them in the process. Our automatic failover services keep identity verification running during Department of Home Affairs downtime and resume live verification the moment it returns, while real-time HANIS verification, one-click combined identity and AML screening, document and biometric verification, and full API automation let you complete compliant onboarding in minutes rather than days. With access to 45+ services and a decade of experience reducing FICA compliance from weeks to minutes, ThisIsMe helps businesses protect both their compliance position and their conversion rate. To experience our full suite of onboarding and verification solutions and find out how we can serve your business, contact our team here.
