Imagine you’re holding a concert and decide to spend most of your resources on publicity. You generate buzz and sell out all your tickets, but when guests arrive, the door is difficult to find, the venue is understaffed, the bartenders are out of ice, and the microphones don’t work. At this point, it won’t matter how great your opening act is; you’ll likely lose plenty of attendees before the event even begins.    

This may sound like an absurd proposition, and yet it’s exactly what's happening inside fintech growth funnels. 

I've spent nearly a decade at Fourthline: first building the KYC product, then working directly with clients in Customer Success, and now leading revenue. This experience has given me a deep understanding of where financial institutions allow growth trends to stagnate. And more often than not, it isn't in the acquisition funnel. Instead, it’s what comes after.  

Marketing teams get a huge budget, and proceed to run exceptional campaigns. CAC is being tracked to the decimal, and sign-up numbers are being celebrated internally. Meanwhile, a significant portion of those users are silently failing to complete their onboarding. The marketing is great, and the product is great too, but the customers aren’t actually walking through the door.  

The good news is that it doesn’t have to be this way. In this article, I’ll discuss where funnels are breaking, how it’s eating into acquisition budgets at scale, and what to do about it.  

What your funnel isn’t showing you 

The standard fintech onboarding funnel runs in a relatively linear fashion: acquisition leads to sign-up which then leads to identity verification and account creation. Most growth leaders have deep visibility into the first step and adequate visibility into the second one. It’s the third step where things begin to get shaky.  

And it's not hard to understand why. In the best case, users arrive at the verification stage after a well-designed marketing journey. Then they hit a KYC onboarding flow that actually asks them to do some work: enter their personal details, photograph their ID in good lighting, take a selfie, and wait for a verification result. If something goes wrong at any point, it’s enough for them to abandon the process entirely. 

The impact of onboarding friction is measurable: Deloitte reports that one in four UK adults would abandon account opening if identity checks were too time-consuming or complex. McKinsey has found that KYC due diligence and account opening consume more than 40% of the time corporate-banking customers spend onboarding.  

And the reasons are generally consistent: friction, confusion, no real-time feedback (or, too much real-time feedback), and a poor mobile experience. These both are UX problems and conversion problems, not just compliance problems. But because of where identity verification sits in most organisations,  growth leaders often never see these results, or have the opportunity to fix them.  

All this adds up to paying for customers who never become customers at all. 

The Customer Acquisition Cost (CAC) multiplier effect, and how it impacts growth   

Let me get a bit more specific about what I mean by paying for customers who don’t convert.   

Many growth dashboards calculate an early-funnel acquisition metric using registrations or onboarding starts. That number may be useful operationally, but it is not the true cost of acquiring an activated customer. It's a clean number that’s easy to report, but it’s almost certainly wrong. Why? Because CAC counts those who started onboarding, rather than everyone who completed it. And let’s face it: the customers who sign up and don’t actually become a customer aren’t of any real value to your organisation, or your bottom line.  

In this way, every customer who drops off inflates the effective CAC of every user who doesn’t. These customers consumed acquisition spending, and yet they generated zero lifetime value. And the worst part is that they are hanging out in your funnel metrics, making your CAC look better than it actually is.  

We can look at a concrete example. If you spend €1M acquiring 10,000 users but only 30% complete onboarding, you've effectively paid to acquire 3,000 customers. This makes your real CAC 3.3 times higher than your dashboard reports. The other 7,000 aren't even in the funnel anymore. They become sunk costs. 

The compounding effect is worse than the immediate number suggests. Inflated CAC extends the payback period, weakens the LTV:CAC ratio, and ties up capital that could otherwise fund the next acquisition cycle. Compressed LTV changes your unit economics, and with them your ability to invest in the next acquisition cycle. All this means that a leak in the onboarding funnel expands well beyond it.  

For many growth leaders, the question “When did you last reconcile your acquisition spend against your actual onboarding completion rate?” might be an uncomfortable one. But it’s a question worth asking if you want to see a meaningful impact in your CAC.   

Doing onboarding right the first time 

The quality of your onboarding experience is a growth lever. And, it’s one of the highest-ROI conversion optimisations available to you.  

The truth is that in financial services, a customer who has a negative experience is likely gone forever. Which is why getting it right the first time is so important. Higher completion rates mean more users reaching activation and generating revenue. Fewer confused, frustrated users mean lower customer service costs, less bad press, and a better bottom line. Users who complete onboarding smoothly are more likely to become the engaged, high-LTV customers your acquisition spend was trying to find in the first place.  

What quality onboarding as a growth metric looks like in practice 

A growth-led approach to identity verification isn't necessarily complicated, but it does require rethinking how onboarding is treated in a company’s growth apparatus.  

There are practical ways to achieving this. Here are a few:  

• Finding the balance of offering just enough real-time feedback during the verification process. This way, users know what's happening and what to do if something goes wrong, but aren’t overwhelmed by too much information.  

• Identifying ineligible users early, before they invest time in a journey that won't convert.  

• A mobile-first, guided experience that reduces confusion at every step.  

• Full funnel visibility, from advertisement click to activated accounts, so that you can actually see where users are dropping off and why.  

As I see it, these are baseline for any onboarding experience that takes conversion seriously. Your growth dashboard will tell you what you spent, but it won’t tell you what you wasted. Taking a holistic look at where customer friction is creating drop off is necessary for keeping your customers happy and your business growing. 

At Fourthline, we've spent nearly a decade helping fast-scaling fintechs close the gap between acquisition spend and activated customers. If you'd like to understand where your onboarding funnel is leaking, and what it’s costing you, we’re here to help.