How to make account opening more customer-friendly

Technology
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The world has gone digital. That means customers expect swift, seamless experiences across online and mobile—including from their bank. Learn how the account funding process contributes to user experience, and how optimizing it can drive results for your institution.

Banking customers want great digital experiences. It’s important for banks to understand what exactly that means—both internally and from their customers’ points of view. Banks who don’t deliver a superior experience will not only acquire new customers more slowly, but may also fall short of existing customers’ expectations and thereby lose the opportunity to grow relationships.

Research from McKinsey has shown that banks who have better overall customer satisfaction show measurably higher rates of new account applications by existing customers. “Highly satisfied” customers, the research says, are 2.5x more likely to consume additional banking products or open new accounts relative to those who report only being “satisfied.”

Account funding, in particular, plays a significant role in your bank’s account opening process as far as user experience is concerned. Subpar account funding can be frustrating to work through, and if it takes too long, customers are likely to abandon the application process altogether. Streamlined, easy-to-accomplish funding is a must-have for any modern account opening process, and the best account opening platforms also inevitably pay close attention to funding methods and best practices.

In this piece, we’ll evaluate three of the most common account funding options and share MANTL’s best practices for getting the most out of your account funding process.

Funding method 1: manual entry

Manual entry is a traditional method that requires applicants to manually enter account and routing numbers before completing a micro-deposit. Manual entry comes with some caveats; even if applicants have these numbers handy, the process is relatively labor-intensive and error-prone for both applicant and bank employees, and account information sometimes takes up to five days to validate. For this reason, certain customers will be underwhelmed by manual entry, so it’s important for your bank to offer alternative funding methods.

Manual entry also requires the applicant’s driver’s license number and state of issue. MANTL has worked with community banks across the country, and almost universally, we’ve found that requiring a driver’s license leads to significant customer drop-off. Moreover, many banks overestimate the potential benefits of requiring a driver’s license. Other funding methods are equally secure and entirely compliant, with less time and fewer steps required.

Why is time important? According to MANTL research, every 10 seconds added to the application process correlates roughly to a 5 percent increase in application abandonment. So the increased average time to completion associated with certain funding methods isn’t doing your bank any favors. And on micro-deposits specifically, research from MX found that “the onboarding drop-off rate for businesses using the micro-deposit process [was] as high as 49 [percent]”—meaning some banks have let almost half of potential new accounts fall through the cracks due to funding via manual entry. Clearly, this dynamic can be improved upon, and other funding methods are thankfully better equipped to help, rather than obstruct, potential customers interested in opening an account with your bank.

Funding method 2: debit or credit card

This method requires applicants to enter their card number, expiration date, and CVV security code to fund an account. After the card is verified as being active and in good standing, the funding transaction is completed. If the applicant uses a credit card, they gain the benefit of earning credit card rewards while meeting the minimum deposit requirement for a new account.

While it’s certainly easier than manual entry, debit and credit card funding is not without its caveats.

One significant drawback for your institution is that initial deposits made with debit or credit cards tend to be low on average. Across the industry, roughly 47 percent of funders will choose to fund with a debit card, but ultimately, those funders will only account for 5 percent of total deposits.

In addition, fraud is a concern when it comes to debit and credit cards. MANTL’s account funding research has revealed that credit card funding in particular generates more fraud than any other channel on a percentage basis, most often in the form of stolen cards or charge-back activity. For this reason, MANTL doesn’t recommend allowing credit card funding at all. We believe the risk isn’t justified—especially when alternatives exist that are speedy and convenient without the added risk. Funding via debit card, on the other hand, is safer but not ideal for customer experience and conversion. Ultimately, any solution that requires customers to input account or card numbers to fund will create a bottleneck in your process—which is why MANTL’s first choice for funding is IAV.

Funding method 3: instant account verification (IAV)

Instant Account Verification (IAV) allows applicants to use their online banking credentials from an external bank to validate their account details and confirm a funding amount. This process takes just a few seconds, and provides real-time account validation.

Our research has found that applicants who don’t know the exact balance of their external accounts are more likely to deposit the minimum required amount—simply because they know it won’t overdraft their account. MANTL’s IAV integration displays the real-time balance held in the external account during funding. Institutions who have adopted this method have found that it encourages higher funding amounts, with initial funding amounts for IAV-facilitated accounts being about three times larger on average.

Typically, applicants under 35 are more likely to use IAV, making this method particularly attractive for banks focused on building valuable long-term customer relationships. IAV does require customers to consent to data sharing, but MX’s research also found that the onboarding drop-off rate for IAV was low as 1 percent, suggesting that data sharing consent is not a significant bottleneck if the rest of the account funding experience is streamlined.

Customer experience is key to higher satisfaction rates

Customers value their time. Initiating your banking relationship with a fast, convenient online account opening experience shows them that your bank values it too. And for your institution, a superior funding experience drives growth in the form of better conversion rates and higher initial funding amounts.

Community banks are built on providing phenomenal customer service. MANTL’s platform puts customer experience first, without sacrificing on compliance or personalization. Get in touch with us to learn more.

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