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Technology

Proven tactics to boost online account opening

Picture this. Newlyweds are looking to open a joint checking account online. They’ve chosen your bank because they value the local network and they believe your fees are fairer than those of the big banks.

Then, they get to your website and start the online application. Faced with multiple screens, lengthy disclosures and multiple document requests, they close the laptop and decide to return to the task later. But they rarely do.

When a customer begins an application, they’re sold

With a poor online account opening experience, the value of your marketing efforts, your community outreach and your digital presence are drastically diminished. If potential customers aren’t able to quickly onboard, you are, in effect, unselling those customers.

In the eyes of consumers, the time and effort it takes to open an account online is a proxy for the ease of doing business with your bank in general. Though many consumers may value your local connection, there’s a point at which they’re likely to give that up for added convenience.

The average community bank has an online account opening flow that takes between eight to ten minutes to complete. One in five banks has an online account opening process that actually exceeds ten minutes. What’s best practice in retail banking? Three minutes or less - that’s the customer’s other option.

Every minute of your online account opening process unsells the customer

Here’s a scary statistic: according to Javelin Research, only 8% of consumers are able to successfully complete account applications, start to finish, on a mobile device—only 34% on computers. Our own data shows that this is in an environment where, according to BAI, “more than half of customers (57 percent) would prefer to open a deposit account online.”

Suppose 500 potential new customers visit your website and attempt to open an account, but only 8% of them, or 40 people, actually end up doing it. If a branch performed at this level, a bank would likely take swift action to better train, staff, and resource the branch. So, why not do the same for your digital branch?

In the digital world where consumers expect instant results, every minute added to your online account opening flow increases their likelihood to abandon the process. Understandably, community banks and credit unions don’t have the resources that money-center banks have at their disposal to build best-in-class digital account opening. Fortunately, they don’t need to.

Four tactics that improve conversion rates

A three-minute account opening process is more than possible, whether that’s on a desktop, laptop, smartphone, or in your branch. By automating the majority of the process, effective software should streamline the experience for consumers and your bank. Here are just a few ways technology can cut the time to open an account:

  • Switch to a non-documentary based Know Your Customer program: Financial institutions are able to comply with regulatory requirements without utilizing documentary methods to verify customers’ identity. In fact, the Federal Financial Institutions Examination Council (FFIEC) has standing guidance allowing non-documentary based customer identification programs. Asking for documentation (like a scan of a driver’s license) can cause up to a third of your customers to abandon the application, with negligible fraud reduction.
  • Eliminate knowledge-based authentication (KBA) for more robust digital identity checks: You can now perform KYC/AML checks in seconds by taking information collected from a user, both directly inputted (name, DOB, SSN, address, phone number, email etc) and passively gathered (browser type, IP address, linked bank account information) and comparing it to identity information available in the public and private spheres. Not only does it reduce fraud, but it significantly decreases the time to open an account.
  • Book accounts directly to the core 24/7 using store and forward functionality: Many core banking systems have periodic downtimes. Today’s consumers expect technology to work 24/7/365, including weekends and public holidays. Technology that integrates with any bank’s core should have the ability to circumvent your core’s down-time through a process called store and forward. This enables your customers to complete the application process without added fraud risks, even when your core is down.
  • Convert PDF disclosures to HTML: Not only are PDFs borderline impossible to make ADA compliant, but they often require the customer to leave your onboarding screen. Further, your terms of service should never be the first step of your account opening process. It’s best to reserve the intimidating legal jargon until the end.

The Conference of State Bank Supervisors' 2019 national survey found that 35.4 percent of community banker respondents cited funding costs as the biggest influencers on profitability over the next 12 months. It’s a highly competitive market for core deposits and big banks are taking market share at increasing rates. By optimizing the time to open an online account, community banks and credit unions can better compete and grow their businesses.

The average application on the MANTL platform is completed in 2 minutes and 37 seconds. Reach out to learn how.