We sat down with Doug to talk about what’s new in small-business banking, how to meet customers’ changing demands, and why conversion rates matter more than ever. Here’s what he had to say.
In Nathaniel Harley’s predictions for 2022, he said that “small businesses are the new retail banking customer.” Do you agree?
I do. About five years ago, we started hearing that a huge number of consumer checking accounts were shifting away from community banks to megabanks and digital banks. Now we’re starting to hear the same type of dynamic with business deposit accounts, too. And it really comes down to this: who has the easiest tools for me to interact with them? To use a sports analogy, we’re probably in the eighth inning when it comes to the digital transformation of consumer accounts, but only in the bottom of the first when it comes to business accounts. The process is just getting underway, but it’s definitely happening.
What’s driving that change?
Honestly, everything. Digital experiences have become ubiquitous across every aspect of consumer life in America today — from buying a burrito to buying a car. 60% of American consumers believe that online experiences are becoming more important than in-person experiences. So if we’re talking about small business owners, it’s important to remember that they’re consumers, too. They’re fully accustomed to doing everything online. And if you approach them with an inefficient legacy process, they’re going to say: wait a minute, I have this fantastic experience on the consumer side, but a terrible experience when I try to open a business account.
That makes a lot of sense, because they’ve got a front-row seat to these changes in consumer behavior. They’re pivoting to meet the same demands. And many of them are bringing digital tools into their day-to-day operations.
Absolutely. Think of it this way: more than 4.4 million new businesses were created in the U.S. in 2020 alone. That’s the highest annual total on record. About 25% of those entrepreneurs describe their businesses as “purely digital.”
So one-quarter of all new businesses are operating fully in the digital realm. It stands to reason that if you’re creating a digital-first business, you’re going to expect a digital-first experience from your bank.
How is MANTL helping FIs meet those new demands?
We recently launched Business Account Opening by MANTL, which not only cuts down the time it takes to open business accounts — it also enables banks to open more accounts with fewer exceptions. To me, it’s like the CarMax of account origination. You go to CarMax, and a sales associate can buy your car back and sell you a new one on a tablet, without necessarily having a deep knowledge of what’s involved in that transaction from a technical perspective. They’ve got everything they need on their tablet to carry out a very complex series of functions, with technological guardrails in place to avoid the kind of errors that you’d get with a more manual process. That’s effectively what we’ve done with business onboarding. There’s a lot of complexity in setting up a business deposit account: you’ve got to collect information on the owners of the business. You’ve got to verify it. Depending on the activities of the business, you may need to collect more information. You may have different requirements for different entity types and activities the business is engaged in. The point is — there’s this vast universe of potential scenarios you need to cover. And if you’re doing all of that manually, even the best-trained employees in the world will make mistakes once in a while.
What’s the cumulative impact of those errors? How does that impact operational efficiency?
Think of it this way: let’s say you cut the length of your typical onboarding process in half. What’s the value of that time? It’s not just the amount per hour that you’d be paying an employee to deal with it. A logjam impacts everything downstream. You’ve got to consider the opportunity cost of not being able to tackle other, more strategic tasks. How could you put that time to better, more valuable use?
Maybe you could dedicate more resources to treasury management onboarding, or providing more hands-on service to your highest-value customers, or reaching out to your community in more visible or valuable ways.
How does customer experience play into this equation? In other words: what’s the value of focusing on building a better customer experience?
I can tell you this: nobody likes having to answer the same questions more than once. That’s a terrible experience by today’s standards, no matter what industry you’re talking about. Just today, I was speaking with a prospect who’s currently using a competitor’s solution for online account opening. And he told me that people are constantly starting applications online and not finishing them, which is a very common problem with a lower-converting solution. Then these customers come into the branch to complete their applications, but the branch has no way to see the information that the customer has already provided. So you’re starting off on the wrong foot from the get-go. That’s a very bad impression to be making, especially when you’re dealing with personal data. Put yourself in the customer’s perspective, who’s probably thinking: where did all that information go? Can I even trust this organization with my most sensitive information if they can’t keep track of what I’ve already told them?
So how do you measure customer experience when it comes to account origination? What metrics would you apply as a benchmark?
When we talk about user experience, we really focus on conversion rates. I think it’s safe to say that if you have a poor conversion rate, you’re probably delivering a subpar customer experience. You’re frustrating people to the point where they abandon the application. If you focus on solving that, if you focus on streamlining your account opening process and optimizing for quantifiable metrics like a conversion rate, then you’re much more likely to have satisfied customers.
Think of it this way: if you own a business but nobody can get in the front door, then it doesn’t really matter what else you’re doing. You’re either making a bad impression or you’re losing people altogether. And who can afford that? Nobody — not in this environment. If you don’t make it easy for people, they’ll find someone who will.
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