Modern consumers are accustomed to the conveniences of consumer apps such as Uber and Amazon. These consumers expect the same user-friendly experiences during the account opening process. The banking industry, however, faces unique onboarding challenges that are not present in other industries- such as complying with strict and dynamic regulations. Here are 5 ways to significantly improve the account opening process:
1. Adopt a Mobile-First Account Opening Process
Banks have experienced a 14.5% increase in online account openings since the start of the pandemic. Yet only 40% of banks provide an end-to-end mobile account opening process. As more and more customers turn to mobile for their banking needs, banks need to offer customers a “mobile-first” banking experience.
Providing a mobile-first experience is far more nuanced in banking than it is in other industries. Banking customers rely on a complex mix of in-person and digital channels. A recent McKinsey report noted the challenges of meeting the needs of customers that “are increasingly channel agnostic, jumping between channels to solve problems and get answers. They are also embracing digital channels embraced by human interaction.” This means that banks should not only offer the option to open a new account on a mobile device but must provide opportunities for seamless digital and human interaction throughout the account opening process.
2. Strike a Careful Balance Between Compliance and the Customer Experience
Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations have drastically increased the costs of opening new customer accounts. These costs come in many forms, such as compliance and regulatory fines. The costs of AML compliance across U.S. financial services firms cost an estimated $25.3 billion per year. While financial institutions in the U.S., Europe, APAC, and the Middle East have been subject to nearly $26 billion over the past decade in financial penalties for AML, KYC, and other sanctions-related violations.
There are also indirect costs associated with a poor customer experience. According to some estimates, banks take an average of 24 days to complete the customer onboarding process. A lengthy account opening process can lead to abandoned applications and lost revenue.
To strike a balance between compliance and providing a superior customer experience, banks must leverage automation technologies in the account opening process. For example, a low-code business process management (BPM) platform allows banks to streamline customer data collection to provide lightning-fast approvals while enabling service representatives to focus on the customer service.
3. Leveraging Data for a Faster and More Personalized Experience
Approximately 75% of banks report that their account opening process takes more than 5 minutes while 30% say that it takes longer than 10 minutes. Prolonged processes cause abandonment rates to rise exponentially. For account openings that take more than 10 minutes to complete online and more than 5 minutes on a mobile device, the abandonment rate impacts account openings at a rate of up to 40%.
To speed the account opening process up, banks will need to leverage customer data to promote relevant cross-sell attempts and boost customer retention. Many banks make the mistake of targeting new customers at the expense of current customers. Targeting a current customer, however, has a 60-70% chance of converting whereas the chance of landing a new prospect is just 5-20%. Moreover, a 5% increase in customer retention produces more than a 25% increase in profit.
Banks can leverage technology to identify which customers to target for cross-sales and capture more business that is typically lost to other financial institutions. Banks can also improve the account opening process by streamlining repetitive and time-consuming tasks.
4. Emphasize Regulatory and Security Initiatives
While KYC and AML regulations prolong the account opening process and can negatively impact the customer experience, research shows that most banking customers view these regulations favorably. The authors of a recent Deloitte study noted that “the fact that consumers know about regulatory requirements…might be tamping down expectations around speed and complexity.”
The authors concluded that banks may even want to incorporate their customer security initiatives in their marketing strategy. “In this regard, banks might even want to emphasize it in their overall messaging strategy as a benefit that customer don’t get from less regulated non-bank competitors.” Yet even the most patient of banking customers will consider going elsewhere should the account opening process prove unreasonably long. Again, banks must strike a careful balance between security and the customer experience.
5. Automate Customer Communication and Follow Up
Timely following up with customers is an incredibly important aspect of the account opening process. The same Deloitte study also found that “the lack of a follow-up by the bank created much greater dissatisfaction among [customers]…Even more alarming for banks, these demanding customers also had to follow up with the institution on their own, at a rate that was many times higher than other consumers.”
The reasons for follow up are wide-ranging, but often include customers seeking information that could have been provided during the account opening process. To eliminate time-consuming customer interactions and improve the customer experience, banks should leverage automation technologies to provide customers with important information, features, and promotions associated with their new account.
ProcessMaker offers a powerful low-code BPM platform for banking that has helped countless banks located around the world to provide their customers with a world-class account opening process.