This article is part of a series on improving industry-specific digital account opening processes.
Digital banking used to be a luxury for top-tier banks, with most activity taking place at a brick-and-mortar branch. Now, more than half of customers conduct most of their banking on the internet, and the digital experience is the chief factor influencing a customer’s choice of a new banking partner. As a result, digital account opening is no longer reserved for industry leaders, but is a vital essential in every bank’s digital offering.
The cost of a poor account opening experience is hefty—not only in customer satisfaction but financially. Commercial banks risk $4.5 billion in revenue if they continue to work through systems that don’t move at the speeds expected by modern customers. To build a commercial account opening solution that’s intuitive, interactive, and user-friendly, you must put the customer first.
Why banks need to rethink their customer experiences
Customers are unwilling to wade through time-draining application processes
For many banks, a six-week application timeframe is status quo. Institutions that beat this number think they’re ahead of the game. But, nearly three-quarters of customers believe bank functions should be near instantaneous. They’re unwilling to wait on even complex functions like account opening or treasury funding.
Application abandonments cost the banking industry big bucks
Many customers begin the account opening process online, but immediately stop once things get too complicated. In 2018 alone, abandoned applications totaled $3.3 trillion in losses. By focusing on user-friendliness and ease-of-use, you can attract the business customers that other banks lose in the confusion.
Account opening speed enhances loyalty
Business owners are busy and measure potential projects by their time investment. They’re most loyal to banks that respect their time pressures. In fact, 96% of customers who undergo a high-effort banking experience become disloyal to their financial institution. What questions are they asking when considering your account opening process?
- How long will this take me?
- How much paperwork is required?
- How many back-and-forth emails or phone calls will pile up on my to-do list?
- How many clicks and taps are needed from start to finish?
Analysts estimate that an iron-clad account opening process can earn your bank between 3% to 10% incremental value over the first year. Here are the four steps to delivering a winning self-service account application.
How banks can create a winning digital account opening experience
1. Collect basic customer data in intuitive ways
A winning digital account opening process is more than pasting your offline application onto a website. Digital should be quick and fast, satisfying the modern thirst for convenience and expediency.
- Use progress bars or countdowns to show how many steps or minutes remain. Establish expectations by giving customers a roadmap of the overall process.
- Ask only the essential questions. Review your entire application with your team to decide what fields to ax or what forms you can improve by leveraging useful functions like auto-complete.
- Ask all questions upfront. Enterprise customers do not have time for “just one more thing” requests. Make sure you’re requesting everything upfront without any frustrating follow-ups.
While your current paper application might be dozens of pages, don’t weigh down your online process with unnecessary form fields. To offer the best digital account opening experience, you need to create a user-friendly workflow that customers will be happy to use.
2. Present a personalized list of products
Instead of presenting a long list of features for customers to sort through—with alarmingly high drop-off rates!—consider new interactive ways to curate a list of personalized offerings.
Some popular sites report that 96% of users that start a quiz wind up finishing them. Leverage this popular marketing strategy to reduce abandonment rates. Pare down your complete list of services into a smaller collection of products pinpointed explicitly for each customer’s needs. By asking a few quick questions about the size of their business and spending habits, you can discover what products a customer is most likely to be interested in.
3. Streamline Know-Your-Customer checks
Many banks allow customers to complete the first few steps of account opening on the web but then send them to offline channels to complete the process. Are you forcing customers to mail in documents or schedule an appointment at a branch to finalize their application? You’re likely experiencing sharp application abandonment rates—over one-quarter of Americans will seek out a competitor when asked to finish an application offline.
Instead of the unwanted interruption, perform KYC right inside your digital application. You can use biometrics and sync-ups with third-party services:
- Selfie scans: Leverage one of smartphones’ top-used features: the camera. Automated software can compare a government-issued ID against a live video or snapped selfie to verify identity.
- Document scans: Camera phones can also analyze information off of articles of incorporation, EIN numbers, and business or driver licenses.
- Leverage third-party providers: In many cases, customers prove themselves by logging into a regulated platform that has already verified their identity, like a credit reporting database or centralized KYC registry.
- Location-based verification: Further safeguard against misrepresentation by comparing a user’s location against a scanned proof of address.
- Behavioral data: For more sensitive financial products, it might be essential to certify the application is a real person instead of a bot. Sync with a platform that performs “mini-tests” of a phone’s clicks, swipes, and taps and compares it against
What Know-Your-Customer information do you really need to open up an account? The truth is, to get a new customer up and running requires far less paperwork than most banks admit. Instead of drowning users in unnecessary, time-draining steps, consider a gradual KYC process. Allow customers to unlock base features to “hook” them and gather additional regulatory information as they need access to different functions.
4. Create accounts instantaneously
Even the most user-friendly interface cannot overcome the importance of instant account creation. Studies reveal that 75% of online bank account openings take longer than five minutes. Sound fast? Think again—banking applications that take more than 5 minutes on mobile or 10 minutes on desktop lose the attention of 40% of prospects. By improving KYC checks and other backend workflows, you can have new accounts ready to go in mere minutes.
What’s stopping banks from stepping up to the plate? A staggering 9 out of 10 banking professionals point to their own legacy infrastructure as the most significant obstacle blocking them from adopting user-friendly customer experiences that attract a fresh clientele. To survive the shift towards digital, banks need to connect with new technologies that help them serve up a stellar digital account opening process. Is your bank ready with the digital tools that build the thriving customer bases of the future?