Financial institutions (FIs) know the importance of account opening but have tended to be slow on making the digital account opening process as fast and seamless as the rest of their digital banking experience.
This blog explores the new view of digital account opening and what’s to gain from getting the experience right, from the current state of account opening solutions to how FIs can benefit when refreshing or introducing a new account opening experience to their mobile and desktop users.
According to a Signicat study, four out of ten digital banking users say frustrations with an online application led them to abandon the onboarding process. More results from the study show that FIs aren’t just slow to meet user needs for a modern digital banking experience, but seem to be moving further from what works. Among the survey respondents who had applied for products within the year of the study, 45% abandoned the process. The year prior, only 26% abandoned. Nearly 40% of respondents cited the length of time it took to complete the application as a reason for leaving.
Meeting user expectations isn’t about how much FIs invest in technology, but how much they and their digital banking partner listen to users. To meet what users demand, FIs will require a partner with an extensible platform that adapts quickly to the evolving digital banking landscape.
We’ve previously touched on striking a balance between seamlessness, speed, and security in our Gold Standard Series event, Earning User Loyalty Starts with Digital Account Opening. We explored how services like Amazon have heightened consumer expectations, which leads FIs to differentiate themselves by reducing friction in onboarding, starting with digital account opening. This remains a challenge, however, as securing the experience can sometimes create friction.
But even while minimizing fraud, FIs can identify new means to improve usability by leveraging data. For instance, users don’t have to provide their information by typing a response in each form field if the FI provides response options for users to select, easing the burden on the 34% of users who cite providing too much personal information as a deterrent for opening accounts online.
In the evolving digital banking landscape, FIs need a platform with a secure, seamless, and future-proof account opening experience that can help them give users what they want from the beginning of their relationship.
Offering a digital account opening experience isn’t enough. Mobile or desktop account opening is likely the first impression users will have of an FI’s ability to provide service now and into the future with the latest technology.
Despite that challenge, a recent study from Celent found most banking apps’ account opening experiences were glitchy. The Digital Banking Report found 75+% of digital account openings in 2020 exceeded five minutes. Nearly 30% took ten minutes or more to complete. For FIs to win customers and members on the application experience, they’ll need to make the account opening process mobile-first, streamlined, and secure.
According to The Financial Brand, many FIs are still holding out on offering end-to-end mobile account opening. More than 25% said they weren’t planning on it or had plans as far as three years down the road. This kind of planning doesn’t bode well for competitiveness when Megabanks and neobanks are laser focused on digital account opening. In an article published by Forbes, megabanks and digital banks accounted for 69% of newly opened accounts in Q2 of 2020. With this stark reality in the marketplace, FIs need to compete on experience in order to gain market share and grow user acquisition.
There are plenty of reasons for FIs to bring digital account opening to users sooner than later on the digital roadmap, and to work toward as frictionless an experience as possible. American Banker found FIs offering digital account opening attained 16% growth. Those without faced a 9% decline in year-over-year revenue growth. Digital account opening also lowers costs by eliminating manual, time-intensive processes through automation. Acquisition costs for digital users averaged $77 per account vs. $138 non-digital user account.
Users engaged in account-based products and services are more loyal and benefit an FI’s bottom line. The Financial Brand found that deeply engaged users each bring an average of $212 annually in incremental profit over less engaged or inactive users. But despite dedicating time to choosing an FI and opening an account with them, some 25% to 40% of new checking accounts are closed within their first year. That’s because 25% of users feel processes involving financial services, like bill pay or lending, aren’t intuitive enough.
FIs can engage users from the first interaction with a digital banking platform that provides deep integrations with third parties who focus on simplifying these specific processes for users. These integrations can automate every step of certain services, like the lending process, and deliver a digitally transformative solution for the FI’s lending operations.
Alkami has extended the banking journey into digital account opening and loan origination. Now, FIs can utilize a single platform across the breadth of their operations. With Alkami’s account opening solution, FIs can seamlessly onboard new users in three minutes or less via a mobile-first application. By leveraging powerful integrations with third party providers for identity verification and funding, users can input minimal fields and authenticate their bank account for real-time funding. Ensuring ease of use for customers and members allows FIs to grow their lending authority while delivering an exceptional user experience. Through back-office automation, Alkami clients have experienced a 50% reduction in processing time with rules-based credit and identity decisions and end-to-end dataflow to their core.
FIs are increasingly focused on providing digital banking solutions that reflect the experiences of today’s leading consumer apps, but account opening, whether mobile or on desktop, has remained neglected for most FIs. Now, FIs have a choice to make when it comes to crafting an engaging, secure digital account opening experience. For some, the choice lies in supplying such an experience in the first place or prioritizing account opening in their digital strategy roadmap. For others, they may choose to improve their current experience. Wherever FIs are on their digital journey, they have the option of providing a digital banking platform featuring deep integrations for a streamlined user experience. Which option will you choose?
