For many, your website is the first impression someone has with your financial institution (FI) and should preview how the rest of their banking journey will be: an intuitive user experience powered by data. So if a prospective user is met with friction and cannot easily navigate through financial products and open a new account, odds are they will find another provider who prioritizes simplicity.
Gone are the days of competing for account holders with the FI down the street. Across the globe, there’s been a rising wave of digital-only banks, targeting consumers and businesses who feel underrepresented by their FI or live in communities underserved by a physical branch. While these digital-first banks, or neobanks, may not be able to provide the full suite of banking products and services like traditional FIs, they offer simplicity, speed and the essential, digital services account holders are looking for. Emphasizing convenience and real-time capabilities, neobanks make their digital offering sticky so users keep coming back for all of their banking needs. With primary FI relationships under siege, how can FIs pivot to retain account holders and grow market share?
In 2021, 5.4 million Americans started their own business, 20 percent more than the previous year.
In the wake of the pandemic, the U.S. workforce experienced a shift – an emergence of remote work popularity, a rise in the gig economy, and individuals deciding to start their own businesses. Many fintechs popped up as if overnight, capturing new entrepreneurs with simple applications and immediate presentment of funds.
More than half of SMBs define the primary financial institution (PFI) relationship as the institution where they deposit checks or cash.
The deposit account is the gateway to a broader SMB financial relationship. Yet, according to Javelin, half of the country’s top 24 banks do not offer digital account opening for businesses. To compete at scale, banks and credit unions need to simplify the digital account opening process and embrace a digital approach for business account opening.
Without making these investments, FIs risk losing account holders to encroaching market players who actively target users and cross-sell additional financial products in an effort to make themselves stickier with account holders. According to The Financial Brand, “for both digital-only and incumbent providers, priorities will shift from ‘user growth at all costs’ to metrics that tie back to the bottom line – such as primary bank status, average deposits, and potential for relationship growth.”
Applying for an account with a neobank often takes about two-to-five minutes — a fraction of the time of most incumbents (over 10, and often 15 minutes).
With traditional FIs’ digital account opening processes, business owners often experience friction – skyrocketing application drop off rates. “Reasons for this level of abandonment included a lengthy application process, complex forms, the requirement to come to a physical facility for one or more steps of the process, and requests for too much information,” (The Financial Brand, 2022).
The way Alkami has approached business account opening is through a streamlined user experience – including secure messaging, multiple funding options, document uploads, and electronic signatures. We’ve distributed the application burden to all of the business owners without causing friction – making each co-applicant’s experience five minutes or less.
Taking the consumer experience and applying that to business banking makes FIs stickier with business account holders and creates cohesion across all systems. Be a champion for business owners by truly understanding their needs and delivering solutions that are experience-driven and fueled by data. The secret here? Take the data insights you know about your customer or member to deliver relevant, cross-sell offers for credit cards. This is the key to driving acquisition and retention rates.
With Alkami, it’s all in one place for retail and business – meaning no more data silos. By leveraging Alkami’s account opening solution, FIs can improve three critical areas – increasing user acquisition, elevating fraud prevention, and developing operational efficiencies. With more business coming through your front door, or digital branch, FIs can feel confident bracing against the tides of a potential global recession. Furthermore, business account opening is integrated with our digital banking solution, allowing FIs to seamlessly onboard business owners into their business banking solution where they gain access to the tools they need to run a successful operation. Simplicity, stickiness, and convenience – these are the elements you need to strengthen the banking relationship and become the primary FI.
