Why getting digital account opening right matters
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. Since the beginning of the pandemic, many FIs are seeing digital account opening in a new light.
Maintaining business as usual in uncertain times has meant opening accounts through the digital channel, especially via mobile. Since this is the first impression an FI gives regarding what new users can expect from the digital experience, their digital account opening is more crucial than ever.
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.
Users want a good digital experience from the start
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 can make adaptation to the evolving digital banking landscape secure and fast.
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 throughout the digital experience, starting with digital account opening. This remains a challenge, however, as securing the experience creates some necessary 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.
What lies beyond digital account opening obstacles
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 over users from the start, they’ll need to make the time spent on account opening go as smoothly as possible if security prevents them from shortening the experience.
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 are laser focused on mobile account opening. Megabanks make account opening available on the mobile channel at a higher rate than the rest of the industry (50% compared to 38%).
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. Account opening in the digital channel also lowers costs. Customer acquisition for digital users averaged $77 per account vs. $138 non-digital user account.
Engaging users with integrations
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.
The Alkami Platform, for instance, integrates the Turnkey Lender Unified Lending Management (ULM) platform. Turnkey Lender offers a modular system that provides unparalleled flexibility with the quickest time-to-market available. Whether a lender chooses the ULM as an end-to-end platform or a modular version to address specific needs on an existing platform, TurnKey Lender has the technology and real-time support to strengthen any organization’s loan portfolio. With intelligent automation, Turnkey Lender can reduce human error and improve decision accuracy by up to 25% at every step of the loan process. Operational costs can also be reduced, and efficiency improved by an average of 283%.
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?