Editor's note: Financial institutions must make the new account opening process quick and convenient, or risk high customer abandonment rates.
The importance of first impressions can’t be overstated, and this rings especially true when it comes to consumers’ first interaction with their potential bank or credit union. Technology has dramatically raised service standards and expectations, and as a result, banks and credit unions must enhance their digital strategy when it comes to attracting new customers and opening their accounts.
In the critical new account opening stage of a banking relationship, speed and convenience are imperative. Consumers’ patience has shortened significantly, and their perception of a long wait has shortened. Processes that are overly complex or confusing will cause them to abandon whatever they are trying to accomplish, creating a significant challenge for banks and credit unions who are tasked with meeting security and regulatory demands which often causes some friction for consumers.
While customers understand the importance of financial safety measures, they are no longer judging the quality of their interaction with their bank or credit union based on what might be available at another institution. The baseline for comparison is made up of companies such as Venmo, Airbnb and Uber.
The onboarding of customers and members is where this type of comparison can be particularly frustrating for all involved. Nonetheless, to meet consumer expectations, banks and credit unions should limit the digital onboarding process to less than five minutes. Financial institutions can accomplish this by reducing data entry through tools such as photo ID capture. Financial institutions have the opportunity to use their own data as well as information from third parties to assess the risk of new customers while still leveraging technologies that can make the account opening process easier and quicker than it has been in the past. A convenient, intuitive process, bolstered by data analytics and coupled with clear instructions and FI follow-up, has become table stakes in this area.
In addition to offering a quick, convenient experience, banks and credit unions should also strive to facilitate the new account opening process through customers’ and members’ preferred channels. It’s no secret that smartphones are typically the channel of choice for younger generations to engage with their service providers. In fact, according to a survey conducted by Harris Poll on behalf of D3 Banking, 70% of Millennials say that it is at least somewhat important that their bank or credit union offer a mobile account opening process.
Despite this preference for mobile account opening, 52% of FIs don’t allow customer to fully open accounts digitally, according to the Digital Banking Report. This is simply unacceptable from a customer and member experience standpoint, and has the potential to create a significant abandonment rate. It will be critical to banks’ and credit unions’ success to allow customers and members to complete the new account opening process entirely online, especially via mobile.
FIs that are able to successfully harmonize and streamline the new account opening process will benefit from reduced abandonment rates. According to a 2018 survey by Jumio and Javelin Strategy & Research, these are the top five reasons Millennials abandon mobile banking:
- 38% Process too long
- 27% Forgot password
- 22% Authentication too long
- 19% Process too complicated
- 18% Difficult filling out forms on device
Savvy financial institutions that recognize the need to enhance the new account opening process are increasingly partnering with a digital banking provider that offers an adaptive platform. An advanced, modern digital banking platform can enable banks and credit unions to facilitate the intuitive, frictionless experience customers and members expect online and on their smartphones, backed by the necessary security and compliance requirements.
In an era where consumer patience is thinner than ever before, banks and credit unions must ensure the initial experience with potential customers and members is a strong one. By making the new account opening process quick, convenient and available via their customers’ preferred channels, financial institutions can reduce abandonment rates and strengthen customer and member relationships.