Differentiating With Digital Account Opening

Apr 23, 2021

In our last blog post, we examined some potential ways you can accelerate digital transformation in your bank or financial institution (FI). In this post, we will take a deeper dive into digital account opening.

Banks and other FIs know that digital onboarding is an urgent need, and some (like U.S. Bank) are actively pursuing a streamlined, digital-first approach. Others have it as a top priority for 2021; 23% of respondents in the Cornerstone Advisors report What’s Going on in Banking 2021 indicated that digital account opening (DAO) is a new product/service they will launch this year.

During the first half of 2020, digital banks grew by 67% where now over 14 million Americans view a digital bank as their primary financial institution.[i]

The time is certainly nigh, as consumers have flocked to mobile and online banking as the pandemic continues to hamper in-branch banking.

Ease of Access = Less Loyalty

Before digital banking, switching a primary account was frankly painful. Consumers would have to visit different physical locations to open or close accounts, take funding sources from one FI to another, and wait for confirmation and checks.

Improvements in account opening and management (brought about by mobile and online banking) mean that consumers are no longer bound to a bank because of proximity, geography or history. Digital transfers and online-only banks make it incredibly easy for individuals to shop commoditized products like DDA accounts for the best features or rates.

Consumers have also embraced a polygamous approach to banking – Ron Shevlin, in a recent Forbes article, notes that “35% of Americans have more than one checking account.” Consumers are also embracing neobanks and fintech companies, like Green Dot, SoFi and Chime, as those FIs offer products and services that traditional banks may not.

Room to Improve

Despite the uptick in new accounts and a growing willingness to use multiple FIs, consumers still face challenges with digital account opening. Over the course of 2020, “the global banking market lost $3.3 trillion due to abandoned applications during onboarding” according to Lightico.

Some of the issues consumers noted include online forms that are complicated and lengthy, and lack personalization.[ii]  Other issues were mandatory branch visits for documentation or regulatory requirements, structuring an online application like a paper application, and slow response/approval times.

Some FIs are working to fix those issues. Senior Vice President and head of digital sales experience at U.S. Bank, Jonathan Burns, noted in a recent article that “The biggest pain point…was actually the sheer length of time it took to get through the application itself.”[iii] U.S. Bank implemented significant changes to improve the onboarding process, and they remain a leader in prioritizing digital account opening.

Incremental Change Adds Up

For companies looking to improve the digital account opening process, identifying the best place to start can be difficult. The most successful approach is to start with small, incremental steps – over time, those steps will drastically improve onboarding experiences, and lead to long term growth and improvements in customer satisfaction.

Using a digitally native decisioning platform (like Zoot’s) is a great starting point. By embedding technology throughout the application and approval process, FIs can create a framework that scales over time.

Prefill Forms

One of the immediate steps FIs can take, once they have implemented a digital decisioning platform, is to include form-fill functionality on their online and mobile applications. By identifying specific consumer information and prefilling fields like name, address, phone, email and more, companies can reduce application friction, save time and effort on a consumer’s behalf and speed up the application process.

Pickup Where You Left Off

Another excellent step is to enable application start/stop functionality. This feature, available through any Zoot platform, can help applicants pick up where they left off if they get interrupted in the application process. Letting customers complete applications on their own terms and timeline is an excellent way to adapt to the realities of mobile and online banking, as consumers may be juggling multiple simultaneous priorities (kids, dinner, banking, etc.)

Harness The Power of Automation

A third step is to harness the power of automation in the application review/approval process. Automation can drastically reduce approval times through millisecond decisioning, while maintaining all regulatory, fraud risk and credit risk compliance. A recent Forrester study, commissioned by Zoot, found that a composite organization using Zoot’s decisioning engine was able to increase conversion rates from 60% to 90% using automation, driving additional profit and saving money on IT and related expenses.

Finally, FIs can leverage technology to provide a seamless, omni-channel experience – provided they have the right technology partner. With Zoot, companies can provide the same level of responsiveness for their customers whether applications arrive online, from mobile apps, in a call center, in branch, at a kiosk or any other channel.

Ready to incorporate a Zoot Solution into your stack?