Banks today are in a race to win new deposits. This means offers abound for high-interest checking accounts, savings accounts, and CODs, as well as institutions looking to optimize the onboarding process, which historically has involved spending an hour or more at the branch filling out paperwork, and in the case of a loan, waiting several weeks for approval.
One consequence of the rise of self-service digital banking is that when customers move from one region to another, they no longer need to close their bank account and open another in the new locality. This has led to a reduction in the growth of new checking accounts, according to research from BAI.
But digital banking has also increased customer expectations around the ease of opening accounts. Consumer apps in the social media and e-commerce spaces have trained customers to expect fast and seamless onboarding processes, and customers typically don’t take into account regulatory requirements banks must comply with – they expect all apps to be the same.
A recent study from CCG Catalyst Research shone a light on consumer views around the account-opening process. We surveyed 1,000 customers about their most recent experience opening an account at a financial institution. Some 486 consumers recalled their experience. Of this group, 40.9% performed the task digitally, while 59.1% went to a branch to complete the process. This should not necessarily be taken as an indication of preference – it may have to do with the availability of services, or the marketing done by the institution to heighten awareness of such services.
Customers were further asked how much time it should take to open an account. 76.6% indicated it should take less than an hour, while just 13.9% were satisfied with a process that took longer, hours or even days. Those in the hour-or-less camp were not wedded to a digital-only process. One respondent described a speedy in-branch process in this way:
“Twenty-five minutes to fill out paperwork, speak with a representative, have them receive the requirements, and anything else they need.”
Another expressed the opinion that advances in technology should guarantee a more expeditious process: “I believe with technology at this stage it shouldn’t take more than 20 minutes to open a new account.”
Heightened expectations ratchet up the pressure for FIs to produce an experience comparable to that offered in other industries. The megabanks have launched parallel banks with higher interest accounts and a streamlined account-opening process, but community institutions must look to their service providers.
Technology vendors serving financial institutions have taken note, and have begun partnering or acquiring fintech companies with expertise in this area: Temenos acquired Avoka, Q2 acquired Gro, FIS invested in Zenmonics, and Fiserv launched a battery of solutions across its various product lines.
Banks cannot rely on a “Field of Dreams” approach with their account-opening – a trail of marketing breadcrumbs must lead consumers to that process. For younger customers, a speedy signup process is a benefit worth advertising, and ditch the outdated lingo – it’s not a checking account if they never write a check. The new wave of fintech apps use language my “My Money” to refer to customers’ primary accounts.