Giltner made his comments May 19 during a presentation entitled “Driving Revenue from the Web: Online Acquisition and Opening,” at BAI Retail Banking Solutions Live, a virtual conference and expo sponsored by BAI. He said that the online channel offers the best opportunity for courting and onboarding prospective account holders.

“How will prospects find you? They will find you online,” Giltner said, noting research from Seattle-based NetBanker predicting that by 2015 half of all U.S. checking accounts – and more than 63% of accounts opened by consumers under age 35 – will be sold via the Internet.

He pointed out that checking accounts currently offer the highest return on investment of any financial activity to drive earnings growth, according to research conducted by New York City consultancy Novantas LLC. The projected value of the typical checking account is between $500 and $2500 over the life of the account, Giltner said.

Even so, Giltner said that checking account acquisition has historically been hindered by mass marketing and media strategies that show declining results and the inherent limitations of the branch network’s geographic reach. In addition, there’s an incremental cost of between $150 and $250 to open each new account, so banks typically take a year or so to break even on the accounts.

“Typically, bankers had to balance the zeal of acquiring new accounts with the idea that they couldn’t grow too much without damaging the income statement in the short term,” he said.

However, the increased ability to both market and open checking accounts online “has unique features that allow for rapid account growth,” Giltner said. For example, banks can acquire new accounts in and out of their conventional geographic service area. Also, banks can more easily target certain demographic or psychographic groups with more focused products because they are reaching out to a broader swath of consumers than they could reach through a branch or direct mail, he said.

Giltner cited as an example Redneck Bank – an Internet-only arm of Bank of the Wichitas of Snyder, Okla., which aims to draw consumers who feel an affinity to that folksy archetype.

“A segment has to be sizable to be profitable. On the Internet, going out to a wider distribution of customers and servicing those customers is much more accessible,” Giltner said.

Difficulties funding new checking accounts has historically provided the one major hitch that would drive otherwise online-prone customers into a branch. But Giltner pointed out that even this barrier is falling away due to more recent advances such as consumer-oriented remote deposit capture via mobile phones or home-based scanners as well as making Automated Clearing House (ACH) transfers via PayPal. “These advances are answering the last question of how to make a deposit into a new online account,” he said.

(For more on online account opening, see “Improving Risk Management for Online Account Openings” in the September 24, 2008 issue of BAI Banking Strategies Retail Delivery Insights.)