Debunking the myths of digital account opening
Customer experience demands are only going to increase, so an inefficient approach can be a drag on both the top line and the bottom line.
Digital account opening remains elusive for banks and credit unions, and abandonment rates during account opening continue to be a concern. It’s not that financial institutions don’t prioritize account opening – they do. But despite their best effort, the outcomes do not match the intent.
The lack of a holistic approach to account opening is a key reason for this gap. It is also driven by a number of myths and misconceptions around digital account opening.
Myth: Digital account opening is only for large institutions
Reality: This cannot be farther from the truth. It’s true that automation typically enables efficient handling of larger volumes of applications, but digital account opening is not only about the efficiency of scale. It is also about shorter cycle times and a better overall experience for customers.
Another key benefit of digital account opening is the better utilization of human resources, which is critical for banks and credit unions of all sizes due to the increasing talent crunch. All of these benefits add up to increase overall demand while simultaneously enhancing the capacity to process applications.
Myth: Digital account opening is only for regular deposit products
Reality: Banks and credit unions undertaking digital account opening typically end up following a piecemeal approach that focuses their digital efforts on products that they consider critical, like checking and savings.
Digital account opening done right can enable a consistent experience across products that can help increase customer lifetime value. Non-regular products, such as retirement savings or health savings all add up to a holistic journey for customers, thereby improving stickiness and loyalty. Increased cross-sell and upsell across products is a direct benefit, too.
Myth: Digital account opening = branch-free banking
Reality: Digital account opening is often considered a replacement for branch banking, which can lead to a resource shift from branches to digital channels.
But branches cannot be truly replaced by digital channels. Branches need to coexist for the human touch that customers often seek. The benefits of digital account opening extend to branch-based interfaces, including self-service kiosks, that can improve the holistic customer journey.
Myth: Digital account opening ends when the account is opened
Reality: Many financial institutions create digital account opening as a process from application to closure and treat it in that scope. But banks and credit unions can benefit greatly by treating digital account opening as a holistic process considering the end-to-end customer journey.
For instance, perpetual Know Your Customer requirements mandate that account maintenance be carried out regularly, which create many service requests. And many institutions use the account opening platform for account maintenance activities, so branch officers don’t have to touch the core banking system to respond to basic customer service needs. Holistic treatment of digital account opening can also enable cross-linking of accounts, which can eliminate the need for repeated information gathering in case of cross-selling.
Myth: Digital account opening is a resource-heavy project
Reality: Because account opening is one of the key processes for any bank or credit union, it makes the process a critical candidate for transformation. But contrary to what some believe, holistic transformation of the account opening process even across products doesn’t have to be a long, drawn-out program.
Methodologies and platforms exist today that enable an incremental approach without compromising on the longer-term objectives. A financial institution can start with a small set of accounts and then expand to cover other products relatively much faster than the traditional development models. Low-code digital platforms, with their rapid development capability, can accelerate the implementation of digital account opening.
Customer experience and efficiency demands are only going to increase, and an inefficient account opening process can be a drag on both the top line and the bottom line.
Digital account opening must be a top priority for banks and credit unions of all sizes. Success in this endeavor can be enhanced by a well-devised plan to identify a set of products to start with in order to earn some quick wins, and a build-as-you-go approach to digital transformation based on agile methodologies.
Ankur Rawat is director of products and solutions for banking and financial services at Newgen Software.