Lawrence J. Sands Feb 25, 2013

Unclogging the Online Account Opening Pipeline

Online account opening (OAO) presents a frustrating irony for many banks: The great service they are prepared to offer after they get a customer on board is belied by an often inferior, frustrating OAO process. “Just when prospective customers need to see us at our technological best,” fretted a banker client, “our online process exposes all our worst shortcomings.”

He is not alone. While most banks tell us they would like to open at least a third of new accounts online, they fall well short of that mark despite strong market interest. To meet the demand, or at least to appear to be competitive, many banks rushed a system into production and touted it in their marketing literature, with plans to fix it later. The recent financial crisis caused many banks to put their information technology (IT) improvement initiatives on ice, leaving balky OAO processes in place. That can have negative consequences.

When OAO marketing efforts get the right results, they deliver a huge number of potential customers into the pipeline, at least at the top of the pipeline funnel. But the funnel narrows quickly as customers slog through the process, with only 2 in 10 actually making it all the way through to a funded online account. And that is for banks that do it well.

So marketing dollars get spent, customers get interested, then frustrated. They move on and open up their online account elsewhere and take their balances with them along with a poor impression of the bank that disappointed them.

It doesn’t have to be that way, as a few exceptional banks have shown. If your OAO process is not meeting your goals for new customers, cross-sales and profits, it is time to revisit it. OAO tools have vastly improved, perhaps your own internal infrastructure has stabilized and certainly customer expectations have risen.

These considerations should guide your “new and improved OAO” strategy:

Satisfy a wide variety of demographic segments. Early initiatives naturally targeted the young who live their lives online. The product assumed applicants were at ease with web-based commerce and had enough commitment to online transacting that they were willing to overlook obstacles and shortcomings.

But now the process is attracting people who learned what they know about the web from eBay, Facebook or a photo-sharing site, where ease of use is paramount. They might be frustrated more easily by unforgiving features, more suspicious of security matters, more put off by customer-unfriendly instructions, more intimidated by long, complicated forms and more likely to quit the process. For them, a site that times them out aggressively, won’t permit them to save their work, or fails to tell them where they are in the process is just too much aggravation. And if it forces them to use a different channel to finish, over half will abandon the process.

Use OAO for wider marketing purposes. It’s true that OAO is almost self-justifying purely on the basis of the branch traffic it avoids and the branch resources it frees up when people open checking accounts online instead of in the branch. But that gravely undersells OAO’s potential as an extraordinary cross-selling and information-giving tool if properly administered. Ideally, it should be fully integrated with account acquisition as well as transaction processing.

Consider a mortgage loan applicant, who provides reams of information, much of which can signal a potential need for other products. The best OAO processes are adept at suggesting additional products and making it easy for the applicant to explore them– without, of course, further complicating the mortgage process. It’s a perfect time to recommend mortgage insurance, but not necessarily to suggest opening a trust account.

Realize that your OAO process substitutes a web-based process for a new accounts person. If OAO is supposed to “stand in” for a new-accounts person, it can’t just be a form-filling process. It has to provide the information and service that the new-accounts person would normally deliver. OAO users need easy access to FAQs, online tutorials, product calculators and bundling tools for identifying the package of products that best meets their needs. The information needs to appear at the right points in the process, be accessible without interrupting or aborting the application and be understandable.

Understand your infrastructure issues before making promises. If your bank put infrastructure issues on the back-burner during the financial crisis, you are not alone. Many banks rushed OAO to market without, for example, integrating their business channels to offer a consistent look and feel for OAO. It’s not unusual to see an older OAO process that drags the applicant through 20 or more screens when four or five are sufficient.

Your goal should be a unified customer experience. An un-integrated OAO tool is better than none at all, but just barely. To be competitive, your strategy must include aggressive integration of OAO.

Monitor and act on the OAO statistics that matter. Web-based tools are notorious for providing piles of statistics at the expense of real answers. What you really need to know is how many users started an app, how many finished and, for the rest, where they abandoned or were perhaps timed out. Top performers are able to identify those weak points and fix them rapidly. People who decide to bank online are telling you that they value convenience. Make the identification of bail-out points a top priority for your best IT team.

Give real-time answers where possible. Instead of making it a one-way communication process, look for opportunities to interact favorably with the applicant. For example, provide the customer with an instantaneous credit decision for a credit card while they are still online. This would also enable the customer to obtain details such as the interest rate and the credit limit. Make it easy for customers to find online support via the channel of their choice.

It’s worth noting that “helping” a customer while they are online needs to be done adeptly so as not to violate the customer’s expectation of privacy. If you’ve ever been startled by a pop-up that says “Hello, this is Chad and I see you haven’t finished purchasing the items in your cart…” then you know the risks of too much or unrequested “help.” Many banks choose to handle this risk by making visible a permanent box asking, “Need help? Chat now.”

Rome wasn’t built in a day, but it grew to greatness. If your OAO process is subpar today, you have a lot of company. The key is to understand how much better it can and should be by investigating how the market leaders do it. Then develop a staged strategy for achieving excellence. It’s not a quick fix but a series of well-planned improvements, with reporting that tells you every day how you’re doing on the aspects that matter: customer acquisition, applications completed, cross-sales and profits. With an excellent OAO, you can compete with the best.

Mr. Sands is managing principal in the consulting practice of Morristown, NJ-based Collabera LLC. He can be reached at lawrence.sands@collabera.com.

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