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Digital account opening: Comparing bank and customer perspectives

A woman sits at her dining room table with laptop and financial reports doing her monthly budget.

While many industries have mastered the digital experience for consumers, financial services seems to be lagging in their offerings. Adding fuel to the fire, COVID-19 has exacerbated the need for successful digital onboarding solutions.

Banks have attempted to implement new solutions that enhance the digital onboarding process for back-office employees, while overlooking the issues facing their most important stakeholders: the customers. Financial institutions are positioned to overcome the challenges of digital account opening to create a more engaging experience for both commercial and retail customers and close the deal.

From the bank’s perspective

Part of the problem is that the level of automation within many existing digital account opening (DAO) solutions is lacking, resulting in the capturing of a few pieces of information on the screen and then routing customers to an email channel to submit additional details and documentation. From an operational standpoint, this actually creates more work for a bank’s back-office team, requiring employees to manually verify information to complete the process.

If a customer uses an invalid form of identification, for example, the bank must then confirm the identity of the application originator. The problem arises when the bank captures a driver’s license through an email, which is sent to the bank’s back-office for verification. Automated verification within DAO solutions eliminates the burden of manually inspecting identification and allows bank employees to redirect their attention to more customer-facing tasks.

A primary reason that implemented DAO solutions fail is when customers don’t know what to expect in the account opening process beforehand, so a process that asks too many questions or requests documentation that the customer does not have readily at hand often leads to high abandonment rates.

Banks that are committed to determining why customers are dropping out of the process – and then preventing it – need flexibility in the tool to modify the workflow.

Consider a prospective customer who wants to open a commercial account. First, the bank asks for a driver’s license and then a required host of questions about the business itself, but often has yet to request the customer’s phone number or email address. If the customer exits the application, there is no way to associate the progress made with the customer. The customer must then restart from the beginning, leading to increased frustration and the real possibility of abandoning the account opening process entirely.

Before starting the application, the bank should advise the prospect of all information required to open the account. The customer can gather their articles of incorporation, define their membership and prepare all the information for any co-owners. Once the DAO process is started, identifying information is linked to the account in case the customer exits the application. By reordering the workflow, banks can significantly reduce the likelihood of abandonment.

From the customer’s perspective

Creating an effective DAO solution is simple: banks must present a streamlined, frictionless, customer-centric experience that provides value through its features. Unfortunately, most DAO solutions have made the process too complicated for the customer. Each customer is unique, and an ideal DAO solution tailors the progression of questions based on each customer’s objectives.

If a customer wants to open a checking account, the bank should first give an overview of what the customer can expect while opening the account. Next steps include identifying the customer to ensure progress is recorded, followed by automated verification of the customer’s identity. The remaining questions only pertain to opening a checking account, reducing friction in the process.

To round out the process, the bank should automate the activation of the account and the issuance of the debit card. Taking it a step further, automating the enrollment in online banking and providing direct-deposit instructions allows the customer to instantly fund the new account within the DAO solution.

This inclusive, customer-centric approach to digital account opening helps the bank to gather the most important information while giving the customer a holistic, frictionless digital banking experience.

DAO is still a new solution for a majority of institutions and a replacement solution for some. However, there is a greenfield opportunity for banks to differentiate themselves competitively by implementing a DAO solution that takes advantage of newer technologies to eliminate manual touches in the back-office, minimize fraudulent activity and offer flexibility to adjust the workflow to enhance the overall process. Consumers are shifting more toward digital environments and they expect their financial institutions to follow suite. Banks that do so successfully will realize the benefits and improve their bottom line.

Booshan Rengachari is founder and CEO of Finzly.

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