Picture this: Newlyweds want to
open a joint checking account online. They’ve chosen your bank because they
value the local network and they believe your fees are fairer than those of the
big banks.

They get to your website and
start the online application, where they encounter multiple screens, lengthy
disclosures and numerous requests for documents. They close the laptop and
decide to return to the task later. But prospective customers like these rarely

When a customer begins an
application, they’re sold on the bank. But a poor online account opening
experience drastically diminishes the value of your marketing efforts,
community outreach, and your digital presence.

The time and effort it takes
today’s customers to open an account online serves as a proxy for the ease of
doing business with your bank in general. Though many consumers may value your
local presence and services, there’s always a point at which they’re likely to
give up in favor of added convenience elsewhere.

The average
community bank has an online account opening flow that takes between eight to
10 minutes to complete; and one in five banks takes longer than that. The best
practice in retail banking, by comparison, is three minutes or less.

In the digital world where
consumers expect instant results, every minute added to your online account
opening flow increases their likelihood to abandon the process. Only 8% of
consumers successfully complete an account application, start to finish,
according to Javelin Research. For every 500 potential new customers that visit
your website to open an account, only 40 actually end up doing it. If a branch
performed at this level, a bank would likely take swift action to better train,
staff, and resource the branch. Understandably, community banks and credit
unions don’t have the resources that money-center banks have at their disposal
to build best-in-class digital account opening – but fortunately, they don’t
need to.

Cutting down the account opening
process to three minutes is possible at most community banks. By automating the
majority of the process, software can streamline the experience for prospective
customers and your bank. Here are four ways technology can cut the time to open
an account:

Switch to a non-documentary based Know-Your-Customer
Financial institutions can
comply with regulatory requirements without utilizing documentary methods to
verify customers’ identity. In fact, the Federal Financial Institutions
Examination Council has standing guidance allowing non-documentary-based
customer identification programs. Asking for documentation (like a scan of a
driver’s license) can cause up to a third of prospective customers to abandon the
application, with negligible fraud reduction.

Eliminate knowledge-based authentication for more-robust digital
identity checks:
You can perform KYC/AML checks
in seconds by taking information collected from a user and comparing it to
identity information available in the public and private spheres. These checks
can encompass information that is directly inputted (such as name, birthday,
Social Security number, address, phone number and email) or passively gathered
(including browser type, IP address and linked bank account information). This
approach not only reduces fraud, it significantly decreases the time to open an

Book accounts directly to the core using store and forward functionality: Many core banking systems have periodic downtimes, while
today’s consumers expect technology to work 24/7/365. Technology that
integrates with any bank’s core should have the ability to circumvent the
core’s downtime through a process called “store and forward.” This enables your
customers to complete the application process without added fraud risks, even
when the core is down.

Convert PDF disclosures to HTML: Not only are PDFs impossible to make ADA-compliant, they often
require the customer to leave your bank’s onboarding screen. On top of that,
your terms of service should never be the first step of your account opening
process. It’s best to reserve the intimidating legal jargon until the end.

The Conference of State Bank Supervisors’ 2019
national survey found that 35.4% of community bankers cited funding costs as
the biggest influencers on profitability over the next 12 months. It’s a highly
competitive market for core deposits, and big banks are taking market share at
increasing rates. By optimizing the time to open an online account, community
banks and credit unions can better compete and grow their businesses faster.


Raj Patel