In business, as in life, you don’t get a second chance to make a good first impression. And that applies to digitally onboarding new account holders and borrowers.
Banks that don’t give consumers a way to quickly and seamlessly open new accounts or apply for loans online risk losing them to application abandonment. Where will those consumers go? To competitors that do offer top-notch digital experiences.
Consumers increasingly expect to open new accounts and complete loan applications online as effortlessly as signing up to use popular e-commerce sites and social media apps. If not, they may abandon their applications before they complete the onboarding process.
“Recent research indicates that unless a financial institution can open a new account or complete a new loan application in less than five minutes, the potential for the consumer to abandon the account opening increases to as much as 60% or more,” according to Jim Marous co-publisher of The Financial Brand.
The statistics tell the story:
- 48% of consumers encountered digital friction when they tried to open accounts online.
- 48% of consumers who experienced digital friction took their business to another bank.
- 68% of consumers abandoned their online applications for financial services.
- 75% of consumers who abandoned their online applications were ages 25 to 34.
High application abandonment rates cost banks new business and revenue. Despite this, most institutions still struggle to reduce those rates, or even avoid application abandonment altogether. Here are three ways to create less friction for consumers, which can lower your bank’s application abandonment rates.
1. Keep the Application Short
Consumers who encounter lengthy and complicated online application forms may be more likely to abandon their applications and seek out lenders that offer a well-designed, intuitive, and smooth application process.
Keeping potential consumers engaged requires limiting the number of pages — ideally, no more than four or five. The more time it takes people to open accounts online, the greater the chances they’ll give up. It’s crucial to ensure consumers can complete their applications on the first try because if they abandon the process, they’re unlikely to return.
2. Ensure the Site Is Quick, Responsive and Flexible
Enabling consumers to open accounts, apply for loans, pay bills or transfer funds is table stakes in today’s market. To stand out from the crowd, banks should offer an experience akin to Amazon.com. That means making the process as simple and quick as possible. The application should cut unnecessary questions and be user-friendly on various devices, especially mobile phones. Prefill onboarding forms with borrowers’ identity information from a trusted source such as a credit bureau. Doing this will cut down on manual errors and speed up the onboarding process.
3. Leverage New Technology for Ease of Use
Helping borrowers complete their online applications faster requires technology designed for ease of use. Your bank’s online application should support a variety of technologies to ensure a seamless process, such as a driver’s license scan feature and prefill options. These tactics will lower the number of keystrokes an applicant needs to make, accelerating the process.
“The difference between fully digital account opening and what has been done by banks in the past is not just handling all the steps digitally, but completely reimagining the process for a digital world,” said Marous. “This includes, but is not limited to, user experience-driven responsive design, the need for simplified staging and mobile identification verification.”
No lender wants to lose revenue to abandonment. Consumers expect fast and easy digital experiences in every part of their lives, including when it comes to online account opening and loan applications. If you’re still using manual and time-consuming online application processes, borrowers will likely abandon their applications before completing them.