Issues : Retail

Reducing Friction And Increasing Profitability with New Accounts

Too many banks miss a major opportunity to engage with their customers: Account opening and onboarding.

Onboarding a new customer is a critical time for engagement and a chance to lay the foundation for a profitable relationship. But “fewer than half of all new checking accounts are activated 90 days after acquisition,” according to BAI.

Banks that focus on improving the onboarding process and capturing the direct deposits of their new customers are more likely to create a sticky relationship that leads to future cross-selling opportunities. “Active” account holders are four times more likely than “inactive” customers to identify their new bank or credit union as their primary financial institution, according to a study by Javelin. Capturing direct deposits activates and cements the relationship, boosting profitability.

Monona Bank, which has $914 million in assets and is located in Monona, Wisconsin, was in the market for a way to improve the client experience when it came to switching institutions. Its bankers would prospect for new business, set up the new account for a client and begin cross-selling, only to make the client do the tedious work of switching their direct deposits and automatic payments.

They decided to deploy an automated switching solution that would make it easier and faster for clients to get their new accounts started and solve its challenge of capturing deposits.

For customers, opening a new bank account is like “hiking in the woods,” says Ben Udell, senior vice president of consumer banking at Monona.

Banks pretty much tell clients to walk through a forest and provide no map or guidance,” he says. Now, “we give them the map and provide more guidance; it can still be a tough walk, but it’s significantly easier when you have the map and a guide.”

Monona Bank quickly saw results after deploying the automated solution from ClickSWITCH. The setup was easy for employees and new clients to use, and customers now enjoy a significantly smoother onboarding process, including shifting their direct deposits and automatic payments. On average, 85% of Monona Bank’s customers that are enrolled in ClickSWITCH submit a switch.

Udell says one “big win” for the bank was the rapidity that the Monona Bank account became its customers’ primary checking account. “[A] long-term benefit [of technology like this] is that it shuts the other bank out of receiving the direct deposit which helps ensure the client doesn’t back out of switching,” he says. “This helps us with our checking promotions, as well as not having zombie accounts because a client never made the full switch.”