Bank Director | Digital Account Opening Archives

Many banks want to increase the number of deposit accounts as a way to grow funding, putting a premium on customer retention and acquisition. But high interest rates have made funding more costly and consumers can easily switch financial institutions when they find a better interest rate.

Some consumers may be satisfied with a slightly higher interest rate at their current primary institution; others may be eager to jump to digital-only banks for a markedly higher rate along with little to no minimum balance or fees. Offering effortless online account opening gives banks an edge in this fierce market — but they need to ensure their processes and systems are user-friendly and fast, with seamless support when needed. It is not surprising that 55% of bankers said they “plan to prioritize digital account opening technologies” in a recent survey by CSI.

Consumers increasingly expect real-time results, including digital account opening in minutes. To attract these customers, banks must improve their digital account opening processes and service or face the risk of stagnating their customer base. There are several ways that banks can make sure their digital account opening process allows them to compete more effectively.

1. Personalize Support to Capture Wallet Share
Since account openings are the entry point for new customers, personalizing the experience can drive customer acquisition. This is likely the consumer’s first interaction with the bank — why not make it as easy and positive as possible?

Beyond that initial first impression, banks should continue to impress. J.D. Power found that personalized support is a key element for 78% of surveyed bank customers in staying with their bank, yet only 44% of banks provide it. Another survey found that customers are willing to spend more with companies that provide personalized customer service. Helping digital visitors open accounts easily and conveniently provides this important personalization.

Digital account opening may not be the same as in-person account opening, but facilitating online visitor interactions can close the gap. Providing this user experience can include human connection and/or automated business rules and digital routing to guide prospects to the appropriate application or resources. Combining self-service, such as conversational virtual assistants, for digital-savvy applicants along with live representatives available through chat, voice or video when needed makes sure that account openers can receive personalized support throughout their journey.

2. Add Context to Reduce Abandonment
Many banks with online account opening processes find themselves dealing with abandonment. Customers want digital convenience, but they also want hands-on support when they have questions or experience difficulty. These are opportunities for banks to lower abandonment and improve retention. Nothing establishes loyalty more than helping a prospective customer join your institution.

Assisting someone at these critical moments can drive up acquisitions, especially during the account opening process. Digital collaboration tools can provide context for bank service representatives and give them the ability to guide potential customers through the application process in real time. Helping applicants expedite their account opening can not only lower the institution’s abandonment rates, it also adds to the bottom line.

3. Streamline Assistance to Drive Loyalty
Bankers not only need to personalize the digital account opening process — they also need to streamline it on all devices. Statista reports that the number of digital banking users will grow to nearly 217 million in 2025. Strong digital adoption means most customers have little patience for unnecessary effort on their part to do straightforward tasks. Having one customer service platform that combines phone calls, digital interactions and automation provides digital account prospects with desired guidance, especially at points of need. For instance, a potential customer is nearly done filling out an application for a checking account, but has a question about funding of the account. Providing them with easy access to answers in real time, such as through chat or video, can translate into greater application completion rates, higher customer satisfaction and increased customer loyalty.

It’s essential that banks stay competitive in the digital account opening space. Complicating this effort is that consumer expectations are continuously increasing; without a successful way to support online account opening, banks risk losing customers and being left behind. Digital-first solutions that offer a seamless experience can help drive customer acquisition and retention and assist banks in expanding the number of deposits and growing their business.

In the wake of Covid-19, digital account opening (DAO) solutions have taken on greater importance than ever before — yet several myths persist about this technology and how it should be optimized. Read on to understand the most common misperceptions about digital account opening and how you can maximize its effectiveness as part of your financial institution’s digital strategy.

Myth 1: The best DAO processes eliminate as much friction as possible—the shorter the process, the better.
Reality: Some friction is necessary to reduce risk.
While conventional thinking suggests that minimizing friction will reduce application abandonment rates, institutions must have enough steps built into the process to identify potential fraud. It’s critical to find a balance between risk and the customer experience, and the “right” approach may vary from one financial institution to another. As analyst firm Celent notes in its report, “Digital Account Opening: You Can Only Improve What You Measure,” a relatively fast and easy application process is important, but seconds really do not matter. Instead, leveraging a solution that provides you with the flexibility to find the right balance for your institution is the key.

Myth 2: Accounts should always be funded as part of the DAO process.
Reality: There’s no right answer when it comes to funding.
Institutions have different views on this topic. Proponents think account holders with a financial stake are more likely to engage with your institution. Others see this as an unnecessary step that adds friction. Whatever your philosophy, a strong DAO solution will be able to adapt the process based on your institution’s needs and preferences and will enable you to evolve it as needed over time.

Myth 3: The DAO process is over when the account is activated.
Reality: Account opening isn’t over until the customer starts using the account. Although account opening is the obvious first step, institutions should not lose sight of the holistic view of the customer journey. The most successful account activations initiate other onboarding activities and provide a bridge to services account holders will need as a customer, including bill pay or credit card services.

Myth 4: DAO should be completely self-service.
Reality: Customers may require support during the account opening process.
Rather than delivering a potentially cold, digital-only experience, the DAO process ideally provides “off ramps” from digital channels to assist users if needed. For example, some applicants may need help choosing products and want to ask questions. Offering support either digitally or offline will help to prevent abandonment.

Myth 5: The DAO process should be consistent for all applicants.
Reality: Your process should adapt based on the applicant.
Rather than offering a one-size-fits-all approach, your DAO solution should tailor the workflow based on the responses provided by the applicant. For a known user, some applicants can be approved after as few as two questions, while additional verification should be required for those that are unknown. One suggestion is to require unknown or flagged users to upload personal documents, such as a driver’s license, tax ID card or utility bill.

Myth 6: Traditional KYC practices are most effective for identity verification. Reality: Newer, more effective alternatives are available that provide a better customer experience.
Knowledge-based authentication, such as asking applicants for information like their mother’s maiden name, remains commonplace today, yet this and other traditional KYC processes often introduce significant friction. Alternatives such as telecom data can be a more effective alternative to identify potential fraud, for example, when an applicant’s address is different from the address on the customer’s mobile phone bill.

Myth 7: Your DAO approval and rejection rates should mirror those of the branch environment.
Reality: Brick-and-mortar rates are irrelevant in the digital world.
DAO opens the door for users outside your immediate area to become customers of your institution. Lower approval rates or higher rejection rates are not necessarily negative, as the pool of applicants is much larger with digital channels in the mix. As a result, you should develop digital approval and rejection benchmarks that are independent of those from the branch environment.

Making DAO Effective for You
A modern, seamless DAO solution that can adjust to your institution’s needs should be the ultimate goal to enhance your process and your customers’ journey. Avoiding these myths along the way will help you establish a strategy that best serves your organization.

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Debunking 7 Digital Account Opening Myths