5 Ways to Keep and Attract Commercial Clients

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It’s no longer enough for banks to provide clients with standard products and services. Clients are constantly looking for differentiators when deciding which financial institution to trust with their business. Whether your clients are baby boomers preparing for retirement or millennials interested in purchasing their first home, everyone wants their bank to make them feel special.

When implementing any initiative, strategic marketing is key. Your clients need to be aware of, and excited by, your incentives — one benefit can set your institution apart from competitors. Below are five benefits for banks to consider.

1. Partner With Other Companies
Partnering with other companies like gas stations, grocery stores and retail brands gives you a way to offer rewards to clients when they purchase their essentials. Plus, your bank will enjoy free marketing and awareness as part of the collaboration. Banks can also increase their trust, credibility and relevance when they partner with businesses that clients already know and use. For example, Bank of America Corp. offers a customizable cash back credit card that offers 2% back at grocery stores and wholesale clubs.

2. Connect Clients to Capital
Often, clients are unaware of programs that can net them working capital, like the Employee Retention Credit (ERC). ERC providers are highly qualified professionals that help clients navigate the ERC process and can work with banks to help their commercial clients collect an average of $400,000. This is another example of an alliance that’s mutually beneficial: Clients gain back money they’re owed, while the bank receives referral commissions from its agreement with a trusted ERC provider. Banks can also benefit from the goodwill built between the institution and the client.

3. Offer a Loyalty Program
A loyalty program can provide clients with compelling, ongoing reasons to continue banking with your institution. Going a step further, your institution can add different tiers of rewards that incentivize clients to take advantage of each initiative. One great aspect of a loyalty program is that banks can customize it according to clients’ unique needs, creating a personalized offering that resonates with them. As an example, Kasasa Cash and Kasasa Cash Back function as a checking account, plus include monthly rewards like exclusive savings at different stores and restaurants.

4. Provide Enrollment Incentives
To encourage potential clients to sign up with your bank, consider offering exclusive rewards only available for new clients. From exclusive discounts to no sign-up fees, there are many ways banks can provide value up front to people deciding between institutions. For example, Citigroup’s Citibank is giving new clients up to $2,000 when they open a checking account by Jan. 9, 2023.

5. Implement Digital Banking
For banks with ample resources, a digital banking app is a great way to further improve your clients’ experience. Providing a more streamlined way for clients to manage their finances allows your bank to create greater value that other institutions may not be able to offer. Digital banking allows clients to interact with your bank wherever they are, at any time. Some features your bank may want to include are:

● Disposable virtual card.
● Credit card transaction disputes.
● Recurring bills.
● Chatbot support.
● Digital account opening.

7 Indicators of a Successful Digital Account Opening Strategy

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How good is your bank’s online account opening process?

Many banks don’t know where to begin looking for the answer to that question and struggle to make impactful investments to improve their digital growth. Assessing the robustness of the bank’s online account opening strategy and reporting capabilities is a crucial first step toward improving and strengthening the experience. To get a pulse on the institution’s ability to effectively open accounts digitally, we suggest starting with a simple checklist of questions.

These key indicators can provide better transparency into the health of the online account opening process, clarity around where the bank is excelling, and insight into the areas that need development.

Signs of healthy digital account opening:

1. Visitor-to-Applicant Conversion
The ratio of visits to applications started measures the bank’s ability to make a good first impression with customers. If your bank experiences a high volume of traffic but a low rate of applications, something is making your institution unappealing.

Your focus should shift to conversion. Look at the account opening site through the eyes of a potential new customer to identify areas that are confusing or distract from starting an application. Counting the number of clicks it takes to start an online application is a quick way to evaluate your marketing site’s ability to convert visitors.

2. Application Start-to-Completion
On average, 51% of all online applications for deposit accounts are abandoned before completion. It’s key to have a frictionless digital account opening process and ensure that the mobile option is as equally accessible and intuitive as its web counterpart.

If your institution is seeing high abandonment rates, something is happening to turn enthusiasm into discouragement. Identifying pain points will reveal necessary user flow improvements that can make the overall experience faster and more satisfying, which should translate into a greater percentage of completed applications.

3. Resume Rate on Abandoned Applications
The probability that a customer will restart an online application they’ve abandoned drastically decreases as more time passes. You can assess potential customers’ excitement about opening accounts by measuring how many resume where they left off, and the amount of time they take between sessions.

Providing a quick and intuitive experience that eliminates the friction that causes applicants to leave an application means less effort trying to get them to come back. Consider implementing automated reminders similar to the approach e-commerce brands take with abandoned shopping carts in cases where applications are left unfinished.

4. Total Time to Completion
The more time a person has to take to open an account, the more likely they’ll give up. This is something many banks still struggle with: 80% of banks say it takes longer than five minutes to open an account online, and nearly 30% take longer than 10 minutes. At these lengths, the potential for abandonment is very high.

A simple way to see how customers experience your digital application process is to measure the amount of time it takes, including multi-session openings, to open an account, and then working to reduce that time by streamlining the process.

5. Percent of Funded Accounts
A key predictive factor for how active a new customer will be when opening their new account is whether they choose to initially fund their account or not. It’s imperative that financial institutions offer initial funding options that are stress-free and take minimal steps.

For example, requiring that customers verify accounts through trial deposits to link external accounts is a time-consuming process involving multiple steps that are likely to deter people from funding their accounts. Offering fast and secure methods of funding, like instant account authentication, improves the funding experience and the likelihood that new users will stay active.

6. Percent of Auto-Opened Accounts
Manual intervention from a customer service rep to verify and open accounts is time-consuming and expensive. Even with some automation, an overzealous flagging process can create bottlenecks that forces applicants wait longer and bogs down back-office teams with manual review.

Financial institutions should look at the amount of manual review their accounts need, how much time is spent on flagged applications, and the number of bad actor accounts actually being filtered out. Ideally, new online accounts should be automatically opened on the core without any manual intervention—something that banks can accomplish using powerful non-document based verification methods.

7. Fraud Rate Over Time
A high percentage of opened accounts displaying alarming behavior means there may be a weakness in your account opening process that fraudsters are exploiting. To assess your bank’s ability to catch fraud, measure how many approved accounts turn out to be fraudulent and how long it takes for those accounts to start behaving badly.

The most important thing for financial institutions to do is to make sure they can detect fraudulent activity early. Using multiple verification processes is a great way to filter out fraudulent account applications at the outset and avoid headaches and losses later.

FinXTech’s Need to Know: Direct Deposits

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For many banks, direct deposit information is the key that turns a new account into a long-term successful primary relationship.

Direct deposit is a conduit to a customer’s life — and their information. Customers tend to use the account that receives their income; accounts without these recurring deposits risk sitting idly.

However, most customers don’t actively think about their direct deposit account. It’s not table stakes after they open the account; it doesn’t make or break their banking experience. But for banks, it’s crucial they get customers to switch. Research from Harland Clarke and Javelin Strategy & Research in 2017 found that 81% of bank customers who received a paycheck used direct deposit; of those customers, 91% used only one financial institution for it.

Banks with technology that makes it easier for customers to switch their direct deposit over when opening a new account have an edge in the fight for primacy.

Some of the financial technology companies that offer this type of solution — Atomic FI, Argyle, Pinwheel and ClickSWITCH, among others — can embed it directly into a bank’s digital banking interface. Customers have a self-servicing option, and bankers can use the tool on the back end. And, when opening a new bank account, it can automatically prompt customers to switch over their direct deposit as part of the account setup.

There is room for banks to improve in this area. Harland Clarke and Javelin also noted that out of those that opened a checking account between 2016 and 2017, only 70% recalled being asked to switch over their direct deposit enrollment.

Application programming interfaces (APIs) facilitate the actual switching of accounts. The APIs, which function as passageways between software systems that enable data exchanges, can also be used to verify income and employment data, which can help the bank identify other products the customer might qualify for.

In addition, some fintechs also offer a service called “paycheck linked lending,” which allows bank customers to pay their loans directly from their paycheck before it’s deposited into their account.

Newer digital startup banks — or neobanks — may have these types of tools built into their infrastructure. But for many smaller or community banks, the act of switching direct deposits is still a highly manual task that falls primarily on the customers, which could deter them from making the switch.

Here are five benefits a bank could experience by implementing a direct deposit switching tool:

  1. Capture more customer data. As customers switch their direct deposit, banks have an opportunity to collect more income and employment data to use in marketing campaigns and fraud detection.
  2. Automate manual tasks for both the customer and bank. APIs handle the account switch once the customer gives them permission to do so.
  3. Cater to customers in the gig economy workforce. Customers can switch one or multiple direct deposits to your bank, or split their paychecks to go to multiple accounts.
  4. Cut the time it takes to switch direct deposit accounts. APIs can conduct changes and verify data in real time — no paper forms involved. Atomic FI claims that its switches can take effect within a customer’s current or next pay cycle.
  5. Create stickier relationships with new and existing customers. Capturing direct deposits jumpstarts account activity and longevity with customers. If a customer considers your bank their primary financial institution, they may be more likely to turn to the bank for other services.

Q2 Software, the digital banking provider that acquired ClickSWITCH in April 2021, has an online ROI calculator to demonstrate the potential growth banks could see in adding a direct deposit switching tool.

It’s never been easier to open a new bank account. But newly opened accounts don’t promise a source of activity and recurring deposits. If your bank has never incorporated direct deposit as a key step in the customer acquisition process, now may be the time to reconsider.

Argyle and ClickSWITCH are included in FinXTech Connect, a curated directory of technology companies who strategically partner with financial institutions of all sizes. For more information about how to gain access to the directory, please email [email protected].

How Community Banks Compete on Digital Account Openings

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In 2019, over half of all checking accounts were opened via digital channels. In 2020, this number rose to two-thirds.

In 2019, megabanks and digital banks were responsible for 55% all checking applications. In the first three months of 2020, this figure reached 63% — and climbed to 69% in the next three months.

Meanwhile, community banks and credit unions accounted for 15% of applications in 2019, and even fewer than that in the six months of 2020. What’s happening here?

It’s a trend: More accounts are being opened online. But digital account openings are only one piece of a steady shift in the financial services industry, one where consumers do more over online and mobile channels. Megabanks and digital banks are riding this wave, using powerful online offerings to draw consumers away from smaller institutions.

Moneycenter banks have strong digital operations that allow them to expand into communities where they may not have a single branch. Digital offerings have also opened the door for new players like online-only challenger banks, big tech companies and fintechs that are successfully luring in younger customers with payments, investing and even cryptocurrency services. Make no mistake: if community banks aren’t already in direct competition with these digital players now, it’s only a matter of time before they are.

Who Are The New Players?

In the past, community banks’ primary competitors were primarily each another or a nearby regional bank. Today, technology is redefining what it means to be a financial institution, and thereby reshaping the competitive landscape.

Big tech heavyweights like Facebook, Alphabet’s Google, Apple, and Amazon.com have become increasingly involved in financial services in recent years. Their efforts are growing in scope: Google, for example, launching Google Plex, which includes a checking account. Most likely, these firms believe that over time, their expertise in the areas of data and software development will yield a natural advantage over incumbent financial institutions.

Online-only startup banks (also known as challenger banks or neobanks) like Chime and Varo Money are also proving to be a legitimate concern. While Varo’s strategy included obtaining a full-fledged banking charter, which it received in July 2020, Chime relies on partner banks to manage their deposits. And just because they’re startups, doesn’t mean they’re small; Chime boasted 12 million users as of the end of 2020 — 4.3 million of whom identified it as their primary bank.

How Community Banks Compete

As the marketplace evolves, so do consumer expectations. With Amazon and other on-demand services at their fingertips, consumers have become accustomed to digital experiences that are fast, seamless, and personalized.

To compete with megabanks, tech companies and challenger banks for digitally-savvy customers, it’s essential that community banks consider the following strategies:

Invest in speed and reliability
Digital banking solutions need to be fast and reliable to satisfy the high standards that consumers have come to expect. This means efficient processes, minimal to no downtime and speedy customer service. Technology that integrates with your core in real time is key to accelerating customer onboarding and boosting overall user experience.

Play to key strengths
Community banks should lean into the areas where they shine by catering to customers’ personalized needs. Banks should also position their products according to market demand and digital best practices, and configure them for strong customer experience and institutional outcomes.

Seek out the right technology partners
The difference between a good and bad technology partnership is significant; banks often end up disappointed with the performance of a digital solution. To avoid this, it’s important to extensively reference-check technology providers and inquire about the actual delivered (and not theoretical) return on investment of a solution.

Building a Digital Transformation Strategy

As digital banking becomes the norm, it has prompted a massive shift in the competitive landscape. Yet with the daunting task of digital transformation ahead of them, what’s the best place for community banks to start?

One impactful area to focus on is digital account opening. In fact, 42% of banks and 35% of credit unions say they are very interested in fintech partnerships that prioritize digital account opening solutions. Partnering with an account opening provider can help small and mid-size financial institutions position themselves favorably as consumers continue to adopt digital banking.