Digital-First Banking

Banks Must Look Beyond Speed To Optimize Digital Account Opening

Why Banks Must Look Beyond Speed To Optimize Customer Onboarding

Without the local branch to visit, financial institution (FI) customers were suddenly thrust into the world of digital and online banking. PYMNTS' most recent Digital-First Banking Tracker revealed a whopping 200 percent increase in new mobile banking registrations last April, as the pandemic removed the ability to step into a physical bank branch or visit an ATM.

Though this climate was embraced by many banks and credit unions (CUs) as an opportunity to kick off digitization initiatives that might have sat on the back burner in the past, rising to consumers' newly elevated expectations for a fully digital banking experience hasn't always come easy.

That's particularly true in the customer onboarding process, with PYMNTS research revealing that only 56 percent of FIs currently offer the ability to open an account digitally. That could throw a wrench into financial service providers' broader modernization initiatives and the ability to reach new customers seeking the fully digital experience, warns Doug Brown, senior vice president and general manager, NCR Digital Banking.

"With the need for new account relationships that spawn from [the pandemic], there's also the need to seamlessly and elegantly open new accounts," he told PYMNTS' Karen Webster in a recent interview. "Onboarding has taken on a whole new level of emphasis."

The Customer Relationship Opportunity

As it has in so many other ways, the pandemic continues to force entities like banks and CUs to entirely rethink their product and service strategy. In the immediate aftermath of branch closures, FIs turned to their call centers as an obvious source of support to help open new accounts for customers.

It was perhaps not the most ideal strategy, however, with call centers already largely overwhelmed with an influx of other needs, said Brown. Long wait times on hold with customer service hardly provides the optimized digital onboarding experience consumers seek — and, as Brown explained, it took some time for FIs to identify this opportunity as one to not only streamline the client experience, but also to foster a powerful customer relationship from the very beginning.

"FIs probably had the opportunity to expand relationships right out of the gate by understanding people better," he said. "But digital online onboarding was so narrowly defined, it didn't afford FIs the opportunity to do that. So there's been a radical reevaluation and reprioritization about how onboarding is going to work."

The Next Generation Of Onboarding

Historically, financial institutions' approach to digital onboarding has been all about speed and efficiency. While rerouting new clients away from physical branches and call centers and toward online banking portals can indeed offer that speed, Brown warned that financial service providers can quickly fall into the trap of assuming that speed equals customer satisfaction.

On the contrary, a fully electronic onboarding experience may actually lead to an increased number of account openings that are never actually used.

"Speed matters in digital — but at the same time, in our effort to be so efficient, we may lose sight of, 'Did I actually select the right account for myself?'" said Brown. "That's where an interaction opportunity becomes evident, so you don't end up with a bunch of non-funded, zero-value accounts through your pipeline."

As FIs navigate through the development of a better onboarding experience, many are quick to discover that addressing friction isn't simply about allowing an individual to make a few clicks to open an account online without any human interaction. Rather, banks must approach their onboarding strategies with a focus on fostering long-lasting and loyal customer relationships.

The Right Touch

An optimized onboarding experience should be digital-first — but as Brown explained, there are opportunities for human interaction to improve the client experience, even if it means a slightly longer process.

He said that NCR's own financial institution clients are exploring the impact of customer representative engagement in guiding a potential new client through the onboarding experience, with many finding that a simple offering by a bank professional to help prepare a client to open an account can be more effective than no human interaction at all.

"People are always afraid of putting a speed bump in the way, but we're finding that there's a lot of value in offering that tactfully upfront," Brown noted.

Also key, he continued, is to set expectations from the get-go. It's not a financially viable strategy for financial service providers to make bankers become available 24/7, for example. Ensuring that clients are aware of what to expect as they navigate the account opening process and interact with both online channels and humans — and making it clear how long this will take — is another effective way to promote customer satisfaction.

"Set expectations. People seem to appreciate that more than we recognized," he said.

In the race to digitize, offering an onboarding experience that took place entirely online may have enabled some customers to find the right banking provider in the midst of the pandemic. But as FIs take a longer-term outlook as to the impact of digitizing and optimizing their processes for potential new clients, Brown said the focus must shift from one that is fast and digital to one that is efficient and builds a customer relationship.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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