Banks need to start implementing improved mobile account opening capabilities to provide customers with an omnichannel approach to opening new accounts, a new report released yesterday by Javelin strategy and Research concludes. The study, based on consumer surveys, found that about 88.5 million Americans tried to open an account through the digital channels in the last 12 months, with about 20% of applications for checking or savings accounts being made on a mobile device. Javelin also found that consumers who fall in its profitable “Moneyhawks” segment (who use online and mobile banking, and pay their bills with their primary bank) are particularly interested in mobile account opening.
“The challenge for many banks is that they have a long-standing culture of branch-centric banking,” says Mark Schwanhausser, director of omnichannel financial services at Javelin, and author of the report. “You can’t wait for the customer to come in [to the branch] with their problems. You need to be proactive and reach out to the customer with answers through the digital channels.”
Banks should start thinking about how they are going to adapt the account opening process to the mobile device now, not in three years, Schwanhausser urges. If they don’t they will risk alienating potential customers who are active on their mobile devices and more profitable, like the “Moneyhawk” consumers, he points out. And these customers, Javelin’s research has suggested, are more likely to buy or opt-in to new mobile banking, payments, PFM or loyalty rewards offerings.
Adapting account opening to the mobile form factor has to start with the fact that “nobody wants to fill out a form on a smartphone,” Schwanhausser says. The process has to be simplified for a smaller screen by, for instance, using the phone’s camera to take a picture of a driver’s license and auto-populating fields (a capability that Mitek has said it is interested in providing). The mobile device also gives banks the ability to take advantage of other capabilities of smartphones and tablets, such as biometrics, that should be explored now rather than later, according to Schwanhausser.
The report also found that about 3 in 4 account opening attempts in the digital channels is successful. The most common reason for an unsuccessful attempt was inability to fund the new account right away, showing that funding an account is still a challenge for many banks in digital account opening. “After authenticating, it’s still a challenge when the funds move to ensure that those funds are really yours,” Shwanhausser notes. Some of the different methods to fund an account digitally can take days, such as using micro-deposits to verify that the funds belong to the customer, he adds. Banks have work to do on the back-end to use data to help verify that the funds being moved actually belong to the customer, he concludes.
Smaller institutions, particularly credit unions, have a lot more work to do on their digital account opening offerings to compete with the bigger banks, the report also noted. The customers at credit unions are generally more likely to use the branch to open an account, but Schwanhausser says that is because these institutions haven’t built confidence among their customers in the capabilities they offer in the online and mobile channel. And building that confidence begins with a seamless account opening experience online or on the mobile device. “Digital account opening is an opportunity to introduce your new customers to your digital offerings. It’s a critical welcome mat,” Schwanhausser notes.