How is your online account opening process doing, really? Many financial institutions don’t know where to begin looking for the answer to that question. But there are a wealth of distinct key performance indicators (KPIs) you can observe to see where your institution stands. Opening an account should never be a long, arduous process, and luckily, there are ways to make the process quick and painless without sacrificing security.
By paying attention to certain KPIs, you’ll have a better understanding of the health of your institution’s online account opening process, a better idea of where you’re excelling, and the areas where you need to improve your digital account opening and growth strategy.
All customer and member interactions start with account opening. If your digital account opening process is failing, your institution will miss out on the relationships that make it thrive.
It’s always a good time to assess your financial institution, but it’s especially crucial to do so if you’re planning on updating your account opening system. It will show you what’s working and what isn’t, and give insight into how people are interacting with your site. This kind of data discovery is instrumental in informing the changes you should implement.
Every customer starts as a visitor, and somewhere along the way they decide to take the next step and open an account. But how many of your site’s visitors are choosing to open an account?
The ratio of visits to openings measures your institution’s first impressions on customers who may be shopping around for a new place to put their money. If you get a lot of traffic, but the rate of application is low, something is making your site, and thus your financial institution, seem unappealing. This is where marketing strategies also must be taken into consideration. If you’re spending money on attracting visitors, but aren’t optimizing your site for conversion, then you’re wasting money, The focus should shift to conversion.
Look at your site through the eyes of a potential new customer. Are there areas that are confusing or redundant? Everything from the layout to the design is key to attracting and retaining customers, so having a robust design system and a frictionless experience is one of the fundamental ways to ensure people are coming to you…and staying.
Getting people to start an application is great, but it means nothing if they don’t complete it. If you’re seeing a significant abandonment rate, it may indicate that your account opening process needs work.
On average, roughly half (51%) of all online applications for deposit accounts are abandoned before completion. That’s why it’s key to have a frictionless digital account opening process, and also ensure that your mobile option is equally accessible and intuitive as your web option.
If your institution is seeing high abandonment rates, something is going wrong and turning enthusiasm into discouragement. Identifying these pain points is key to smoothing reveal frustrations and making the overall experience faster and more satisfying, and will lead to a greater percentage of completed account openings.
“Users get frustrated and give up if it's not easy or doesn’t give that immediate satisfaction and progress they're used to seeing in their digital interactions.” – Kaitlin Russenberger, Narmi General Manager
Life gets in the way, and so many times, account opening takes more than one session. Unfortunately, the probability of a customer picking up where they left off drastically decreases as more time passes. And that means the chances of the account ever being opened decreases as well. You can assess your potential customers’ excitement about opening accounts by measuring how many of them pick up where they left off, as well as the amount of time they take between sessions.
While you can’t control what’s happening in your customers’ lives, you can control the likelihood of the process being interrupted by simply shortening and streamlining the process. With a quick and efficient experience, users won’t have to remember to come back because they’ll already be done.
In cases where applications are left unfinished, consider implementing a system to remind customers to come back. It’s possible they simply got distracted and need a gentle reminder to complete the application.
Plainly put, the more time and clicks a person has to take to open an account, the more likely they’ll be to give up. Narmi General Manager Kaitlin Russenberger has found that many banks are still struggling in this regard: “75% of banks report that it takes longer than five minutes to open an account online, and there's close to 30% that take longer than 10 minutes,” she explained in a webinar on mobile strategy. “When you're looking at that amount of time, you really risk having abandonment increase. Users get frustrated and give up if it's not easy or doesn’t give that immediate satisfaction and progress they're used to seeing in their digital interactions.”
A simple way to see how customers are experiencing your DAO is to measure the amount of time it takes them in total (meaning including multi-session openings) to open an account. You can use this information to make edits to your process, slimming down the time and making the experience smoother for customers.
Berkshire Bank, for example, was able to take their application time down to just 2 minutes and 13 seconds without sacrificing security, resulting in a far superior experience for new customers.
A key factor in how active someone will be when opening a new account is whether they choose to initially fund their account or not. Financial institutions have multiple options for encouraging initial funding, including instant account verification, linking an external account, and credit card funding.
But some funding methods are easier and safer than others. Right now, micro-deposits are a popular industry standard for verifying a linked external account, but these take several days to clear. This method requires the applicant having to go back after a waiting period, and can turn them off actually transferring funds. If you see a low percentage of engagement after the funding phase, it may indicate that your funding options are just not working. After all, a gap in time breaks up the seamless experience, and that’s a turnoff at any point in the application process.
Having multiple account funding options is great so your institution can meet multiple kinds of needs, but it’s imperative to have options that are stress-free and take minimal time. And there’s really no excuse for a lack of those options as technology is increasingly allowing for it.
Instant account verification is becoming increasingly popular, even if it’s not yet the industry standard. With instant verification, new customers and members input their account credentials and can immediately transfer funds. It combines the best of both worlds – in that it’s secure and reduces fraud risk – while also providing a smooth and efficient experience for customers.
When manual intervention by a customer service rep is required to verify and open accounts, it’s time-consuming and expensive.
Even with some automation, an overzealous flagging process means that applicants have to wait longer to open an account and may have to endure the hassle of providing more identifying documents. This also means back-office teams have less time to help other customers with more urgent concerns.
Banks and credit unions need to assess how their account opening flow really operates, and how contingent it is on manual intervention and verification. There will always be accounts that require review, but if a significant percentage of them are being flagged, it might mean the system could use some finessing. This is especially true if the majority of flagged accounts are not fraudulent but simply being held up over minor issues.
To assess how healthy auto-opening is, financial institutions can look at the amount of manual review needed, how much time is being spent on manual reviews, and the number of bad actor accounts that are actually being filtered out by the manual review.
Non-document based verification methods, like the one provided by Narmi via Alloy, allow institutions to set their own parameters when it comes to accepting, denying, or flagging accounts for review. Institutions can also access a wealth of resources on best practices for a system that’s secure, but doesn’t trip itself up.
Ideally, fraud would be detected and squashed at the outset. After all, financial institutions aren’t harmed by fraudsters trying to open accounts, they’re only harmed if those accounts actually get through.
If a high percentage of accounts display alarming behavior, it means there may be a weakness in your account opening process fraudsters are able to exploit. To assess the your institution’s ability to catch fraud, it’s important to be able to answers these questions: Out of all the accounts that are successfully opened, how many turn out to be fraudulent? How long does it take for these accounts to start displaying strange behavior? And, most importantly, how much loss are these accounts incurring?
Fraud happens, it’s unfortunate, but true. So the most important thing for financial institutions to do is to make sure they can detect it early and deal with it accordingly. Using multiple verification processes is a great way to filter out fraudulent account applications at the outset and avoid headaches and loss later.
Examining your financial institution’s account opening process is a crucial step in assessing where your customers are running into pain points, and how you can eliminate those for a frictionless experience that gets people where they want to be, and helps propel your institution to the next level.
Get the checklist for assessing the health of your institution's Digital Account Opening strategy, and schedule a Narmi demo to chat with a solution specialist.