At the 2022 Digital Account Opening Summit, Narmi got the chance to sit down with experts in the fintech field, including some from Narmi’s own team, to talk about everything digital account opening has to offer community banks and credit unions. Read about the insights that came from each session, and learn why digital account opening is more important than ever for staying competitive and driving growth.
Despite living in a digital world, there’s still a lot of hesitancy around digital account opening for banks and credit unions. Concerns around the cost and the learning curve of implementing digital account opening are at the forefront of their minds – but are they really as scary as they seem, and are they worth ignoring the digital features customers want?
“With the speed of digital adoption, how are we keeping our competitive advantage?” -Sean Gray
Narmi Co-Founder Nikhil Lakhanpal and Berkshire Bank COO Sean Gray sat down to talk about the realities of launching a digital account opening strategy – something the majority of our banking professional attendees said they were interested in exploring within the year.
There is still some reticence, though. For one, even though digital banking is clearly what customers want, many institutions still see it as secondary to the physical branch experience, and prioritize it as such. There are also lingering concerns around KYC and fraud, as digital account opening eschews the traditional document-based identity verification process.
Sean pointed out that while change can seem scary, the really scary, and costly, prospect is doing nothing. “The biggest risk in today’s environment is not realizing how important digital innovation is,” he says. “What is the real risk of maintaining the status quo to cost and to reputation?”
Community banks and credit unions are most competitive and sustainable in their service through personal relationships, and need to see digital as a way to build on what’s working. Is the cost of maintaining the status quo (doing nothing) greater or lesser than innovating? Which is really more expensive?
One of our attendees, Vida Villanueva, summed up the reality of resisting digital quite well: “The cost of doing nothing will be greater given the changing environment and customer demands in the long term. Additionally, going digital is part of the maturation journey for any community bank and credit union to remain relevant to the different generations of banking services consumers.”
As Nikhil and Sean stressed, a seamless user experience must come first and digital account opening is table stakes. Nikhil likened the digital experience to a first date: a time to really shine and show everything you have to offer: “You only get one chance to make a good impression. If your first impression isn’t impressive, what options are left to build trust later?”
"Businesses are stuck with lackluster digital banking options, leaving a largely untapped market." -Chris Griffin
Small and mid-sized businesses are a hugely underserved market with infinite potential, but many banks – and businesses – are not taking advantage of this mutually beneficial opportunity. During this session, Narmi Co-Founder Chris Griffin and Narmi Lead Product Designer Hillary Pollak went over in detail why businesses and banks have been avoiding each other, and how to fix that problem.
Chris and Hillary explained that banks and credit unions are reluctant to approach business banking because of the perceived risks, which makes the business account opening experience disappointing and drawn-out for business owners – and that’s when business account opening is available to them at all. As a result, as many as 42% of businesses get stuck using consumer bank accounts, which are not optimized for business.
Hillary and Chris went on to break down in detail what businesses are looking for in a bank, and what financial institutions can offer for a relationship that benefits everyone. And that means tackling the challenges unique to business accounts while also serving as a center of support and education for business owners who may be opening a business account for the first time.
This includes managing stakeholder information, obtaining good-standing certificates and international transaction documentation, securing EINs, and finding balances between multiple owners. It’s admittedly a steep learning curve, but with the right tools and the right support, financial institutions and their business clients can see incredible results.
"If you’ve needed digital account opening improvements for the past five years and haven’t done it, you’re falling below the survival line and you’ll see deposit outflows." -Kirk Wycoff
Adding to the hesitancy many financial institutions have around digital investments are the fears surrounding inflation, changing interest rates, and global instability. However, the future is always uncertain so playing it constantly safe can actually cause banks and credit unions to miss out on growth opportunities
Ron Shevlin, CRO at Cornerstone Advisors, and Kirk Wycoff, Managing Partner at Patriot Financial Partners, sat down to talk about the realities of risk-taking and risk aversion, as well as the steps financial institutions can take to mitigate those risks while harnessing their benefits.
Kirk also pointed out that despite risks, the industry is set up to withstand them, and that tech and efficiency innovations are continuing to drive revenue growth. And there’s more good news for core deposit generators on the horizon: Kirk estimates a 20-30% growth in the coming year!
But this optimistic prediction also came with a warning about complacency: “Banks and credit unions are still holding a lot more deposits due to stimulus, but that doesn’t mean the banks are necessarily good at generating revenue.” Institutions that don't invest in technology now might not be able to grow well when deposits start to migrate. “If you’ve needed digital account opening improvements for the past five years, and haven’t done it, you’re falling below the survival line and you’ll see deposit outflows,” he says.
Ron also pointed out that the relevance of staunchly traditional institutions will wane as non-traditional banking options become more available, and to see this as impetus to explore those options. “It’s all about competition. It's not enough to just be “best-in-class”, it’s about being able to actually stay relevant and stay competitive with other banks and fintechs.”
They also pointed out that the deposit opening process has completely changed in the past 20 years. Kirk recalled how initially institutions wanted the account opening process to take as long as possible to make it a sticky cross-sell opportunity. This is no longer the case. People now expect fast account opening, and are more receptive to additional products and services once they’ve established a banking relationship.
By taking a traditional check-the-boxes approach to choosing vendors, financial institutions are missing out on innovation, Kirk maintains. And these missed opportunities can mean being stuck on a dead-end track as the industry evolves without them.
“‘Just say no’ is the approach many traditional bankers take when it comes to digital innovations," Kirk says. "They need to ‘just say yes’ to account opening, spending the money, doing it this year, and opening more accounts digitally than in-branch. Every day you’re not doing it, you’re falling farther and farther behind, and in 10 years there will be many less in-branch experiences to rely on.
"Your competition isn’t another bank, it’s the last app they opened and the experience they had there." -Stephen Gates
Once a financial institution decides to embrace digital account opening, the next challenge is making customers want to use their platform as the place for their financial lives. Global Design Leader Stephen Gates and Alloy Co-Founder and CRO Laura Spiekerman, provided great insight into ways banks and credit unions can attract users and keep them engaged.
First, digital banking experiences must be usable and attractive on desktop or mobile. That means not only competing with other banks and credit unions for a great customer experience, but also with every other app and site out there. As Stephen put it, “Your competition isn’t another bank, it’s the last app they opened and the experience they had there. People want the design and the experience to be as easy and intuitive as possible.”
There are other challenges, too. One is ensuring that all teams within an institution are aligned in their creative and design decisioning, and that their cues come from customer habits and trends rather than a theoretical idea of the “right” thing to do. That includes legal and compliance teams, who can give input on limitations from the beginning to save time on revisions.
And when it comes to what users want – a frictionless, fast, and easy experience – the question typically raised is security. If it’s so fast, how can it be safe? A little transparency can go a long way: “People will tolerate friction more if you respect them enough to explain why that friction is there,” says Stephen, “This also builds trust because they will understand the value and outcome of the precautions — but don’t overdo it!”
Laura also encouraged banks concerned with safety to consider the digital account opening process as just the beginning of the relationship. “You can no longer think of onboarding as a 3-5 min exercise. It’s really a 90-day exercise to see what they’re really doing, learning their habits, and adjusting accordingly. And, ongoing trust building is table stakes now.”