Understanding ROI on Digital Account Opening

Dec 6, 2019
Narmi Staff Contributor

Organic user growth for financial institutions continues to be a key focus across the industry, elevating the importance of frictionless digital account opening. While increased deposits and user counts are often used as benchmarks for success, financial institutions should expect that a robust digital account opening platform will add additional revenue beyond these common metrics.

Below are four examples of how a best-in-class digital account opening platform can drive increased ROI for financial institutions.

1. Annual Revenue Generated by New Users

Deposit growth is an important resource used by financial institutions to increase revenue. When new users place money into their accounts, financial institutions are able to leverage those deposited assets into revenue generating loans and investments. Having a highly automated, intuitive digital account opening process gives financial institutions the best opportunity to gain new users they would not have previously won. The more new users, the more deposits available to generate revenue from.

Example: One of the simplest ways to calculate the initial value of new users, annual revenue can be calculated by taking the interest ($) paid on deposits (cost of user) and subtracting that amount from the interest ($) earned on loans or investments (revenue of the user), then multiplying the total by the number of new users.

2. Automatic Approval Value Creation

Industry research shows that an auto-approved user is 5x more valuable to a financial institution than a user that is manually decisioned. When a user dedicates time to apply for a financial institution account, their level of engagement is at an all-time high. If an applicant is placed in a manual review queue, and subsequently approved one day later, their level of engagement has already dropped significantly, if not completely disappeared. Thus, their overall value to the financial institution is far less than if they were originally automatically approved.

Example: A user decides to apply for a checking account at a financial institution. They are automatically approved in an intuitive, 2.5-minute experience. Their enrollment into digital banking services is also seamless. Since they funded via an external bank account transfer, that external account is already linked to their new checking account. They decide to bring in an additional $1,000 because they have had a positive experience so far. They also receive a text to download the mobile application and end up remote depositing a $150 check.

Alternatively, a user decides to apply for a checking account at a financial institution and is not automatically approved. One day later they receive a notification that their account has been opened. They are traveling for work, or on vacation and forget about this new account.

3. High-Interest Deposit Campaign Value Creation

 A high-interest deposit campaign involves marketing a focused product set and setting a high deposit goal in a short amount of time. These campaigns are a valuable tool that can be utilized by financial institutions to grow organically and reach a market segment that would otherwise be left untouched. Successful campaigns can drive millions of dollars of deposits that, even at a higher ongoing cost per user, will still add significant new revenue opportunities.

Example: A financial institution creates a campaign targeting potential applicants that are eligible for a 15-month promotional Certificate of Deposit (CD) offering a higher than normal rate as the incentive. Instead of requiring applicants to come into a branch to open this CD, the financial institution is able to drive deposits entirely through digital channels and can also attract new digital-minded users. The financial institution is also able to create unique product links for the promotional CD to market via various methods.

4. Cost Savings from Manual Review Process Efficiencies

Automatic approval of applications provides financial institutions with a much more positive front-end experience and the financial benefits noted above. Naturally, it also drastically reduces the time and cost associated with manual reviews.

Financial institutions often cite a lack of confidence in their fraud decisioning process as the reason for high rates of manual review, and devote valuable (and costly) resources to a process that should be automated. Working with a digital account opening partner that provides a flexible and data-driven Know-Your-Customer (KYC) and fraud verification process can provide confidence to increase automated approval rates.

Example: For a designated employee who is paid an hourly wage of $20 per hour plus 40% of the hourly rate in employment costs (benefits, taxes, etc.), each 30 minute manual review will cost the financial institution $14. If there are 1,000 applications sent through manual review, the cost is $14,000. Additionally, this does not account for the opportunity cost of the time spent reviewing.


Each of the examples above highlights how the right digital account opening platform can positively impact ROI for your financial institution. In addition to the items articulated, the financial institution may also see the impact of increased brand perception or an exponential gain from increased marketing spend. As the financial services industry continues to evolve, the ability to differentiate and grow deposits will remain a key indicator of future success.

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Understanding ROI on Digital Account Opening