Publications & Resources
September/October 2009
Focus: Information Systems & Security
More Than An “Open Now” Button
The Competitive Advantage: Next Generation Online Account Opening Systems
By John Waupsh
Let’s face it, in today’s banking world, the simplest inconvenience can quickly terminate the acquisition of a new account holder. Consumers simply have no room for error or miscalculation with regard to the new account process. Nowhere is that reality more pointed than with the online process. It’s pretty easy to hit the backspace key. But despite, or maybe because of, the challenges the online account opening process presents, I’d like to suggest it represents a remarkable opportunity for community banks. Because done correctly – efficiently and hassle free, that is – online account opening is the ultimate gateway for new customer acquisition.
Too long discounted, even shunned, by community banks, online account opening, or OAO, has remained the domain of the mega banks. But over the years, a number of these OAO systems built originally for the megas or regionals and designed more for customer “de-selection” than anything else, have been pushed off in scaled-down versions for sale to community banks. Not surprisingly, these hacked-up ‘technical solutions’ are cumbersome to configure with long deployment timelines, deliver very little (if any) analytical support, offer complicated lead management tools that result in poor follow-up by team members, and lack focus on curing abandonment or improving conversion rates. Simply put, the OAO tools out there for community banks have served our industry poorly.
How poorly? Industry OAO vendors state that within the application funnel, an immediate 10% drop out, a full 35% of applicants receive an “Auto-Deny”, most often for reasons more to do with incorrect data on the credit report than real credit issues, and another 15% are assigned to “In Review”, likely for the same reasons. In the end, just 40% of online deposit account applicants – just four out of 10 potential customers – are “Auto-Approved”. Considering that Forrester Research says 30% of all checking applications will occur online by 2012, with nearly 1 in 4 happening online today, a 40% or even 50% funding rate is entirely unacceptable.
So, leveraging the knowledge and experience of serving hundreds of community financial institutions with their online presence and building one of the most visited portals for online account openings, we set out to elevate OAO to the standards of a community bank, where personal service and on-site decision-making are key. To produce, in other words, an OAO built for and with community banks.
We’ve already learned that effective online account opening is driven by tracking lead follow-up, employing best practices to convert “in-review” applications, carefully measuring drop-out rates, and offering incentives to complete applications. Such a robust system demands a powerful interface with ID verification, authentication and applicant-screening.
The reality is any successful OAO will have to represent a total effort that includes not just technical concerns, but marketing, design, analytical, compliance and consulting concerns. To really empower a community bank, OAO needs a “user” component that delivers a secure, efficient online account opening process, easy-to-use lead management, and best practices guidance, coupled with a behind-the-scenes component that provides seamless interaction with credit bureaus, ChexSystems, Deluxe Detect, or TeleCheck, and industry-leading cores. And above all, successful OAO needs to be powerful, fast, and understandable.
Community banks need the best products and services if they’re to win the battle for customer accounts and deposits. A well-designed OAO system delivers both. And at this hour, local banks willing to move quickly can literally skip to the next generation of online account opening systems. I have to think it’s a great way to gain advantage on the direct and mega bank competition.
John Waupsh is CEO of First ROI. He can be reached at (512) 342-9530 or johnw@firstroi.com. First ROI is a WIB-endorsed Value & Income Program (VIP) partner.
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