Viewpoint: Good First Impressions Make for Profitable Relationships

By Brett Walker, Cachet Financial Solutions

Smartphones and tablets have become financial lifelines for millions of Americans, and in the process have redefined what convenience is all about. For increasing numbers of Americans, convenient banking is more about clicks and apps and less about branch locations and hours.

Javelin Strategy & Research reports that nearly one in four consumers turn to mobile devices first when they want to access their accounts at financial institutions. Javelin calls these folks “moneyhawks.” Moneyhawks tend to be young adults—think millennials. They opened about one-third of all new accounts at financial institutions last year, and two out of three expect to open checking, savings or credit card accounts this year. What’s more, 20 percent of moneyhawks say they are apt to change financial institutions, and these individuals represent more than 70 percent of deposits controlled by likely switchers, Javelin said.

Even consumers who have limited interactions with financial institutions (the underbanked) are demanding more mobile banking access. The Federal Reserve reports that 48 percent of underbanked Americans it asked earlier this year had used their mobile devices to perform routine banking during the previous 12 months.

Despite increasing demand for mobile banking services, most of the banking activities Americans perform with their smartphones generate no revenues for the offering financial institutions, and they have little impact on overhead. Primarily consumers are using mobile devices to check on account balances and transactions, locate ATMs, make internal transfers and, with increasing frequency, they’re using their mobile devices to deposit checks.

Account opening, which is labor-intensive, time-consuming and the gateway to relationship building, has been slow to emerge from the forest of mobile apps. In fact, when the consultancy Aite Group last year queried financial institutions about their plans, more than half responded that they expected to be offering mortgage and auto loans via mobile banking products by the end of 2015. Yet nearly a quarter said they didn’t offer mobile account-opening options and probably never would. As for consumers, 70 percent would prefer to apply for checking accounts online or using their mobile devices, according to Javelin, while 80 percent also prefer digital options for credit card applications.

Building Good Relationships from the Get Go

First impressions count for a lot in business. Mobile bankers prefer the mobile channel because it fits their mobile lifestyles. Requiring consumers to complete tedious on-screen forms or to complete the process later (e.g., through an exchange of emails) makes for a lousy first impression and is a sure-fire way to turn off prospective customers. It’s also unnecessary as the technologies that underlie mobile check deposit and mobile photo bill-pay services are equally suited to expediting and enhancing customer onboarding routines.

It’s not only customers who benefit. Leveraging smartphones with their camera functionality in support of account-opening processes also enables financial institutions to eliminate costly, error-prone and time-consuming workflows. Traditional account-opening routines can take as little as 30 minutes or as long as two weeks, depending upon account types. In addition, some financial institutions reportedly are rejecting 50 percent or more of account applications for incorrect or incomplete information, or the inability to decipher customer handwriting on faxed documents. Then there are the hard costs of processing paper and mixed media applications, like copying and storing forms, and the staffers needed to rekey information into back-end systems.

Account opening is the first interaction between a financial institution and a prospective customer. If this interaction is confusing or time-consuming, prospects will abandon the process and take their business elsewhere. In a report published earlier this year, Aite estimated that mobile capture-enabled onboarding can reduce new account abandonment by as much as 25 percent.

There are also relationship-building benefits and increased wallet-share considerations. Typically, consumers need multiple financial services; just having a checking account (or a prepaid card) is never enough. In a study published several years ago by the Bank Administration Institute, nearly three-quarters of cross-sales from retail checking account customers occurred within 90 days of a customer opening a bank account. Each new service requires onboarding, of course. So simplifying and streamlining onboarding will lead to more effective cross-selling and up-selling, and perhaps most importantly, less customer turnover.

Mobile-image-enabled customer onboarding can be a completely self-service activity, where applicants use their smartphones to capture images of identity documents, such as passports and drivers licenses. In this scenario, the captured information gets used to automatically prefill applications and related forms, which applicants complete independently, when and where they choose. Account funding can be handled similarly; applicants snap photos of checks or payment cards selected to fund their accounts.

Alternatively, staffers can use smartphones or tablets to assist with in-person onboarding at branches, or elsewhere, such as county fairs and remote promotional events. Using mobile photo technology in this way can do much to improve performance metrics at branches, which continue to be challenged by falling foot traffic and high fixed costs.

Whether it’s self-service or staff-assisted mobile-application completion, the experience is far faster, cleaner and friendlier than traditional onboarding methods. Capturing data from official identification documents via mobile imaging to automatically prefill application forms and provide access to those digital documents provides financial institutions with structured data that can readily be deployed to back-office systems where it can be analyzed and sent to CIP/KYC verification providers. Perhaps most importantly, mobile onboarding positions financial institutions to attract younger consumers, especially those among the mobile-first millennial generation and to retain them as profitable customers throughout their financial lives.

“Offering a great mobile self-service experience starts with a flawless account-opening process,” says Tom Burns, president of North America Retail at DFC Global Corp. A nonbank provider of financial services, DFC is expected to be the first such company to enable customers to apply for its mobile-to-prepaid check cashing service using the cameras on their smartphones. Once approved, customers can fund their new prepaid cards immediately with mobile photo check deposits.

The time has come for financial institutions to truly reap the benefits mobile connectivity offers, and the place to begin is with customer onboarding. Delivering an excellent mobile account-opening experience not only assures a great customer experience, it also frees up staff members to engage in more productive activities like selling. Plus, it drives customer satisfaction and profitability. It’s a winning proposition all the way around.

Brett Walker is senior vice president of emerging markets at Cachet Financial Solutions. He has more than 20 years’ experience helping financial institutions to leverage the latest mobile money, imaging, and risk mitigation technologies to enhance customer engagement, increase loyalty and expand their businesses. Reach Brett at [email protected].

In Viewpoints, prepaid and emerging payment professionals share their perspectives on the industry. Paybefore endeavors to present many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.