How to optimise your digital account opening process

If 2020 taught the banking industry anything, it was about the increasing demand for digital solutions, a demand accelerated by the COVID-19 pandemic. After all, people were not really concerned with personal space or sanitised surfaces when visiting their local branch at the beginning of 2020.

Even if your service area has low case numbers, many branches remain closed or have reduced hours, which means that customers have been forced to go online to conduct their business. Call centres have been restructured, employees are now telecommuting, and digital channels have been overwhelmed and strained to breaking points. Online and mobile banking services that were once convenient preferences have become safety necessities, making digital account opening more important than ever.

If banks want to start 2021 on the right foot, they can start with these five steps.

The good news is that many customers actually prefer the digital onboarding process, and banks can start 2021 better equipped to meet their demand than even a year ago – if they act now.

Here are five steps financial institutions can take to create frictionless, engaging, and safe experiences for customers – during and after the COVID-19 pandemic.

1. Objectively evaluate where you stand

First, you must determine where your organisation stands today based on your digital capabilities. Are your services adequate? Can you keep up with the competition and rising consumer demand? It’s important to be objective and realistic if you want to thrive. Consider bringing in a third party to evaluate your company’s efficiency (and to avoid internal office politics).

What will you address first? Look to where you can plant seeds for long-term success and make smart investments that will help you build momentum. Once you identify the areas that require improvement, you need to develop actionable strategies.

Customer expectations are high in the digital space. COVID-19 has exposed many weaknesses in financial services, including failure on the part of many banks that couldn’t integrate the PPP loan program into their systems. For many, digital engagement is a key focus area and has been for years, but we still have a lot of work to do.

2. Use analytics to improve your customer acquisition process

“The abandonment rate for online account opening is 19%.”   – Digital Banking Report

Many financial institutions still have an online account opening process that exceeds ten minutes. Banks continue to underestimate the importance of a fast and seamless application experience and aren’t taking full advantage of tracking and analytics technology that can help identify where (and why) customers drop out of the sales funnel.

Research shows that more than 50% of digital applicants leave before selecting an offer or product, and more than 25% leave during the initial verification phase; only between 6-9% of applicants make a purchase (NEURO-ID Friction Index Report 2019). If you want to improve your results, you need to utilise application funnel metrics so you can understand how to benchmark each stage of the process. You must dig into the customer acquisition funnel and think about how it can be optimised to increase the volume of profitable new accounts being opened.

Track abandonment rates, identify points of friction, and streamline the digital account opening process by asking customers only the essential questions. The goal is to deliver the best possible customer experience while maintaining mechanisms for risk/fraud detection and cost control.

3. Increase your data awareness

Much of digital transformation is about getting the right data. Make sure you know what data you have and what you don’t have. Your customers’ time is valuable, so don’t ask applicants for information you already have. Remove friction by accessing both internal and external data – even if it costs you a little more.

Remember that digital authentication is vital to avoiding fraud. You can employ third party data providers to gather and verify information, such as income verification and bill payment history. Expedite your learning by using this external data (including traditional and alternative data) to help build contextually aware profiles on prospective and existing customers. This will give you more insight into each customer and allow you to present solutions tailored for specific clients.

4. Embrace machine-learning technology and artificial intelligence

Don’t be apprehensive about applying machine-learning (ML) models and artificial intelligence (AI) solutions to enhance your decision-management practices. Make the most of modern technology by using these complex mathematical structures to run simulations and conduct experiments that will help you understand the best approach for every situation.

A robust AI program can incorporate statistical analysis with predictive response modelling to quickly produce multiple scenarios and recommended strategies for each customer. However, we must try to avoid accidentally encoding unintentional features into their predictions by developing a better understanding of the relationships captured by such programs.

As noted by the “xAI Toolkit – Practical, Explainable Machine Learning” whitepaper: “As these complex mathematical structures become more ubiquitous and even autonomously self-updating, it becomes imperative to clearly understand how these models are operating to know what features are influencing their predictions and to reveal specific evidence in support of their conclusions.”

When we understand a model’s structure, we can use it to provide positive experiences and produce desirable outcomes. Ensuring your AI is explainable can improve your offer determination, decision accuracy, and operational efficiency and scalability. This helps streamline your applications and makes the entire DAO process faster.

5. Provide omnichannel engagement without neglecting the human aspect

Customers now expect the ability to do anything, anywhere, and anytime. There’s huge demand for self-service digital solutions with consistent experiences across multiple connected channels. The challenge is to increase the level of omni-channel engagement that consumers feel throughout the application and onboarding process.

You can use automated communication solutions to proactively reach out to people, keeping them updated on their application status, and welcoming them as new customers. Digital capabilities can help establish customers’ communication preferences (channels, velocity, tone, timing) so you can carry those preferences through all future interactions.

However, remember the importance of the human touch – no matter how robust your digital capabilities, many customers will still want to ensure they can solve certain problems by reaching out and speaking with another human being. After all, few things are more frustrating than needing customer service and discovering nobody is available to help.

Digital engagement in financial services: 2020 and beyond

“[An] intense focus on safety, automation, self-service, and frictionless digital experiences.”

– J.D. Power

Public outlook on the pandemic was very different when this crisis began 10 months ago – many people thought it would be over by now. Unfortunately, we are still living in uncertain, socially-distanced times, and digital account opening has gone from nicety to necessity.

According to PwC, the pandemic has made 50% of consumers more likely to use their bank’s website or mobile app, and 24% less likely to use their bank’s branch offices. Even before COVID-19, a growing percentage of consumers had been opening their bank accounts digitally. According to a J.D. Power study released just before the pandemic, digital bank account opening grew from 22% in 2019 to 31% in 2020.

In other words, the pandemic has only increased an already-existing consumer demand for digital services. Consumers who don’t feel their bank is meeting their needs will take their business elsewhere – a switch which has become as easy as logging into another website