The account opening process is critical for new account and loan acquisition. While that’s true, it’s important to realize that account opening is often seen as a process by financial institutions while consumers consider it an experience. This account opening experience is often the make-or-break stage for a consumer relationship with a financial institution. If the consumer hits roadblocks and becomes frustrated with a negative account opening experience, they will open the account elsewhere.
Positive recommendations to open the account may come from a friend, co-worker, social media, or ratings of the institution shown during internet searches. Conversely, many consumers will not consider a relationship if there is negative feedback or reviews. And if those negative reviews specifically call out the account opening experience, consumers will move on. That is why financial institutions must get the account opening experience right.
Historically, new accounts were opened in the branch (and some still are today). Branch account opening enables the consumer to be guided through the process by branch personnel. That process had its issues (and continues to). It often lacked efficiency because paper forms were required, and copies of IDs had to be taken. But someone was there, face to face, often making an inefficient process palatable.
But what about the digital account opening experience? Consider how consumers accustomed to the interpersonal in-branch experience have moved online due to the digital transformation. Is there help or guidance available during that account opening experience? Is a consumer less capable because they cannot complete the digital account opening application without assistance? Many consumers are left to feel that way, and yet a little help could push the application over the finish line. Confusion in the process is a point of frustration that often leads to abandoning the new account application effort. First impressions can be last impressions. In today’s digital world, frustration leads to dismissal, never to be considered again. Let’s dive deeper into the account opening experience within the different channels.
Hold on. I have to open two accounts? Make it fast.
Many consumers will research, decide where they want to open an account or loan, and open that product. They are not, however, required to open products in order to establish a relationship with a financial institution. But, with credit unions, there is a hurdle other financial institutions do not have to contend with—the membership share account. No matter what deposit or loan product a prospective member wants to open with a credit union, a membership share account must always be opened.
The requirement to open two accounts at the time of joining the credit union prompts a greater need for efficiency, especially with the new generation of members who may be attracted by price but demand an efficient experience. Efficiency through self-service is table stakes in the digital economy, and the new account experience needs to embody that requirement.
As mentioned earlier, we also know that consumers may need assistance. Regardless of age, digital savvy or not, the game is over if the applicant gets stuck and cannot get help. Getting stuck increases the time to complete the application and, in many cases, brings it to a halt. That is unacceptable, and result is an incomplete application. The consumer has wasted time in the application process, and the financial institution has paid the cost for the application with no new account. It is a lose-lose proposition.
Do You Want My Money or Not?
Even though some financial institutions may have nailed creating an efficient digital account opening experience, getting funds into the account can still be painful. Consider the earlier point about credit unions requiring the membership share account even for a new loan. In the credit union experience, the consumer has to get money into the deposit account to get money out of the loan. The success of booking an approved loan for a prospective member then hinges on the funding of the membership share account. Funding the membership account is the moment of truth for onboarding the new account and/or loan.
If that process is complex, completed applications often sit in limbo or are purged after a predefined period, without funding. The cost savings associated with having the account opened in the digital channel may be sacrificed due to an account never being funded. Consider the scenario where a potential member opens an account online but has to go into a branch or call the contact center to make the initial deposit. It seems ridiculous in the digital age, BUT it happens. Any part of the process that causes friction, including the funding, may cause the consumer to look elsewhere.
Service Is Where We Shine.
While a credit union’s staff may provide the ultimate service experience, the consumer needs to become a member to experience that. Credit unions that rest on the laurels of positive ratings in member surveys or net promoter scores are missing a critical part of the service component. Growth. What about the consumers’ ratings who could not or did not complete a frustrating account opening experience? What is the experience and feedback of the potential members who never joined because funding the account was too difficult? What about their critical feedback to improve the account opening journey? That is a focus group that probably never happens. The argument certainly could be made that incomplete account applications should be part of account attrition statistics; they are lost accounts.
The Beginning is The End.
The new account opening experience is critical to creating a positive first impression. It is often the dividing line between lost opportunities and new members. The new account opening experience must be efficient for digital savvy applicants and not cumbersome for those applicants used to the in-branch account opening experience. Credit unions need to be aware that their account opening experience requires two accounts to be opened. That is an additional step that competitors do not require.
Consider the scenario where a credit union’s new account opening experience is flawless, and the competitor’s experience is not. In that case, even with the additional requirement of the membership share account, the credit union experience will win through the efficiency of the application and funding processes.
Finally, attrition should be examined as to why any account is lost from a digital account opening prospect. It has been said that every experience is an opportunity to create a great impression. Conversely, a negative experience is the beginning of the end. So, does your digital account opening experience lead to the beginning of a new member relationship, or the end of a potential one?
