Analyzing speed, automation, and mobile in acquiring new customers

Time required to open a new bank account is one of the most important factors that banks must continuously evaluate to ensure alignment with customer expectations. Challenger bank Chime (an online-only operation) states on its website: “Applying for an account is free and takes less than 2 minutes.” Chime is creating a powerful alternative—via incredible speed—to traditional options. The wait alone in a physical bank lobby to start the account-opening process can certainly last longer than two minutes.

Chime’s growth is an example of how time can serve as a key differentiator. Chime recently announced a Series F that placed its valuation at $14.5 billion. Chime has experienced huge growth in account subscriptions in 2.5 years—from 1 million in May 2018, to 3 million in March 2019 (when the company was valued at $1.5 billion), to 8 million in February 2020.

How quickly and easily retail banking customers can set up a new account – when comparative offerings are similar enough – can be a determinant of where they choose to place their money for years to come. Three major factors to consider when enabling sign-up simplicity are: speed, automation, and mobile capabilities.

Speed in account set-up

Compelling interest rates and sign-up bonuses that matter to consumers can be for naught if a customer is overwhelmed in the sign-up process. Complex forms will give the appearance of a daunting task, leading many potential customers to defer to another time or to a competitor who has a simpler process with a similar service.

The Financial Brand’s Digital Banking Report analysis of August 2020 found that 71% of online checking account openings can be opened in under ten minutes and 28% of mobile accounts can be opened in under five minutes. Abandonment rates can spike to as much as 40% if an online/mobile process exceeds these respective time benchmarks.

Peter Ramsey, former fintech executive and now a UX industry consultant, provides an extensive analysis on how challenger banks are outpacing traditional institutions in account sign-ups. In May 2020, Peter documented the opening process of 12 U.K. banks – nine traditional, three challenger – and found a 5x difference between the bank with the least clicks (Revolut at 24) and the most (First Direct at 120). All three challenger banks required less clicks than the nine traditional companies and there was a 1.5x delta between the most clicks of a challenger and least of a traditional.

Financial services brands must expedite the process for account sign-up now that consumers are demanding more and will churn if the process is clunky or lengthy. To offer a best-in-class, rapid account sign-up, consider:

What data is essential to obtain from a sign-up process and what data requests could be moved to during post-approval onboarding?
What is the procedure within your bank of confirming revisions of data requirements in sign-up processes?
How much faster could your bank’s internal evaluations move to concurrently innovate more quickly while maintaining compliance?
How long does it take to analyze user experience and ameliorate friction points when testing out revised sign-up processes?

Automation in back-office processes

Leaders in enabling sign-up simplicity make the best use of automation to accelerate processes. Companies setting benchmarks often rely on in-house development and strategic partners to enable a tech ecosystem that concurrently improves UX, speeds up workflows, and strengthens compliance procedures.

Identity verification, as one example, should involve cross-referencing customer-provided information to available public government data, such as name, address, phone number, and email addresses. Monzo in the U.K. will ask for an address – rather than a list of prior addresses – to find the prospective customer and follow-up if a match isn’t found. Identity verification can also be automated as part of Anti-Money Laundering (AML) processes.

Document verification can check and evaluate ID document types such as a driver’s license during the onboarding process. This is in tandem with fraud prevention procedures, such as a side-by-side “selfie” of the applicant with ID, or through making a quick video with the ID to show that it’s a live person. Requirements can vary based on state and national regulations.

A great example of a national market advancing innovation in back-office processes is the January 2020 approval by the Reserve Bank of India permitting the use of Video Know Your Customer (KYC) in account openings. This approval came shortly before the pandemic and the offering became a key differentiator for Kotak, which first launched the protocol, and other banks that could be early adopters of the capabilities.

Automation cost/benefits minimize staff requirements to manually review documents – higher automation accuracy can help optimize audit procedures – and reduce the risk of incurring AML or KYC compliance penalties.

To benchmark your automation metrics, consider:

What are some manual verification processes at your bank that could be automated based on local legislation and the expanding network of technology partners?
How can the marketing department partner with compliance and fraud teams to pursue automating ID verification initiatives?
What’s your visibility of the customer journey when transitioning between technology partners in the sign-up experience?
How fast can your bank interpret insights from customer journeys in first and third-party interactions to optimize sign-up processes?

Mobile-first from Day 1

Mobile banking is one of the most critical differentiators in banking experience today. Customers expect to do every aspect of their banking needs from a mobile device. For Bank of America, the amount of mobile-only users has been increasing 15% year-over-year. And with 46% of banks currently offering fully mobile sign-up processes – up from 35% in 2019 – user expectations continue to rise that all steps of the customer journey, including the sign up process, will begin and remain on mobile.

Some challenger banks have bypassed mobile web as a sign-up channel and have focused on the mobile app as the only channel to actually sign up for an account. Inquiring to apply for an account with Current and Revolut on a website will direct the user to input a mobile number; the user will then receive a link via text to download the app.

Established banks have taken notice of these challengers and the rise of mobile-centric banking. In October, Credit Suisse will launch a mobile app-only banking service, CSX, that will go beyond accounts to offer digital wealth management to compete against disruptors. As mobile banking has ramped up in usage, banks must prioritize mobile roadmaps, provide mobile-friendly services, and lead as mobile-first organizations.

To benchmark your mobile health, consider:

How easy or challenging is the account sign-up process by mobile-web or app?
How do abandon rates compare by mobile vs. desktop vs. tablet?
Does your bank offer new-account sign-up by mobile app? To what extent should this be a near-term priority?
How much can your bank improve its efficiency ratio by providing a fully digital, fully mobile experience from Day 1 of a customer relationship.

Your business depends on embracing innovation

Winning new bank account customers is an important revenue driver in today’s climate. The Bureau of Economic Analysis showed that in July 2020, personal savings (as a percentage of disposable income) was 17.8%, more than double the overall high of 8.6% in 2019. Demand has been on the rise for personal savings accounts.

Delivering frictionless experiences, automating compliance procedures, and enabling mobile-centric banking help banks offer efficient customer sign-up processes which in turn secures account and deposit growth. It’s time to invest in strategies, technologies, and partners that can unlock new value.

Did you miss the first post in this banking series? Learn more about navigating fee-free business models.

Benchmarking bank account sign-up experiences