Gen X, Gen Y, Gen Z… Everyone wants to open their Bank Account 100% remotely now.

To deliver what customers have come to expect, Banks and Credit Unions must innovate and make smart technology choices. There is no better way to compete with Neobanks and Big Banks.

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If you are in financial services, this question must have come up several times since the onset of COVID-19 - "how can we facilitate 100% remote account opening?" In current times, this question is highly relevant and directly impacts your ability to reach account and loan growth goals.

While branch closures were temporary, something else became permanent over the course of 2020 - the shift in customers' preference to go 100% digital. Recent McKinsey research concluded that up to 85% of customers now prefer to conduct banking transactions 100% digital! Even customers 65 years of age or older.

Bank Account Opening - Is it really digital?

Daily banking needs are going digital, lending is going online, but one transaction particularly stands out as a digital hurdle - opening a Checking or Savings Bank Account. A top 3 google search result on this topic suggests a visit to the nearest bank branch to be the best way to open a bank account. Some financial institutions do offer digital account opening applications, but that is where the digital journey ends. After the digital form, the applicant is invariably required to visit a branch to complete some of these final processes – a) sign the documents, b) complete the ID verification for the federally mandated KYC process, and/or c) to deposit cash or check into the newly opened bank account. Interestingly there are solutions to solve for electronic signatures, another few for True ID verification (automated KYC), and another few for accepting electronic deposits. NONE of these work together. The only solutions that bring these technologies together are Neo Banks OR big banks that have access to a large number of engineering resources. Everyone else - including Traditional Banks, Credit Unions, and Community Banks - rely on financial platforms for innovation, and the wait for a unified online account opening solution has been long and overdue.

What makes up a good Account Opening solution, you may ask?

An ideal account opening solution should support the 8 pillars that make up a compliant account opening process. It should take the average customer no more than 10 minutes to go from start to finish of the account opening digital journey - also known as "10 Minute Straight Through Digital Account Opening". 

 

Ingredients of a best-in-class account opening solution include:

 

  1. Product Bundling - Customers should not be forced to submit one application for each account they want to open. If they want to open a checking account and a money market account, then they should not be forced to create two applications. One application should allow for multi-product selection (bundling) and take care of the process at one go.

 

  1. Instant OFAC and Watchlist Checks - OFAC and other AML checks should be instant and in real-time. The applications that are flagged for fraud review cannot be instantly cured, but the happy path applications (no flags) should be able to pass the hurdle and move forward in the instant digital journey.

 

  1. Instant Membership Eligibility Check - For institutions with charters (i.e., Credit Unions), live/work/worship/learn/organization/family membership eligibility should be established immediately to avoid hurdles in a 100% digital process. 

 

  1. Data pre-fill for your existing customers - Given indirect lending is a significant source of membership acquisition, the odds of your existing customer coming back to you for a checking account are real. Account Opening solutions should seamlessly integrate with your customer systems (usually Core or CRM) and pre-fill data for their applications. 

 

  1. True ID Verification for Instant KYC Check - Section 326 of the USA Patriot Act (2011) established clear KYC guidelines for banking institutions. Until Covid, this was easy to comply with - Someone at your branch reviewed the customer's ID and confirmed that the ID indeed belonged to that person. But who wants to visit the branch now? True ID verification is the answer. KYC is fully automated using this technology with instant ID scanning from a mobile phone and a selfie photo for verification. This is a MUST-have capability of any next-generation account opening process.

 

  1. In-Session Signatures - eSignature is not a new concept on its own. But sending an email with a link has restricted banks from automating the subsequent steps as document signatures are a prerequisite for instant funding and other steps. The latest breed of account opening solutions bring this signature experience to in-session and allow customers to sign within the same browser session and move forward to funding and other account opening steps in real-time.

 

  1. Instant Funding - To deposit that first $100 in cash OR that $250 using a check is not an easy transaction anymore - as it requires a branch visit. ATMs cannot facilitate a deposit into a brand new account without the plastic. Next Generation Account Opening solutions come with an integrated funding mechanism with Credit Card, Debit Card, ACH (and RTP coming soon).

 

  1. Real-Time Core Onboarding - Your customer might not know, but the account opening solutions should send that brand new account into your core system for real-time onboarding as soon as funding is done. In other words, that account is near ready for debit card issuance.

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Step 1 through 8 form the heart of the "10 Minute Straight Through Digital Account Opening" vision for progressive Banks and Credit Unions. 

 

BONUS Feature: Personalized Lending Offers - Your employee sitting in the branch used to be the only one that can talk about a loan to your brand new checking account customer. Now, a fully digital account opening solution can do that heavy lifting. A personalized (money-saving auto refi or money-saving home refi) pre-qualified loan offer can be presented to the customer instantly as soon as they complete their checking account process. Account Opening and Lending should seamlessly key off of each other in this modern-day banking system.

 

Is there a solution that can do this, you ask? CreditSnap is a great example of a platform that can help you achieve this goal with a turnkey Account Opening solution. Plus, it can deliver incredible loan growth too!

Deepak Polamarasetty

President & CoFounderA seasoned leader in creating market-leading products to meet the average customer's everyday needs. He has an MBA from UNC-Chapel Hill and Bachelors in Engineering from IIT Varanasi in India. He has served in a number of leadership roles in Technology, Consumer Loans, and Customer Originations at USAA and HSBC. He is now reinventing himself by combining his customer lending and finance experience, and contributing to FinTech. You can reach him at deepak.polamarasetty@creditsnap.com with any questions on this topic.