Organic growth continues to be among the top issues financial institutions face in growing their accounts and one of the main drivers of innovation. As the various channels become commoditized like online banking is today, financial institutions will need to differentiate themselves by service versus product offerings.

For example financial institutions that make it easy for consumers to open new accounts online will have a distinct competitive advantage over those institutions that continue to employ a cumbersome manual process. Those that improve the business process even further and integrate the account opening process across all channels will be the best positioned to deliver a truly superior customer experience. However, financial institutions that are not quite ready to revamp their account opening processes across all channels should start with the easiest channel to innovate, which is also one of their most powerful channels for attracting and retaining new accounts -- the online channel.

A close examination of many financial institution Web sites would find that most online banking applications still include a manual process for opening new accounts online if they have a process at all. The technology is available today for financial institutions to automate the account opening process and literally open and fund a new account in a matter of minutes. Financial institutions need to take a hard look at how they are optimizing their Web channel with the account opening process and truly leverage it as a self-service tool for consumers.

By automating the online account opening process, financial institutions have the opportunity to reap a number of benefits, including significant cost savings. For example, according to Aite Group, the potential cost savings for mid-sized bank with 20 percent of their new accounts opened online could realize over $1,125,000 in savings over traditional account opening methods. In addition, Aite further estimates that the average cost of opening an account online is $15 per-case versus the $65 per-case cost for opening an account via a traditional or manual process. Customers that are able to automatically enroll in a new account online also have significantly lower abandonment rates than customers that have to perform part of the enrollment manually.

Financial institutions also improve their ability to cross-sell by automating the online account opening process. For example, following the automated credit check for opening an account online, the credit check may reveal that the customer has excellent credit and a good candidate for other products and services like a car loan or line of credit. Automating the account opening process brings with it the added benefit of capturing the customer data that may be used to further streamline cross-selling.

In addition to the revenue and cost savings opportunities, financial institutions are also able to minimize risk with automated online account opening. The integration with decisioning engines enables financial institutions to standardize and customize the decisioning criteria to align with the individual institution’s security and risk mitigation processes and ultimately reduce the risk to the financial institution. Plus, the real-time integration with third party data sources helps financial institutions eliminate manual processes and errors that occur with manual handling of account data.

While financial institutions benefit from automating the online account opening process and ultimately deepening customer relationships, customers gain as well with greater convenience and significant time savings. Delivering real-time decisioning via a simplified and quick account opening process that enables same session funding gives financial institutions customers a truly 24/7 banking experience.

The Internet channel continues to be one of the most important tools in a financial institution’s arsenal to retain and acquire more customer accounts. The focus on this channel going forward for all financial institutions should be on streamlining and automating the services that improve the customer experience. Providing customers with valuable services and convenience via the online channel will continue to make them more loyal customers and help drive up that important metric, organic growth.

Leisha Richardson
Director Marketing
Postilion