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Online Account Acquisition: Perception vs. Reality?

Financial institutions tend to think that people who open accounts online are the most desirable and profitable, and they should concentrate on attracting this type of consumer. But research suggests this isn't necessarily the case.

Digital channels are now an integral part of the banking industry. In today’s environment, it would be hard to imagine anyone having a relationship with their primary financial institution without these channels. Indeed, 60% of consumers globally now say they primarily utilize online channels. This is right in line with research from Haberfeld encompassing several million U.S. households holding checking accounts at community banks and credit unions. The top performing community financial institutions in this study led with “sticky” statistics — high penetration with debit cards, direct deposit and online services.


Transitioning from transactional to digital channels can lead bankers down the wrong path with respect to customer acquisition. Financial industry marketers and executives often say they want to attract younger customer segments and consumers who will be more driven by non-traditional channels (e.g., Millennials). In turn, financial institutions frequently look for the solution to customer acquisition almost exclusively in the online channel.

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New PFI Relationships: Online vs. Traditional

Drawing on more than two years worth of data, Haberfeld tracked traditional vs. online checking account openings at over 15 financial institutions ranging from $200 million in assets to over $5 billion in assets. Customer acquisition was a strategic priority for all financial institutions studied. They all invested marketing dollars into traditional marketing (e.g., branches and direct mail), as well as digital channels (e.g., online advertising and social media). During the study participating financial institutions opened 340,384 total checking accounts — an average of roughly 350 accounts per branch per year. But only 8,867 of these were opened online (2.6%).

The study drilled down and examined a six-month slice where over 50,000 new checking accounts were opened. The results were consistent. Only 1,989, or 4.13%, were opened online. The results suggested that financial institutions in the study would see of roughly 200 new checking accounts opened online per year. Even then, 37.7% of online account openings were initially generated through a traditional channel such as direct mail.

Not Much Quantity… What About Quality?

The average age of the new customer attracted from both online and traditional channels is almost identical. Both segments spend $40 per average debit card swipe, however, the online acquired customer swipes their card 35% more often. The online acquired customer has a significantly higher number of overdrafts per year – almost double! While there are definitely some positive trends on fee revenue opportunities, the outlook is not as good when it comes to balances, share-of-wallet, and customer retention.

Avg. # of
Debit Swipes
Avg. Spend
Per Debit Swipe
Overdraft Items
Per Account
Opened Online
39.0 17.5 $39.90 7.73
Opened in Branches
39.3 13.0 $40.43 3.99

Source: Haberfeld Associates

Consumers opening their accounts online have significantly lower balances — 41% lower checking deposits and 57% lower household deposits. They may have higher loan balances, but their retention rate is 16 percentage points lower than accounts opened the traditional way.

Balance of
All Deposits
Balance of
All Loans
Rate After
6 Months
Opened Online
$2,200 $3,406 $5,210 77.3%
Opened in Branches
$3,741 $7,897 $3,372 90.5%

Source: Haberfeld Associates

If you are considering online account opening or already offer it, where does that leave you? Opening checking accounts online is not wrong, but it is not the panacea that will satisfy the industry’s desire to get more tech-savvy and younger consumers. Be aware that you will likely get a more transitional and fee-based customer, and that it won’t likely drive new the kind of growth most financial institutions would. Just because people open accounts online doesn’t mean you can assume (1) you don’t need traditional channels to make it happen, and (2) that the people you attract will reflect the desired profile you might anticipate — e.g., primarily self-service, preference for digital channels, and (most importantly) profitable. Your branches, your people, your core products and associated policies still have tremendous impact on your success with customer acquisition.

Achim Griesel is Chief Operating Officer at Haberfeld Associates, providing customer acquisition marketing and profitability strategies for community-based financial institutions across the United States. Haberfeld provides consulting, marketing and training services for community banks and credit unions, building off its unique data and benchmarks through the analyses of millions of consumer banking records at community institutions across the country.

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  1. I wonder how much the difference in the balances for online versus branch account openings is related to age demographics. Older consumers who typically have larger balances would prefer to open their accounts at the branch, one would assume.

    As to the retention rate, I’d be curious to see that the overall product penetration is for branch versus online. If the relationship isn’t deepened for people opening the account online, then a lower retention rate is to be expected. Most banks/CUs don’t seem to have mature cross-selling and follow up systems in place for online account opening compared to the sales process in the branches.

  2. Robin,

    Very legitimate questions. When analyzing the data, it was very interesting for me to see that the average age of the consumer opening new accounts is the same for both groups. It is shown in the table above in the analytics on debit card usage.

    We also show the deposit and loans on a household level above to illustrate product penetration, but you bring up an interesting point. The online customer actually has 9% more products per household, but less than 1/2 the deposit balances. On a household level they have almost 50% higher loan balances but almost all of this in small Dollar consumer loan products.

    I agree with your conclusion that for most community FIs there is room for improvement when it comes to penetrating the online customer, but I still believe that the retention would be lower for the online group.

  3. Thanks for the clarification, Achim.

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