Despite heavy investment in digital channels, more than half of banking organizations don't support end-to-end digital account opening, resulting in 70%‑90% abandonment rates when potential customers try to open an account online or with a mobile device.
At a time when consumers are doing more of their shopping using mobile and online tools, the banking industry has been slow to respond to the opportunity to support a seamless digital customer journey. This bridge between digital marketing (finding the new customer) and digital sales (opening a new account) continues to be broken at most banks and credit unions globally, leading to extraordinarily high new account opening abandonment rates.
To better understand the progress being made at the largest financial organizations globally, Avoka commissioned their second annual State of Digital Sales in Banking report. This study looked at the capability of banks in North America, Europe and Australia to acquire customers over digital channels and evaluated the ease of using the respective digital account opening tools. Results were compared to the study done in 2016.
Although this year’s findings found that banks in North America and Europe have made headway in improving their digital capabilities, banks in both regions still struggled to capitalize on digital opportunities. In addition, while there was modest progress in supporting digital engagement for personal accounts, the ability to support digital account opening for wealth and business customers continued to lag.
While there was improvement in 2017 over 2016 results, less than 30% of all products can be applied for using digital channels, and only 43% of personal banking products are enabled for mobile customer acquisition. According to Avoka, “With low interest rates and pressure on revenue, improving digital sales still has the potential to be one of the quickest and easiest ways to boost acquisition rates and increase revenues.”
Digital Readiness Matrix
To provide an overview of how financial organizations perform on both a digital selling and digital experience basis, Avoka introduced a Digital Sales Readiness Matrix in 2017. Those firms that allowed a customer to open the most accounts digitally were considered ‘digital ready.’ To determine the ‘ease of use’, Avoka used their proprietary Transaction Effort Score.
The outcome of this measurement process places organizations in one of four quadrants.
- Legacy Lovers. These firms still rely on branches and call centers for the majority of account openings and have broken digital processes when it comes to fulfillment of digital account opening, onboarding and engagement. These organizations have not embraced serving the digital consumer.
- Under Achievers. These organizations have demonstrated an excellent ease of use for buying their primary digital product (usually checking), but have not applied this excellence across multiple product lines.
- Digital Dreamers. These firms have made some digital selling progress on a number of products, but the overall experience is still lacking.
- Digital Promised Land. Organizations in this quadrant allow customers to open the majority of accounts digitally. In addition, these firms eliminated much of the friction experienced in traditional account opening processes.
Only a third of the largest organizations surveyed fell into the coveted top right, ‘Digital Promised Land’ quadrant. More than half of the banks evaluated could not sell the majority of their products digitally, with 22% of banks surveyed falling into the ‘Legacy Lovers’ quadrant.
Interestingly, all except one Australian banking organization provided a better than average user experience, with half of the banks landing in the ‘Digital Promised Land’ quadrant. Of the large North American banks evaluated, most could not sell the majority of their accounts using digital channels and only 4 of 11 were in the top right quadrant (4 were ‘Legacy Lovers’). European financial organizations performed similarly to their North American counterparts, with the majority not being digital ready. Only two European firms reached the ‘Digital Promised Land’.
Mobile Sales Capability Improves
The report found that there had been major improvements in customer acquisition for personal banking products in all countries evaluated, with a significant increase in the banks’ ability to offer products via mobile platforms. Although there were considerable advances in customer acquisition via mobile overall, European and Australian banks led the increase, with North American banks showing only a 6% increase in the number of products that could be applied for from a mobile device compared to an increase of 8% in Australia and 11% in Europe.
The percentage of personal banking products that could be set up using a mobile device increased by 12% in Australia, compared with 16% in Europe and 11% in North America. This brought the percentage of personal accounts that coule be opened on mobile devices to 49% in Australia, 43% in Europe and 39% in North America.
The research found that banks have primarily focused their efforts on the personal banking segment of their customer base as opposed to the business and wealth management segments, which is more complicated and requires more documentation.
Significant Digital Sales Opportunities Remain
Despite improvements in the ability to support mobile sales, most of the progress is with personal account opening, where the ability to support mobile opening still is less than 50%. Capabilities plummet when digital selling beyond personal banking products were evaluated. “What we have found is that many banks have made progress on the experience of their flagship deposit account, but the breadth of offering across all personal, wealth and business banking accounts lags behind”, said Phil Copeland, Avoka CEO.
Beyond mobile account opening, the readiness to support digital account opening overall (mobile + online) is also well below optimal. Avoka found that the digital account opening readiness for personal banking products was only 66%, with wealth management and business banking digital readiness being only 41% and 24% respectively.
“Banks are conducting digital marketing with success. They are promoting their products via social media, internet search, online ads, their websites, and more. But a troubling disconnect occurs when digital marketing transitions to digital sales,” the report noted.
Omnichannel Support Lacking
One of the key components to supporting digital account opening is the ability to ‘save-and-resume’ the account opening process either on the same or an alternative channel. This includes a process where a customer stops an online or mobile account opening process mid-stream and wants to resume their opening in a branch or an alternative digital channel.
Unfortunately, there was virtually no change in the number of products with advanced digital features, such as save-and-resume, which are fundamental for a satisfactory omnichannel experience. Despite the low numbers overall, the Australian banks definitely were more advanced than either the North American or European banks.
Red Flag for Banking Industry
The evaluation done by Avoka of the largest financial organizations in North America, Europe and Australia should give little comfort for smaller organizations worldwide. In the reports State of the Digital Customer Journey and Digital Account Opening, published by the Digital Banking Report, it was found that the vast majority of smaller financial organizations lagged the larger banks in digital engagement capabilities.
In other words, digital consumers may be more likely to have a positive digital experience at a larger bank than at smaller competitors. Of greater concern is that ‘catching up’ in digital capabilities gets harder over time.
The good news is that the solutions available in the marketplace are more advanced and easier to implement than in the past. In fact, Avoka found that some organizations were able to improve their digital and mobile readiness by more than 30% in one year. In other words, a strong commitment to digital sales and service can pay off.
Improving the Digital Sales Experience
One of the best ways to make the digital selling process better for the customer is to remove friction – steps that can be removed or improved to enhance the customer experience. Unfortunately, it’s sometimes tough to know where to begin and exactly what needs fixing. Optimally, the goal is to improve all steps that stand in the way of a quick and easy interaction.
To assist with measuring digital account opening friction, Avoka developed a tool called the Transaction Effort Score™ (TES). With this tool, an organization can quantify exactly where friction is occurring and provide guidance as to how to eliminate the most damaging steps.
As is discussed in the best-selling Digital Banking Report, Digital Account Opening, there are many ways banks and credit unions can improve the account opening and application process, leveraging digital technologies and common sense. Each improvement will reduce friction, simplify the process and enhance the consumer experience … leading to reduced abandonment and improved revenues. Below is an illustration showing many of the ways Avoka has found to improve the mobile account opening process.
With any mobile process, every keystroke and every time a consumer must exert extra effort that takes them away from the smartphone contributes to abandonment. Banks and credit unions need to minimize these hurdles in order to create a mobile new account process that is optimized and frictionless.
About the Avoka Study
The second annual State of Digital Sales in Banking report, published by Avoka is available for immediate download after a standard registration.