Mobile and online banking tools have moved people out of branches for routine items. Two out of every five Americans say they haven’t set foot in a brick-and-mortar branch in the last six months. Why would they, when checking account balances, transferring money and depositing checks are just a click away?
But there remains the disconcerting fact that Millennials are quick to abandon mobile banking opportunities if the experience is lacking, which occurs all too frequently.
Raised in a world drenched by technology, Millennials are digital natives quick to notice when an experience is subpar. And with the flick of a finger, they move on, searching for the simpler, more intuitive, easier and more convenient experience. As banks and credit unions continue to digitally transform, they must ensure their online and mobile platforms work as efficiently as possible — on all fronts, and in every aspect — otherwise they risk frustrating people and alienating countless potential customers.
Many retail financial institutions that are quite proud of the mobile banking tools they provide have a digital account opening process that is surprisingly lacking, often with problems occurring right at the outset. Banks and credit unions must determine where they need to improve processes and deliver the digital experiences people crave.
Poor Digital Account Opening is The Problem
Opening an account with a bank or credit union today is increasingly different than it’s been in the past. Consumers have traditionally needed to be physically present in the branch office, during bank hours, to provide several pieces of documentation to be verified before being eligible to open an account. While this is still often the case, consumers can now sign up for new accounts online or on a mobile device.
Digital banks like Monzo were built on this premise from day one. This modern convenience creates a new challenge, however — how to determine if someone is who they claim to be. How can banks and credit unions streamline the account-opening process without sacrificing security or the user experience? This is where many institutions struggle. Especially because financial institutions are held to the same experience standard as modern apps like Airbnb and Uber — tools that aren’t subject to the same regulatory and compliance burdens as financial institutions. People don’t care; they expect the process to be fast, simple and intuitive.
Creating a smooth account-opening process is especially critical because any abandoned interaction can mean a customer that is lost forever. It’s true that Millennials lead in mobile banking usage overall, but that is based on those who are already enrolled. Millennials that haven’t yet enrolled are especially likely to abandon transactions during the account-opening process. In fact, research shows that 38% of them abandoned mobile banking activities because the process took too long.
Consider, too, that Millennials made up 49% of those who opened bank accounts last year. Credit cards were the most common type of new account opened on web or mobile — 61% of individuals who opened a new credit card did so digitally.
(Read More: How to Design a Millennial Bank)
A Bad Digital Experience Can Be Costly
Banks and credit unions stand to lose a significant number of potential customers if they ignore the importance of a streamlined digital account-opening process.
Banking institutions need to start thinking like e-commerce companies and optimizing for online conversions during the account setup process. On average, more than 75% of e-commerce shoppers choose to leave a website before completing a purchase. Often, those customers are unlikely to return. That’s a lot of lost sales.
Abandonment in the banking industry, however, has an even higher consequence. If you factor in the long-term lifetime value of a banking relationship, a single abandonment translates to a huge revenue stream vanishing into thin air.
Abandonment and bad digital experiences have other repercussions in today’s digital world. The potential cost of a poor user experience for mobile banking is high. Of those that abandoned at least one mobile activity, 31% shared their negative experience with a friend or family member, opened an account at another financial institution, filed a complaint, or discontinued their relationship. This obviously has major consequences for an institution’s reputation and a direct impact on brand loyalty.
How to Optimize Digital Account Opening
How can banks and credit unions reduce friction in the account-opening process to optimize a customer’s first digital experience with the brand? Abandonment rates are most acute during the online identity verification stage, a key component in determining if somebody’s digital identity matches their physical identity when opening an account online.
Biometric digital identity verification can accelerate the mobile account-opening process — as well as match Millennials’ expectations for a simple, fast user experience. That can make the difference between long-term customer loyalty and churn. Asking consumers to take a picture of their driver’s license or passport with their smartphone, along with a selfie, can expedite the account-opening process and increase conversion rates while ensuring the highest level of security.
Financial institutions need to not only ensure that the account-opening experience is intuitive, fast and simple, but that a solution be able to easily scale for more conversions and extended coverage if your institution has plans to grow into new markets.
Compliance is always an important factor and using a digital identity verification solution can help meet and exceed regulations, including Anti-Money Laundering (AML), Know Your Customer (KYC) and the General Data Protection Regulation (GDPR).
Making consumers feel secure should always be a priority for financial institutions, but so should an optimized and streamlined account-opening experience. With Millennials — and other generations too — the account opening process is a critical stage that customers are quick to abandon. If the process isn’t simple and fast, you risk losing your customers to a competitor.