Why Retail Bank Onboarding is a Start, Not a Finish

Too often banks and credit unions treat successful customer onboarding as a finish line. It's more of a starting line, says new research from Javelin. Careful communication and education with new customers and members can build engagement and consolidate more of their financial relationships under your roof. But inept engagement and mismanaged selling can alienate business that was expensive to bring in the door.

A baseball team that mostly hit singles would be consistent, but it wouldn’t be very successful. Many banks and credit unions find themselves in the same situation. They’ve achieved quick and seamless digital onboarding to get consumers in the door, but often they aren’t moving those people past the first stages of being customers or members. Unless and until they do, the consumers don’t get the best of relationships and the institution will leave a good deal of potential on the table — or, more likely, on other players’ tables.

In the absence of a strategy for turning initial sign-ups into fully engaged customers or members, financial institutions have only the barest bones of a relationship. They may even assume that they are the consumer’s primary financial institution. But so many options are available to consumers today, appearances can be deceiving.

Banks and credit unions have to update their thinking — and their tactics.

“In a simpler time, traditional onboarding relied on an outreach campaign in the first few weeks after a customer opened a new account — online banking enrollment, a debit card PIN, and a welcome email,” says a recent report from Javelin. “That sort of old-school onboarding isn’t going to cut it anymore in a mobile-first era when customers are comfortable spreading their financial lives across multiple banks, credit union and tech companies.”

Moving into ‘Ongoing Onboarding’ that Emphasizes Constant Contact

Javelin suggests a new approach to developing deeper, broader, more profitable consumer relationships that it calls “ongoing onboarding.” The firm doesn’t regard this as cross- or up-selling, in the traditional sense, because the pace of the ongoing outreach is gradual but steady, with careful attention to timing.

The goal: Turning inactive or occasionally active consumers into fully engaged customers or members.

The key for banks and credit unions is not to relax after the initial onboarding, but to pursue and expand opportunities with energy.

As demonstrated in the chart below, the growth potential among fully engaged consumers can be double or even triple that of people who aren’t engaged.

Fully engaged consumers hold many more products and account at their primary financial institution

The prime target is not a passive one. Fully engaged consumers work at their financial relationships, according to Ian Benton, senior analyst, digital banking, at Javelin Strategy & Research.

“They’re people who lead an extremely robust financial life,” says Benton in an interview with The Financial Brand. “They actively manage their finances, They tend to fall between 25-44, but that’s not a set rule. They tend to be higher income. But really it’s more an attitude: They’re constantly looking for the best product. They don’t mind managing their money across even dozens of financial institutions, whether they’re banks or nonbanks.”

Making inroads among such consumers demands meaningful — and ongoing — communication, according to Benton.

“They’re looking for someone who can capture their attention, capture their engagement, and help them manage their finances on a daily basis,” says Benton.

The bank or credit union that can meet expectations early and consistently is going to pick up an increasing share of such consumers’ business. Javelin’s research indicates that fully engaged consumers hold an average of 3.5 products at their primary financial institution. And they have a strong tendency to recommend the institution to friends and family. The fully engaged contingent represents the top 20% of digital users. (By contrast, inactive consumers represent the bottom 30% of digital usage.)

Laurie McLachlan, chief marketing officer for Digital Onboarding, Inc., sponsor of the study, compares this to developing the regard that many people have for Amazon when it comes to consumer goods.

“People know Amazon has what they need, they know it’s going to be a good price, and that Amazon will get it there quickly,” says McLachlan. They won’t spend time checking out other providers, and, in the same way, a bank or credit union that learns how to engage, rather than “sell,” can cultivate a similar relationship.

Jen Packard, chief product officer at Digital Onboarding, says efforts during the first 90 days of a new customer or member relationship is critical.

“There’s definitely an education that needs to happen in those first 90 days to make sure that they understand the value that you’re bringing to them,” says Packard. “That’s completely missed a lot of times.”

Read more: Build Lifetime Customer Relationships with a Wellbeing-Centered Growth Strategy

Onboarding Means More than Ever

Today’s banking relationships are broader and more digital, which has expanded the milestones that financial institutions must advance towards.

The old order consisted of only three: switching the consumer’s direct deposit, enrolling them in online banking, and setting a debit PIN. Today, a dozen or more opportunities exist, among them: switching over direct deposit, engaging the consumer with personal finance features, switching over bill pay, dominating the digital wallet, moving over subscriptions, becoming the person-to-person provider of choice, cross-selling the institution’s credit card, signing up consumers for rewards programs, and activating account alerts and notifications.

“After the initial excitement of a swift account opening fades, it’s the journey that unfolds next — ongoing onboarding — that truly sets the stage for establishing deep customer relationships. … Onboarding isn’t a temporary initial phase; it requires constant management and vigilance to develop fully engaged relationships.”

— Javelin report

The report points out that the struggle to expand relationships with fully engaged customers means competing with multiple providers, who are all jockeying for position. Ironically, the study found that more than one in four fully engaged consumers say they could easily change to a new primary financial institution.

“Fully engaged customers are demanding,” says the report, “and fickle.”

Javelin’s Benton says there are “pull factors” — attractions at other institutions — that can draw these consumers away from your bank or credit union. On the other hand, multiple “push factors” can cause them to start looking for alternatives. Among these are annoyances over fees or bad customer service experiences. The latter typically involve human element problems, either in the event or disappointments in how staff handle resolution of the problem.

Benton adds that a given consumer’s status as inactive, active and fully engaged isn’t set in stone, but fluid. An institution that cultivates a relationship carefully can upgrade it, and the clumsy player can lose business just as quickly.

Read more: The Importance of Primacy in Banking

Fully Engaged Consumers Not Only Accept Outreach, But Expect It

A key tactic for institutions that want to expand their relationships with fully engaged consumers is communication. Javelin’s research found that fully engaged consumers enroll for alerts and notifications at a much higher rate than active and inactive consumers. For example, 62% enroll in SMS alerts, versus only 24% of consumers who are merely active and only 7% of inactive consumers. Similar trends were seen for email alerts and push notifications.

Note that what Javelin has in mind is more than the usual kinds of alerts — account updates, fraud alerts and balance notifications, for example.

“Although those remain important messages, the next frontier is to initiate a growing range of conversations with fully engaged customers about financial fitness, linking to insights on spending, saving and debt,” the report says.

Javelin’s Benton says that such outreach, as much as possible, should be oriented toward some action that the institution is suggesting that the consumer take, not just pleasantries. He says these consumers respond to insights and advice and value links to places on the institution’s app or website where they can learn more.

McLachlan says Digital Onboarding’s experience with its platform indicates that text messages produce higher click-through rates than do email messages.

Human outreach can on occasion also score points with consumers. Jen Packard says it’s important to balance such messaging so that it is helpful and doesn’t always come across as someone from the bank or credit union calling to sell something to the consumer.

“If you set up an account and I’m calling just to check in, to see if you have any questions about your service, no one’s going to be bothered by that, even if it’s just leaving a voicemail,” says Packard.

The human outreach can be important because it gives the engaged consumer a name on the other side to start with when there is a concern. As more consumers respond to financial wellness initiatives, this will become increasingly helpful to expanding relationships, according to Packard. Benton adds that selective human follow-up can be especially important after the institution has resolved a problem, such as in a fraud inquiry.

The watchword for all outreach should be “relevance.” This will ensure that frustrated or annoyed consumers don’t opt out of entire channels of communication. In fact, to guard against that, Packard suggests implementing much finer communications preferences so consumers aren’t given an “all or nothing choice.” Institutions genuinely risk losing touch.

Read more: Today’s Deposit Battles Demand Personalized Marketing Strategies

How Not to Communicate with the Fully Engaged Consumer

Another key piece of advice is to be patient. Packard says the first 90 days of the primary account relationship should be a time of guiding and answering questions, but that doesn’t mean that on Day 91 it’s open season on fully engaged consumers.

“That’s what a lot of financial institutions do,” says Packard, “and you just can’t do that.”

Packard explains that in the first 90 days the institution has typically only guided the consumer through the first layers of its services.

McLachlan pinpoints an attitude adjustment that some institutions need to make: Frequently, especially among larger banks, the messages that consumers get after the first 90 days consist of what sound like orders.

“‘It’s time to sign up for direct deposit.’ ‘It’s time to do this, do that’,” says McLachlan. Not only does that come across like being bossed around, in her experience such messaging typically doesn’t do anything to point the consumer in the right direction or even provide a relevant link.

“They just tell you ‘Do it’,” says McLachlan. “That’s a flawed strategy.”

In fact, Packard says it’s important to not assume too much knowledge on the consumer’s part. It doesn’t hurt to explain recommendations. She notes that she recently heard a radio financial columnist expressing amazement that you could deposit a check by shooting it with your cell phone. Of course, mobile deposit capture has been around for many years.

Read more: Four Ways Banks Can Improve Cross-Selling in the Digital Age

What Are You Measuring? And Why?

It’s critical not to let devotion to numbers become an enemy to strategy. McLachlan suggests reviewing the institution’s incentives and key performance indicators. Too many remain very “salesy,” such as an emphasis chiefly on new account openings rather than active usage and engagement, which are ultimately more important.

Benton says metrics should be oriented towards building long-term relationships, not just racking up points. The institution must be certain what types of accounts make its core offering — it varies with institution size and type — and determine the best ways to build on that specific relationship.

In fact, McLachlan believes a key metric rarely tracked is first-year attrition. Institutions frequently look at their rolling overall attrition rate, see that it’s low, typically, and think they are doing fine. She says the first-year rate of attrition may be much higher — perhaps as high as 50%.

“So it’s costing you $300 to open an account and half of them are getting closed in the first year, and you don’t even see that you’re bleeding,” says McLachlan. “This is a core concept to understand, this invisible bleeding that’s happening at financial institutions.”

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