Onboarding in Retail Banking: Who, What, When and Why

Effective onboarding of new customers is essential to building long-term relationships and growing revenue in banking. Yet only half of financial institutions even engage in customer onboarding. And few do it well. Learn how to overcome the roadblocks, as well as the correct way to measure onboarding impact.

Smart marketers knows that onboarding is an essential part of building long-term relationships and revenue, especially in retail banking. Yet customer onboarding to familiarize new customers with products or services is far too often neglected in the banking space. Only 50% of financial institutions say they engage in customer onboarding, according to Customer Contact Week

In many cases, onboarding isn’t even a process that’s actively managed or regularly evaluated across the bank.

While branch locations often help play a big role in onboarding, they operate in silos, separate from the marketing department and without any best practices on the necessary number of touch points or channel mix.

This Isn't Good:

The percentage of financial institutions engaging in customer onboarding

Marketing research company Mintel found that some big banks are emailing customers 19 times within the first month of opening an account, others were found to send emails every other day, while one bank only sent a single communication during the onboarding process. Clearly, onboarding lacks any real guidelines or guidance within the banking industry.

4 Ways Banks Can Measure ‘Stickiness’

At what point does onboarding begin? When a customer walks into the branch? When they call customer service? When adding a new product or service?

Most banking marketers would agree the onboarding process encompasses the first 90 days of the new relationship from start to finish. John Ward, Executive Vice President and Chief Marketing and Product Officer at American Savings Bank, identifies four metrics that help determine whether a new customer is “sticking.” He notes that “each bank decides how they measure and what definitions they assign to each measurement.”

1. Primary financial institution. “At American Savings Bank, we are invested in making our customers’ dreams possible and providing them with personalized solutions to fit their needs and financial goals,” says Ward. “From opening an account to buying their first home and planning for a comfortable retirement, everyone gets a banker who will make banking easy and support them every step of the way.”

Ward adds that onboarding is largely about the customer’s relationship with a banker. This way, they have a trustworthy advisor to speak with to hopefully build a long-term relationship.

Reducing account opening time is critical — it takes roughly 40 minutes in a branch versus ten minutes online to open an account. “Providing convenient digital banking solutions is critical to long-term customer engagement,” says Ward. “By offering an online appointment system to meet with a banker through a video call, we’re making banking convenient and accessible for customers.”

Minutes Count:

It’s crucial for banks and credit unions to reduce the time it takes to open a new account — on any platform. It could make or break the customer relationship.

Ward further explains that helping customers set up direct deposit and creating a personalized customer profile are important. When a customer has signed up for direct deposit, and shows at least three months of deposits and paid out three to four bills online, chances are they are considering the bank their primary financial institution (PFI).

2. Digital customer. The second metric to look at is the customer’s digital activity — more specifically, paying bills online, doing transfers and other online transactions. These customers have proven to be open to other products and services.

3. Percentage of digital transactions. How many digital transactions is the customer conducting? This is a key metric reported to the bank’s board of directors since it shows how efficient the bank is.

4. Net Promoter Score. How likely are your customers to promote your brand to their friends and family? Customers who are predominately digital have a high NPS and tend to be loyal with the bank for the long-term.

Key Challenges to Effective Onboarding

When you examine the state of onboarding in today’s retail banking environment, there are three fundamental issues with the process, according to Allison Wilson, Vice President of Strategy and Client Experience at Amsive, a data-centric marketing agency.

1. The lack of clear objectives. What are the onboarding objectives? Is it to get the customer onboarded fast and pivoted quickly to cross-sell? Is it to obtain PFI status? There are very few times that team members at a bank actually run through and map out the onboarding process in detail with all cross-functional stakeholders. These days this would require getting stakeholders in a room on a Zoom call and walking step-by-step, determining customer touchpoints and assigning values to them.

For example, deciding if there are ten touchpoints or communications with a new customer during the onboarding process, how you’d rate each step in terms of experience against objectives, and what data will be used to measure this.

Where Banks Go Wrong:

Digital teams fail to map out and walk through the onboarding process with all the internal stakeholders to determine what's missing or takes too long.

Novantas found that the rate of switching primary providers is generally low, but customer needs can change, as in the case of Covid-19’s “digital wakeup call” to consumers.

Consider this: According to Forrester, 14% of U.S. adults banked online for the first time due to the Covid-19 pandemic. Satisfaction with their experiences was high, which indicates that they will continue to embrace online usage. What’s more, a J.D. Power survey showed that 26% of consumers plan to use online banking more than they did pre-pandemic.

2. Driven by outdated technology. The fact is, the technology at hand becomes a deal breaker for onboarding improvement initiatives. Current onboarding technology might involve multiple systems and third-party data feeds, leading to the dreaded “We don’t own the systems or teams that drive these.”

“A customer of ours follows a ‘2x2x2 process’ — meaning they call or email on day two, week two, and the second month,” says Wilson. “Yet they don’t have a structure and framework in place to analyze or debate that approach across the organization.”

What would they change about the process? What would be a better follow-up process and why? They don’t discuss if they have the data to measure success. If they aren’t able to obtain that sort of actionable data due to obsolete technology, they won’t be able to accomplish necessary steps, such as determining the best time to cross-sell a product or service.

3. Unclear ownership. “Onboarding is one of those things in a bank where there are a lot of cooks in the kitchen,” Wilson observes. “It’s common with most customer-facing processes that there are multiple internal stakeholders that play a role in the customer experience. With onboarding, the stakeholders include product managers, channel managers, business unit owners, and brand/marketing managers.”

The marketing department often isn’t brought into the onboarding mix — surprising when you consider that marketing strategies for new customer acquisition and cross-sell are extremely important to bank success.

How to Onboard Efficiently and Successfully

Fortunately, there are steps that banks and credit unions can take to help turn onboarding to their advantage — each addresses the current challenges faced by most institutions.

  • Get clear on the objectives of the onboarding process. Start with what all stakeholders need to accomplish first — is it about PFI or cross-sell goals? Measure the current onboarding processes and look for ways to optimize, or even provide better tracking and reporting of the customer journey.
  • Map out the process the old fashioned way. Determine what can be changed, such as channel modifications. For instance, instead of a phone call, send an email. Determine how often communication is appropriate; use your current benchmarks and test with a small sample of customers. Get help understanding your audiences and deliver relevant messaging utilizing the most effective channels for the audience. In the meantime, continuously monitor channel engagement. An outside partner like Amsive can help with workshops that help drive onboarding transformation.
  • Identify an orchestrator for the onboarding process. Ensure this project owner has a solid understanding of each step of the process and who is responsible, and consolidates all input and output during the process. A simple responsibility assignment matrix — also known as a RACI matrix or linear responsibility chart — is a great way to get started if you don’t have a process expert in house.
  • Conduct a competitive analysis. Understanding how other banks are optimizing their onboarding process provides insights that can be leveraged to improve your process.

Life After Onboarding

Once the customer is onboarded, what’s next? The important next step and key milestone is relationship expansion — the data-enabled part of the customer journey in multiple channels.

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