Honeymooning in Banking

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I’m not going to stop fighting this. The banking industry’s misguided view of what onboarding is, that is.

A while back I wrote (slightly edited):

“The banking industry has an odd definition of the word on-boarding. Or at least to me it does, considering it’s not a real word in the first place.

To me, the term implies the process by which a firm helps a new customer become a satisfied new customer. To me, the concept implies that simply closing the sale isn’t enough — that some, if not many, customers need help when initially using, establishing, or setting up a product or service.

But, to many banks on-boarding means trying to sell more products to new customers immediately after those customers purchase their first product or service, before some fictitious cross-selling window closes.”

A recent article on BAI’s site called Customer Onboarding: The 90-Day Countdown underscores the industry’s philosophy:

“An invisible clock starts ticking the moment a customer purchases a new product with a financial institution. Research has shown over and over again that by the time the clock has ticked for 90 days – a period of time known as onboarding – the customer’s lifetime value and profitability will have been practically set in stone.”

But what the “research” never seems to explain is why this alleged 90-day window exists. Here’s a theory: It’s the window in which the customer is still in the honeymoon period, and their bank (or credit union) hasn’t done enough to piss them off yet, or fail to live up to the expectations that were set during the evaluation (courting) phase.

There’s a 90-day window because banks have been terrible at building relationships with customers. There’s nothing magical about the 90-day window that causes the cross-selling window to close.

The BAI article does a nice job of explaining why establishing valuable customer experiences following the opening of a new account is important (and recognizes the role of expectations in the the courting phase). But with an industry mindset that associates onboarding with cross-selling, I fear many will fail to realize that onboarding is more about customer engagement than cross-selling.

So I’d like to propose a new term (and process): Honeymooning.

To be clear, honeymooning is not the process by which someone pulls their pants down and shows their butt to their significant other.

Instead, it’s the process that ensures that new customers become engaged with the bank, and that the new customer’s expectations are met.

This implies that actions taken by the bank in the honeymoon period will be oriented more towards driving high-value engagement behavior — e.g., online bill pay enrollment, use of PFM tools and educational material, webinars and seminars the institution puts on — and towards ensuring that new customers have selected the right account or product, than trying to push another product at them.

Dictionary.com refers to a honeymoon as a period characterized by harmony and goodwill. By the way, Dictionary.com doesn’t have a definition for onboarding, and describes on-board as providing or occurring on a vehicle — leading to a perception of “taking one for a ride”. Nice.

In a banking context, honeymooning could  mean waiving any ATM or overdraft fees, or late fees, or other fees that a customer might be asked or forced to pay.

Could that negatively impact revenue at a time when replacing potential lost revenue is a top priority for financial institutions? Absolutely. But if it builds goodwill and trust, it might help to extend that magical window from 90 days to 180 or 360 days.

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