The current global scenario has limited Banks in their capabilities to physically onboard the clients.

Since the New-Normal, why has a Digital Account Opening solution begun to rule the Banking world?

With multiple behemoths in the industry looking to throw their proverbial hats into the digital ring, Banks and Financial Institutions (FIs) alike are now under pressure to innovate and step up their digital game. To sustain their businesses within the prevalent markets, Banks should steer towards scaling their customer acquisition by delivering a seamless Digital Account Opening (DAO) experience.

However, implementing a true DAO solution is easier said than done. In fact, a research by Gartner indicates that 96 percent of customers who are forced to put considerable effort into an interaction become more disloyal.

Banks need to provide their customers with the seamless user experience they have come to expect with all of their products and services.

In 2009, online account opening was just beginning to move into the early mass market, and was a “nice to have” feature for many financial institutions. By 2014, DAO was no longer a luxury, but a differentiator for banks or credit unions. However, since the pandemic, Digital Account Opening is a mandatory service which Banks are providing.

Implementing a successful DAO solution can be an uphill battle, but there are more than a few good reasons to transition faster towards this digital banking service.

The DAO solution provides Banks the opportunity to increase their revenue and adoption rates. It increases switching costs, allowing your Bank to stay ahead of the competition by getting new customers, while retaining existing ones.

‍Moreover, organizations across the board that utilized DAO experienced a 16% market growth. The digitally shy institutions, however, saw a 9% decline in revenue growth year over year.

‍DAO solutions also give Banks the opportunity to eliminate account opening barriers. An online account opening system lets customers open accounts from the comfort of their homes. Banks can leverage this functionality to offer better customer service and an overall better user experience. The online solution allows financial organizations to scale customer acquisition and eventually reduce the acquisition cost.

The 5 Technical Challenges Banks need to overcome for an effective Digital Account Opening Solution

According to Digital Banking Report , the abandonment rate for Digital Account Opening stands at 19%. This rate increases exponentially as the time required by the consumer to complete the application increases. Ideally, the online account opening process should take less than ten minutes with help of very little documentation needed for help.

Deploying a Digital Account Opening system does not equate to a rising application volume, however.

Why?

At Go-Live Faster, we’ve identified the 5 major hurdles for Banks attempting to launch their own DAO solution.

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An Ineffective Process Design

Banks and Financial Institutions must not try to replicate their offline onboarding process to the online account opening services.

The reality is that it takes little information to open an account. Restructuring the process for the simplest account opening and funding will allow Banks to reduce risks while complying with regulatory requirements.

Designing a successful Digital Account Opening Solution requires out of the box solutions to optimize the customer workflow in a way that can help your Bank increase application volume.

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‍Poor User Experience

Research suggests that completing the Digital Account Opening Process should take less than ten minutes.

The components of an effective Digital Account Opening Process include:

1. A simplified data entry process
2. Instant Account approval
3. Immediate Account Funding
4. Digital ID verification
5. Optimized multichannel onboarding
6. Pre-verified User / Existing Customer opening new accounts for his immediate family member or new business account opening should be simpler as compared to new DAO

Often Banks do not address all the above components while deploying their Digital Account Opening Solutions. That’s why, with a global Fintech solution provider such as Go-Live Faster, Banks can overcome critical issues faced in:

1. Digital ID verification
2. KYC Checks
3. Workflow Integration
4. Unstable Legacy Systems
5. Core Banking systems when updating client's onboarding details

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Inadequate Integrations

The third major challenge Banks and Financial Institutions face while implementing their DAO solutions is failing to integrate their entire digital ecosystem.

Integrating workflows without considering the edge cases and exceptions often results in manual intervention. To avoid causing unnecessary complications, it is important for your IT vendors to support all interfaces in use.

Remember to focus on the following integrations:

1. Know Your Customer (KYC)
2. Identity Verification (IDV)
3. Core

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Not Validating for Broken Workflows

The high abandonment rate on DAO solutions is correlated to the unforeseen exceptions triggered in the production environment.

These exceptions add to a poor user experience. They also result in an increase in the number of iterations a Banks’ DAO solution has to undergo, which leads to building costs and perhaps even a delayed launch of the priority features.

It’s important to proactively identify such issues to minimize losses and accelerate the launch of your Bank’s DAO solutions. This can be achieved by leveraging Go-Live Faster’s domain expertise, analyzing the DAO workflow from Digital literate Layman’s perspective, and understanding the possible break areas and how to handle ‘What-If’ scenarios.

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Not Measuring what Matters

It’s vital that Banks and Financial Institutions realize that DAO implementation is not a one-time activity. Like with any other IT system, testing and tweaking your DAO solution is critical to maximizing its efficiency.

By continuously monitoring your online account opening solution, it’s possible to proactively identify and eliminate any errors found.

Creating the best possible DAO solution mandates measuring the right metrics to aptly cater to your customers’ needs. We recommend measuring the following metrics post your Digital Account Opening solution’s implementation.

1. Offline and Online customer acquisition rate
2. The abandonment rate at each checkpoint
3. The average time taken at each checkpoint

This information will guide your strategic decisions and ensure that your Bank prioritizes the features and services that matter the most. By measuring such metrics, you will be also be able to:

1. Identify the reasons for abandonment
2. Analyze issues in the user experience
3. Determine how to minimize the average time for each user activity

Conclusion

The more progressive Financial Institutions have been looking at DAO initiatives as a competitive advantage. While designing their DAO solutions, Banks and FI’s should employ design thinking to create a better digital experience for their customers. Such a thought process ensures that the end consumer is at the center of this new experience, reducing the probability of making mistakes.

Go-Live Faster’s experts can help your bank identify a heat-map highlighting the top 10 used workflows and provide unique solutions to improve all your online banking solutions. Serving Banks since the last 14 years in the US, our domain experts will help you make the right decisions while balancing any risks during your project implementations.

It’s time for your Bank to Go-Live Digital!