BID Daily Newsletter
February 09, 2016

BID Daily Newsletter

February 09, 2016

Digital Divide Over Checking Account Options

People use their digital devices for just about everything these days, from performing mundane tasks to the out-of-the-ordinary. For instance, there's an app that lets you find people nearby to cuddle with and another that allows you to document every place you've made a No. 2 - both are a bit scary! There's still another app that prevents you from dialing select people in your contact list when you've had a few too many drinks.
Despite their proclivities for digital interactions, consumers still haven't wholeheartedly embraced the idea of using their devices for opening checking accounts. Indeed, only 23% of new checking accounts are opened digitally, according to a recent report by Aite Group. For the time being, it seems most consumers prefer to open up new checking accounts in a branch, with human interaction.
Some of this has to do with the fact that digital account opening is still somewhat new and customers remain mired in their old ways of doing business. According to an August research report by Novantas, only 35% of customers polled prefer opening a digital account, while 45% prefer to open an account in person at the branch.
There's an even more practical reason why digital account opening hasn't taken off yet. Many banks still don't allow customers to fully open up accounts using their devices, though it's an area more are starting to explore further.
Given increased reliance on digital devices, we would expect, over time, to see more customers shift their preference to opening accounts online. This is particularly true as it becomes a more acceptable way of doing business and customers feel more confident their personal information will be safe.
When thinking about how to optimize an account opening strategy, banks need to ask themselves how they want customers to interact with them and the implications of these decisions. For instance, banks that allow customers to open up accounts digitally may find they need to consolidate or close more branches. Banks may also need to establish a call center or ramp up existing staff to be able to accommodate questions related to digital account openings.
Banks should consider whether the customer will use the same account opening system when trying to open an account online, on their mobile phone or in a branch. Banks also have to be prepared for instances when a customer starts the process on the phone and then walks into a branch to complete the application. Will the customer have to restart the entire process (not good), or can they simply pick up with a representative where they left off (ideal)?
Even if a bank feels customers aren't ready to make the leap to open up accounts using a digital device, don't underestimate the importance people are starting to place on getting information this way. Consider data from Novantas that shows 79% of customers polled prefer digital channels to get information such as balances, while only 7% say they want to go to a bank branch. If you're not at least providing information in the way customers want to get it, you're effectively chasing them out the door.
In a world where people turn to an app to tell them the most opportune moment to take a bathroom break during a movie, it's only a matter of time before digital checking account opening becomes commonplace. For banks that aren't quite there yet, we are on the digital precipice so at least start thinking about it.