Getting Ready for Digital Account Opening: A Roadmap
As the financial landscape changes, it’s become clear that digital transformation is a necessity for financial institutions. Most large, traditional banks have mobile apps, where consumers expect to be able to complete financial transactions easily on their phones. More and more consumers are switching to online banks – JD Power reports that 27% of consumers primarily use online banks. Bottom line: Customers expect to manage their financial lives seamlessly from their phones and devices.
One of the biggest changes we’re seeing is in Digital Account Opening (DAO). Customers digitally open an account, often from their phone, within minutes, without visiting a branch. Yet, despite its potential, this goal is still out of reach for many traditional banks. Traditional banks often rely on legacy systems, and integrating these systems with DAO solutions can be complex. They also have to overcome regulatory compliance and cybersecurity challenges.
However, by taking five strategic steps to modernize their processes and infrastructure, traditional banks can prepare for DAO. Here’s a roadmap to get ready for this transformation:
1. Assess Current State
Begin with an in-depth analysis of existing systems, processes, and technology infrastructure. Identify bottlenecks, inefficiencies, and areas that are not compatible with digital account opening.
2. Set Clear Objectives
Define specific objectives that align with your bank’s strategic goals. For instance, set objectives to reduce account opening time by X%, improve customer satisfaction ratings, or ensure full regulatory compliance.
3. Invest in Technology
Allocate sufficient budget for technology upgrades or replacements. Look for modern, flexible, and scalable solutions that can adapt to future needs. Key systems to consider are Customer Relationship Management (CRM) systems, Identity Verification Systems, Cloud Computing, and APIs.
4. Assess and Improve Security Measures
Invest in robust cybersecurity measures: encryption, intrusion detection systems, and regular security audits. Stay proactive in addressing emerging threats.
5. Capture Customer Insights
Survey customers to gain insights on the status of your account opening process as it exists today. And, make sure you know what your customers expect when they open an account online.
The Future Outlook
The landscape is ready for change. While fintech companies have been at the forefront of digital account openings, traditional banks and credit unions are closing the gap. It’s predicted that within the next two years, legacy banks will surpass fintech firms in digital account openings. The time to begin making this change is now, and if done thoughtfully, banks will gain customer trust and loyalty from the beginning of the relationship.
