The Digital Account Opening Slip ‘N Slide

By Joe Phalen

The conventional wisdom about first impressions is true, especially in digital channels. These digital first impressions are particularly tricky for financial institutions that are courting small businesses—because small business account opening is a somewhat asynchronous process that requires:

• document submission,
• know your customer procedures,
• identification proofing,
• credit checks, and
• signatures (potentially from multiple parties).

It’s extraordinarily rare that small-business owners will seek out online account opening, research their options, apply, navigate KYC and ID requirements, submit documentation, and fund their new account in a single online session. In fact, most business owners expect personal service or want a relationship manager to walk them through the process and ensure everything is done properly.

That said, FIs have a wealth of opportunities to streamline processes and reduce the friction of account onboarding with tools and workflows for the digital channel. Doing so also gives banks and credit unions the opportunity to introduce online and mobile solutions that their freshly onboarded business account holders can later use or purchase. Javelin Strategy & Research has observed up to 50% increases in usage of digital services when they are introduced immediately upon funding of an account. There is a high potential for increased profitability as well.

Better account opening and onboarding may not only help smaller FIs compete with other community FIs, but potentially larger banks as well.

In 2017, Javelin reported on the small business digital account opening offerings of the top 30 FIs in the U.S. The report found a wide variance in the approaches the FIs took to help new account holders research and acquire services—as well as varying degrees of success. Many FIs presented very basic information about account options, but very few took additional steps to make the process easier. 

It’s important to note that 73% of small- and medium-sized businesses use the biggest 25 banks in the U.S. This leaves more than 11,000 community FIs fighting for the business of the remaining 27%. Better account opening and onboarding may not only help these smaller FIs compete with other community FIs, but could also potentially make them more competitive against the larger banks—many of whom are having mixed results with their own AO.

Dive Into Online Account Opening

To make this happen, FIs shouldn’t wait for business owners to call or come into their branches; they should make it easy for prospects to fully understand the application process and what accounts and services are available to them. Having simple FAQs or comparison grids in digital channels can make a significant difference here—as can briefly spelling out the process and requirements for creating a business account.

Setting expectations through these kinds of marketing materials can go a long way towards reducing friction and abandonment. Think of the application process like a perfect slip ‘n slide experience. It should be:

• completely frictionless,
• free of bumps or hazard that slow or hurt the user, and
• refreshing and quick.

To carry that analogy a little further, your educational marketing should provide the traction required to build up speed, which helps the business owner move through the application/checkout process easily and quickly. A laundry list of requirements won’t hurt you. 

Many FIs will have basically the same requirements, and your spelling them out helps guide business owners into your application process.

Small-business owners are looking for FIs to guide and educate them. Providing information, processes, and requirements is a great start to that relationship—and it sets the stage for engagement both online and off.

Joe Phelan is sales manager of CUES Supplier member Q2 Gro, based in Austin, Texas.