From “How Optimized Checking Account Origination Can Create Relationship Primacy,” a Curinos webinar presented February 7, 2024, featuring Suraya Randawa, head of omnichannel experience, and Andrew Hovet, managing director.
The quality of digital checking-account origination is improving, but a sizable gap remains between digital- and branch-originated relationships: A year after origination, digital balances are up to 10 times lower and digital retention rates are 20% lower.
While banks and credit unions continue to improve their origination journeys, they still need to make significant changes to achieve the mobile-first origination journeys of leading digital players.
The webinar covered the performance levels for digital checking-account origination and explored how digital origination is evolving to achieve tighter balance security, greater speed and deeper customer engagement.
Here’s what to think about in creating digital customer journeys that maximize engagement while minimizing friction:
1. Customers prefer mobile by a widening margin.
Digital is the overwhelming preference for opening a checking account, and almost half of consumers say they’d prefer to do so on a smartphone. Fewer than one in four would choose to open their account at the branch. Even desktops, laptops and tablets are losing ground to the ease and convenience of mobile phones.
Consumers Increasingly Want To Open Their New Checking Relationships From Their Phones Rather Than Going To A Branch Or Using A Computer
2. But the digital tide hasn’t lifted all boats.
Digital originations surged during the pandemic and have since moderated, but they’re well above pre-Covid levels. Still, the preferential and actual shift to digital hasn’t translated into a greater volume of new checking accounts. Q3 ’23 account openings were only marginally higher than they were pre-pandemic. And while consumers may say they prefer digital, three out of every four checking accounts are still opened at the branch.
Even With The Increase In Digital Origination, The Aggregate Acquisition Levels Are No Higher Than Pre-Pandemic
Checking Customer Acquisition By Channel (Indexed To 2019)
3. Increased digital quantity hasn’t translated into quality.
The Achilles heel of digital originations continues to be customer and member relationships of much lower quality. Not only are account balances lower than those originated in branches (if the accounts are funded at all), they degrade quickly and then steadily over time. Consumers say they prefer digital, but accounts with sticky balances are three times more likely to have started with a face–to–face encounter at the branch.
While Retention Rates Have Improved With Improved Fraud Controls, Retention Rates Are Still Significantly Lower Than Branch Originated Relationships
Relationship Retention By Channel
4. New primary relationships at fintechs are surging.
Fintechs now account for 40% of new banking relationships, up from only 29% three years ago, and three brands – CashApp, PayPal and Chime – accounted for fully 60% of all new fintech and direct-bank relationships. This should be a cause for concern for traditional banks and credit unions. Consumers choosing fintechs generally have lower deposits and are less profitable, but they’re worth defending because they help pay for the expensive branch and technology infrastructure required to support all segments.
Traditional Banks Are Losing Share Of New Primary Bank Relationships
Primary Checking Account Opened By Primary Bank Type, By Year
5. More screens, but fewer fields per screen.
Adapting the application process to mobile doesn’t mean much if the application experience doesn’t also adapt. According to our testing, the completion of applications with minimalist design per screen is up to 60% faster than of those with a standard design – even if it means more screens. Less scrolling and fewer taps per screen make all the difference. The simpler-screen experience keeps users engaged and reduces abandonment.
Focus Applicants On One Input At A Time
AVERAGE SPEED TEST FOR CHECKING ACCOUNT APPLICATIONS
APPLICATIONS WITH MINIMALIST DESIGN
APPLICATIONS WITH STANDARD DESIGN
6. Make them yours instantly.
How to drive primacy? Turn an applicant into a customer or member as soon as possible, starting with funding. Three-quarters of FIs that provide funding through account linking do so through APIs. Make direct–deposit signup prominent and easy. And how about immediate access to a debit card? These steps drive primacy, and the best chance for primacy is at the very start of the relationship. Don’t miss this one-time opportunity.
Drive Primacy As Soon As Possible
7. Use AI to make every marketing path “ideal.”
There’s no longer one happy path or singular way to engage and motivate your members and customers. Amid the nearly limitless permutations of offers, messages and touches, AI – via a machine-learning platform – can determine who to touch, what offers to make and the cadence required to elicit favorable action, all in near-real time. Its ability to adapt marketing experiences and effectiveness to each recipient is sharpened by “always-on” learning. With the help of AI, there’s never an “ideal” path, only the one that’s ideal for each individual.