Our Viewpoints

Our Viewpoint

Self-service banking – available anytime, anywhere

March 25, 2011

All eyes are on the debit interchange rule and other new requirements that are adding to financial institutions’ regulatory burdens. Despite the added challenges, these changes can be the catalyst that strengthens the financial services market. But, to best benefit from this opportunity, financial institutions need to offer the self-service conveniences to which consumers have become accustomed. Simply offering the services for free is not enough if consumers need to sacrifice convenience. 

Consumers open online accounts every day, so it seems natural that automated online account opening and funding should be the first in a series of self-service technologies that financial institutions must offer. Consumers want to open banking accounts online, largely due to the time it will save them and the convenience of opening them when it best fits into their busy schedules. Most new accounts can be opened and approved in only 10 minutes, and the ability to immediately activate an account is priceless. Javelin reported in May 2010 that one in four, or 58 million U.S. consumers, attempted to open a bank account online in the previous year. These numbers will continue to rise – 40 percent of online account attempts from that period were from Generation Y alone!

While financial institutions are careful to stay loyal to their personal service nature, much can be improved in the area of Web-based services. Being available whenever customers need you is just as important as meeting face-to-face. Besides being a highly demanded customer service and a key component to win the coveted X and Y generations, online account opening significantly lessens the costs associated with opening and servicing accounts. Automating this process provides cost savings of about $45 per application, or 75 percent less than traditional branch-based account opening.

Offering online account opening is just the first step in a full-service online sales channel that can bring new business into a financial institution by extending its geographic footprint while also deepening customer relationships. In fact, credit cards are equally as popular as checking accounts to open online, and the pair is closely followed by savings accounts.

Advanced cross-sell and up-sell capabilities, partnered with an integrated relationship switch kit, can significantly increase the number of accounts opened per consumer. An integrated switch kit offers the customer an easy way to close external accounts and switch their existing direct deposit, automatic payment, credit card, and loan relationships over to their new account. It enables financial institutions to become the primary financial institution and gain a higher wallet share per consumer at a highly accelerated pace.

Javelin reported that 44 percent of online checking account applicants also applied for a savings account. Keeping the account opening process simple and unified across all channels enables consumers to have a delightful experience that they will remember when looking for additional accounts.

Looking past the ability to reach out to untapped markets, increase customer satisfaction and improve cross-selling ratios at a reduced cost, the cost of not having an account opening process online is great. Forrester Research reported that almost three in 10 online prospects would go to a competitor due to poor website performance. No institution would accept a third of its prospects leaving the branch; it is just as unacceptable online.

The move to online account opening is an integral step in an important series of self-service offerings, including funds transfers, person-to-person (P2P) payments and mobile banking. The time to leverage online account opening and extend red carpet service to customers looking for a good change is now.

Read our column Best Practices to Mitigate Risk with Online Account Enrollments to learn how to best protect your customers who choose this delivery channel.


Tom Berdan
Vice President, Market Development

Tom Berdan capitalizes on his 25 years as a banker and 15 years in the banking software industry, using his expertise to serve as vice president of market development for D+H where he manages industry research and outreach. Prior to that, Tom served as vice president of product management where he oversaw D+H product roadmaps, including core systems, branch automation, self-service and business intelligence. Tom holds an MBA from the University of South Florida, Tampa, and a Bachelor of Business Administration from the University of Wisconsin, Milwaukee.