MILLIONS of consumers open new accounts every day with online stores, cable companies, mobile ridesharing apps and of course, with banks. Now imagine one such consumer—a Millennial named Max—opening a new account at a popular online shopping site. On the same day, Mia—another Millennial—opens a new account at a bank. Who do you think had a better experience—Max or Mia?
If you thought Max, you are likely wrong.
Conventional wisdom suggests that the account opening process at many banks seems to have become burdensome, due to heightened regulatory demands and compliance and control pressures. Banks today collect more customer information than ever before, follow a greater number of steps while onboarding and ensure strict controls throughout the customer service life cycle.1 Meanwhile, the ease of opening a new account on digital platforms—in online commerce, ridesharing services and even person-to-person (P2P) payments and online lending, is resetting customer expectations, particularly among Millennials.2
To better understand how these dynamics impact the account opening experience of retail bank customers, Deloitte surveyed more than 3,000 consumers who opened a bank account recently for three product categories (see appendix for survey methodology).
What did we find? The survey turned up several interesting results. First, consumers view the account opening experience at banks more favourably than registration experiences in many other industries. Second, a vast majority of customers, including Millennials, are aware of regulations related to the account opening process and also believe them to be beneficial.
However and perhaps most importantly, though customers of all ages are satisfied with the account opening process, a meaningful share want the account opening experience to be improved (figure 1). Specifically, Millennials, mobile-banking users and recently acquired existing customers of the bank were most likely to demand improvement.
Why do banks need to do a better job with account opening? A superior account opening experience can be vital for banks to remain competitive and to ensure loyalty—customers who think the account opening process can be made better at their banks are, in hindsight, much more likely to think about taking their business elsewhere. The survey also found that consumers who wanted improvement in their account opening experience were less likely to purchase additional products or services at the bank and were less enthusiastic about recommending the institution to their family and friends. And 75 per cent of improvement seekers were below age 50—a commercially critical demographic, as they are the banks’ future customer base.
But what does “a better account opening experience” mean? The most fundamental attribute of an exceptional account opening experience is speed—the faster an account is opened, the less likely the customer is to want improvement. Consumers demand that banks use their existing information to not only speed the process up, but also to cross-sell relevant products to them. Banks should also give consumers clear and concise instructions during the account opening process and follow up with them to enquire whether they have questions and are satisfied with their accounts.
So, how can banks improve? Banks can achieve specific capabilities that meet customer demands by investing in not only the right capabilities to improve the direct digital interface with customers, but also in technology available to frontline staff to help them be focussed and empathetic towards customers. By leveraging some critical new insight, banks should also harness customers’ favourable view of regulations in their messaging strategies to emphasise security, safety and rigour.
Our survey shows that typical consumers who want improvement are more likely to be Millennials and that they especially have higher expectations when interfacing with banks through digital channels.
While opening accounts on mobile applications is still nascent—only about 5 per cent of respondents in the survey opened accounts through a mobile application—consumers who opened accounts on a mobile phone, compared to bank branches and online banking (the two main channels used to open accounts), were much more likely to say that the retail bank account opening process needed improvement (figure 2). And, again, more than half (54 per cent) of consumers who opened accounts on a mobile device were Millennials.
While many banks themselves recognise their deficiency in offering robust mobile account opening services,3 clearly, the mobile channel is where the action seems to be headed in the future. Banks should redouble their efforts in this area as a necessary competitive lever, as all types of customers increasingly gravitate to this channel.4
We also found that existing customers with relatively shorter relationships (five years or less since the first account was opened), a cohort dominated by younger respondents, want the account opening process to improve (figure 3)—this holds across all the main product categories (deposit accounts, loans and wealth/retirement solutions). In contrast, consumers who were opening accounts at a completely new institution, or those who had longer relationships (more than five years) were much less likely to say that their account opening experience could have been better.
These findings suggest that although exacting consumers are capable of being forbearing during a first account onboarding with a bank, they expect banks to then use the information they already have to streamline follow-on account openings. This expectation appears quite reasonable and is probably easy enough for banks to establish as a core operating principle.
A fundamental, yet potentially surprising, finding from our survey is that the lion's share of customers (81 per cent of our sample) are aware that regulations require banks to collect a wide range of information and documentation from customers and that a majority of customers, including most Millennials, feel that these regulations are beneficial (figure 4).
Even more revealing, many consumers, once again including Millennials, rate the experience of opening bank accounts as easier than signing up for a range of other services in other industries - from the traditional, such as signing up for a new cable service on the phone, to those powered by digital interfaces, such as signing up for app-based car ridesharing services (see figure 5).
In addition to what banks are doing correctly in the account opening experience, two factors might be influencing consumers' opinions. First, they might be viewing a financial relationship as different from other types of service interactions, inducing an additional level of seriousness and patience in the interaction. And second, the fact that consumers know about regulatory requirements, as noted above, might be tamping down expectations around speed and complexity.
To find out what customers want - particularly Millennials - we distilled some salient points in the experiences of demanding customers who thought their account opening experience could be improved.
The time it took to open the account was the single stand-out predictive observation for those who demanded improvement in their account opening experience. For example, a deposit account opened in 45–60 minutes was over five times more likely to draw a demand for improvement compared to accounts opened in less than 15 minutes (figure 6). This positive association between speed of account opening and the demand for improvement also held for consumer loan and wealth management accounts.
The customer who expects more will typically not hesitate to look elsewhere. Customers who sought improvement were much more likely to have opened the account after some external stimuli, such as seeing an ad about the account, a recommendation from a financial advisor, or simply because they liked the bank’s mobile app or website (figure 7). These findings may indicate that consumers often develop high expectations based on these influences and are then potentially let down by the experience of actually opening the account. They also suggest a potential disconnect between the quality and promise of marketing programmes and/or digital advertising and the actual quality of the account opening experience.
Consumers seeking improvement were also several times as likely to say that in hindsight, they may have gone to another institution to open the account (figure 8). Millennials, again, were the largest component of this group.
Another obvious, but important, message for banks—customers who expect more are likely to think that another bank or an online/digital-only bank would make the account opening process easier or faster. And from a commercial perspective, consumers who sought improvement said they were less likely to purchase additional products or services at the bank, were less enthusiastic about recommending the institution to others and even less likely to trust their bank.
Our study also revealed that consumers who expected a better account opening experience often felt the bank’s information and documentation requirements were not clear. Importantly, the improvement seekers in our survey also rated themselves as having a high knowledge of banking. This finding suggests that the more that customers believe they know about banking, the more likely they are to expect a better experience.
One of the most interesting findings from our survey is that consumers who were the target of a cross-sell attempt during the account opening process were more likely to think that the experience could be improved (figure 9). Notably, consumers who actually considered a purchase based on a cross-sell attempt—the ones who showed a greater measure of attentiveness to the sales pitch—were also more likely to demand improvement. Together, these data tell us that cross-sell attempts at banks, at least those made during the account opening process, currently appear to be hit-or-miss and should become more insight-driven.
We also observed that the lack of a follow-up by the bank created much greater dissatisfaction among the improvement-seeking group (figure 10). Even more alarming for banks, these demanding customers also had to follow up with the institution on their own, at a rate that was many times higher than other consumers. The reasons consumers gave for following up were wide-ranging, but included information about the account that should have been delivered during the account opening process. These findings show a clear and frankly elementary, customer service failure by banks.
The range of data we have examined on gaps in the account opening process highlight a critical fact—many banks seem to still fumble the basics. In that light, the advice below, while not wholly novel, is backed by hard data and primary research rigour to keep the distraction of conventional wisdom(s) at bay:
For this study, Deloitte surveyed 3,000 retail banking consumers who had opened either a deposit (57 per cent of respondents), wealth management (17 per cent) or consumer loan (26 per cent) account from January 2016 to May 2017. The distribution of respondents, shown in figures 11, 12 and 13, skewed towards a younger cohort - this was to be expected given that individuals opening new accounts would tend to have emerging financial needs.
Forty per cent of surveyed consumers opened their accounts at an institution with which they had no prior relationship. This provided us with an adequate basis to differentiate between their account opening experiences and those of consumers who added an account to an existing relationship.
The survey sample distribution may not be representative of the population of consumers who opened bank accounts in 2016 and 2017 - none that we know of exists - making it difficult to estimate sampling error or to weight the sample. Nonetheless, we believe our survey design gives us sufficient basis to make cohort-level and product-level conclusions.
Finally, the survey was tailored to factor in the product for which the account was opened and importantly, the channel through which the account was opened. The natural fallout of channels used to open accounts shows the enduring popularity of branches, but with online account opening also featuring heavily.