Online Account Opening: How Credit Unions Can Outcompete Big Banks

Credit unions have gained popularity in recent years among consumers looking to minimize fees, earn higher interest rates and receive more personalized customer service. In a recent survey conducted by the Aite Group, credit unions surpassed other types of financial institutions in the overall ease and convenience of the checking account opening process. However, major financial institutions continue to outpace them in growth. According to the survey, 24.5 million people opened new accounts at national banks in 2015, compared with about 5.6 million who created accounts with credit unions.

A key difference between larger financial institutions and relatively smaller credit unions lies in the ways they handle omnichannel account openings. Per the survey, credit unions lead other financial institutions when it came to service from branch representatives and the account approval notification length but trailed national banks when it came to customer service from the call center, website or mobile channels. 

Credit unions lack many of the resources of major banks, but they can attract new customers by streamlining their account opening process and making it more convenient. 

Here are five best practices that credit unions should follow to increase account opening rates without compromising the service and security their customers demand.

1. Offer online account opening

National banks maintain an edge over most credit unions by offering reliable online banking options, including the ability to open a new account. Most accounts are still created at a bank or credit union branch. However, approximately 25 percent of account openings took place digitally last year, indicating online account services can play a significant role in maximizing new business today and in the near future.

Financial institutions of all kinds can attract customers through greater accessibility. However, if regional banks and credit unions want to compete with national banks, they must focus on investing in online account services.

Aite estimated national banks spent about $218 million on digital account opening in 2015, while credit unions only put forth $14 million and regional banks invested $64 million.

2. Go mobile

By providing the capability to open new accounts via smartphones and tablets, a financial institution can keep pace with the ever-changing expectations for service and convenience. Taking full advantage of this increasingly important channel – mobile – appeals to young people who are accustomed to having an array of services available to them wherever they go.

The generational gap shows through in the statistics gathered by Aite: While none of the seniors or baby boomers surveyed started new financial accounts with mobile devices, a number of their juniors did.

Almost 929,000 members or Generation X and over a million millennials connected to mobile banking apps or sites to open checking accounts. Since these generations also accounted for 81 percent of new accounts overall, gearing the process to suit their preferences is a wise strategy for credit unions.

3. Streamline the account opening process

By taking full advantage of the possibilities of current technology, credit unions can speed up the time it takes to get an account up and running. When the onboarding process moves faster, customers are more likely to complete it and thus begin an ongoing relationship with a financial institution.

Working across all channels brings convenience both by making accounts readily accessible and simplifying how new customers submit the necessary information. For instance, mobile apps can take advantage of cameras in mobile devices to gather data and fill in forms. Solutions like this one cut down on the tedium of manually inputting information and speed up the account creation process.

4. Implement automatic account opening workflows

In addition to making tasks easier for applicants, credit unions should ensure the process of creating a new account is efficient by implementing automated workflows. That begins with authenticating an applicant’s identity as he or she is still entering data. This also helps to prevent fraud.

Verification measures test whether the individual is authorized to use the funds deposited in the account. Application processing, risk scoring and IP address checks all become part of a seamless onboarding process.

5. Use a machine learning based omnichannel software platform

Credit unions can build an advanced account opening procedure that inspires confidence in customers by bringing all these elements together. Unifying the disparate aspects of onboarding calls for an omnichannel software platform. By creating a single user experience secured by real-time data gathering, credit unions can attract more applicants and speedily make them new account holders.

Additionally, platforms that deploy machine learning are able to combine multi-channel data and automate the approval process with high accuracy rates – increasing the percentage of onboarded customers in a rapid amount of time while keeping credit and fraud risk at bay.

The key to competing with national banks for new accounts, especially among young people, lies in more efficient technical workflows and the ability to meet customers demands. At Feedzai we are constantly on the state-of-the-art of innovating new technologies for the modern banking experience.

Feedzai’s machine learning based omnichannel account opening solution is already powering the online checking account opening process for a Top 10 US Retail Bank. Contact us to learn more about how we can help you.