It's no secret that in online banking, the name of the game is simplicity. The goal among many institutions is to make the Web site so intuitive and hassle-free that the fail rate for customers opening accounts online is near zero. The only fails should be applications kicked out because they hit limits of internal scoring thresholds on identity or credit checks and thus require further scrutiny.

Yet, even though making a Web site user friendly is as much common sense as it is common knowledge, a 2011 study involving 15 banks and credit unions and 5,102 online banking consumers from Javelin Strategy & Research showed that only a bit more than half of online applicants succeeded in opening and funding a standard checking account. Fail rates were particularly high for first-time checking account applicants, in addition to technology novices.

That's why executives at Birmingham, Ala.-based AloStar Bank of Commerce decided to replace the bank's legacy online account opening system and deploy in January 2013 Andera's oFlows deposit platform, which Andera picked up from its October 2011 acquisition of oFlows Inc.

They had good reason to worry about the level of difficulty, and hence, the prospective customer losses the legacy Web site posed.

AloStar was formed 5 p.m. on Friday, April 15, 2011, after Michael Gillfillan and Andrew McGhee, the bank's chairman and president respectively, agreed to acquire the assets and deposits of the failed, branchless, online-only bank Nexity from the FDIC.

Gillfillan, a former chief credit officer and vice chairman at Wells Fargo; and McGhee, who co-founded Atlanta-based private equity firm Archway Equity Partners, sought a national platform from which to provide asset-based lending to middle market companies. They used a shelf charter to buy Nexity and renamed it AloStar Bank of Commerce. The bank has depositors in 48 states, correspondent banks across the Southeast, and a national lending base.

But it has no branches for deposits. So besides the call center, the online channel is the only other route for prospective customers to sign up for deposit accounts. As Cindy Russo, executive vice president of operations at AloStar says: "Our online site is our bank lobby for our customers."

And the bank needs deposits to support its middle-market lending push. The problem is, AloStar's online account opening system does not save data an applicant enters if he or she quits the session before the process is finished. Instead, it forces users to start from the beginning each time, if they revisit the site at all. And it's near impossible for an applicant to back up to a previous page to correct information they erroneously entered. "Sometimes they have to start over," Russo says. "From a customer's standpoint, that's frustrating."

Plus, verifying customers through customer identification programs (CIPs) to protect against money laundering must be done manually. "Once an application is filled out, our staff must basically look at every one of those, run credit reports based on the type of account and go through the CIP and the identity process," says Russo.

The bank needed to simplify account opening for customers and the back office.

The Web-based interface Andera's oFlows deposit platform offers is intuitive for customers to use, Russo says, because it enables customers to finish opening an account in several steps at different times, as well as all at once. The application saves their work. It also allows applicants to go back and correct mistakes. Plus, the platform automates customer identification requirements of anti-money laundering and "know your customer" regulations. The system does the checks itself and integrates the processes into the bank's core system.

"On the backend, the flow-through is automatic; it goes through the CIP identity and any credit checks automatically," Russo says. "We're fairly conservative on how we open our accounts. So we can put scoring guides in there that we drive ourselves; they're not canned by the vendor."

The oFlows system maintains audit files of customer information and tags the accounts to identify which specific reviews have been completed. Vendors offering competing solutions include FIS, Fiserv, MeridianLink, Online Resources, uMonitor (Parsam Technologies), and Yodlee.

AloStar hopes to achieve better completion rates via oFlows. "Hopefully when we implement Andera we'll see that the percentages of people completing applications go up," says Lisa Beck, senior vice president of marketing at AloStar. "Because they have the ability to come back and sign in to begin where they left off."




Bank: AloStar Bank of Commerce

Problem: Online account opening was difficult for customers to use.

Solution: Deploy a tool that automatically performs identity and credit checks.