Respected nineteenth-century British writer William Hazlitt once wrote, "First impressions are often the truest." While he wasn't talking about financial relationships, bankers might consider how it applies to their own new customers.
In a technological world, customers expect immediate-and efficient-results. That's where onboarding comes in. Done well, onboarding can cut out redundancies on the front end, save time on the back, increase revenues and build customer affinity. But it's not something that is achieved by one person or group, says Singularity's Dermot McCauley, director of the firm's banking unit.
"One of the things about onboarding is it's a very cross-silo, cross-functional thing and most time is lost just because one hand doesn't know what the other hand is doing and it's not coordinated," McCauley says. Singularity is an onboarding solutions provider based out of Ireland. "We're like the master coordinator of all the things that need to get done."
In the first year, banks can suffer 30 percent deposit attrition for new customers, says San Antonio-based consultant Harte-Hanks, Inc. But with successful onboarding, that rate can be slashed to 12 to 20 percent. This is crucial because deposit accounts make up nearly 10 percent of a retail bank's assets and 60 percent of the profits, according to Naperville, IL-based consultant Allant. They, like Harte-Hanks, conclude that attrition rates can be cut in half with proper onboarding.
There are two things that drive customers crazy when opening new accounts: waiting and mistakes, says Eva Weber, who is an analyst at Boston-based research firm Aite Group. Technology that ports customer names to multiple systems for different account openings is highly valuable. This helps to reduce redundancy and time for the customer service rep, reduces human error and saves the bank money by eliminating time, third-party information-provider fees and processing.
Weber says that with traditional, manual methods for opening accounts, it can cost the institution $65 per new account opened. Efficient onboarding can cut that setup time by 10 minutes and save the institution $50 per new account, Weber estimates.
While onboarding is widely thought of as an in-branch solution, it's equally important online, says Charlie Kroll, CEO of Providence, RI-based account opening-solutions provider Andera. The firm's clients include Associated Bank, First Mid-Illinois Bank & Trust, Bank Rhode Island and numerous credit unions. A customer whose information can be seamlessly carried throughout the account-opening process, rather than having to go through different hoops, will be more loyal and more likely to apply for a other products, such as credit cards.
"The account opening process can be fully automated; there's nothing technical or legal preventing it," Kroll says. "What we've done is we've developed a platform that allows a consumer to start and finish the process all in a single session."
A majority of banks, he says, have the consumer download a form off the bank's Web site and mail it in. Drop-off rates for this method are between 80 and 90 percent. Automated opening drops that rate to 20 to 30 percent. "That is an indisputable benefit," Kroll says. "Consumers today expect instant gratification online. When they go to Amazon they expect the order to be placed immediately. It's incongruous that a bank would make everything else available immediately online, like online banking, but still make the person wait what can be several weeks to open the account."
Singularity's McCauley says there are two things driving firms to reengineer their onboarding processes. First is reputation, as that relates to customer satisfaction. "After all the hard work of winning a customer, you don't want to make a mistake by irritating them when you are bringing them onboard and getting them set up."
Second is that onboarding drives revenue growth. He notes that with equities the brokerage doesn't start making money until clients start trading. So if you can cut the cycle from eight weeks to three weeks to get them fully up and running, then five weeks of added revenue per client can add up quickly. Clients using the Singularity Client Onboarding Accelerator include JPMorgan's equities division and Bank of Tokyo-Mitsubishi. Singularity says that it has helped securities firms achieve cycle time reductions of up to 80 percent by eliminating over 60 percent of the manual steps. Normally an institution would have to add staff to achieve that kind of reduction.
Even in marketing, onboarding techniques still have to be considered, says Gartner research vp Alistair Newton. While you want to get the customer connected to the institution as quickly and deeply as possible, the different silos within the firm still have to act, feel and look consistent to the outside. (c) 2008 Bank Technology News and SourceMedia, Inc. All Rights Reserved. http://www.americanbanker.com/btn.html/ http://www.sourcemedia.com/