National City Corp.’s new online account-opening system is bucking conventional wisdom by trying to sell applicants additional products and services.
Banks have struggled to persuade customers to open accounts through the Internet — a process that is much cheaper than the traditional, in-person one. A big hurdle is that many people start filling out the forms but fail to finish them. Some bankers have concluded that offering additional products and services makes it more likely that an applicant will abandon the application.
But on Sept. 1, National City started using a system designed for cross-selling during the application process.
“It’s too soon” to say how it is working, but the initial response is promising, according to Scott Linabarger, the Cleveland banking company’s senior vice president in charge of Web marketing.
Customers are applying for products and services in “combinations that we never saw before online,” he said; some people who apply for checking accounts are also applying for credit cards, lines of credit, and individual retirement accounts.
Also, “we are seeing a significant amount of small-business loan applications in this first month,” Mr. Linabarger said.
The new system uses a streamlined online application, he said. “It will only ask for things that it needs, and it will only ask for it once.”
The streamlining makes it easier for people to apply for various products and services as they work their way through the form; the system adds only the questions it needs for whatever offerings applicants have selected.
It is even easier when a current customer wants to apply for a new product or service, since the system does not need to ask as many questions, he said.
But Citigroup Inc. rejects this approach. When people apply for a basic checking account at Citi’s Web site, the system will not pitch any additional products until they have completed the application form.
“In our experience, a simple online account opening process is very successful. Once the customer has signed up to open the account, we can make him or her aware of our other products and services,” said Mark Rodgers, a Citi spokesman, “But the important thing is that they have now become a customer.”
He also said that one promotion last year — in which it gave away tens of thousands of Apple Computer Inc.’s iPod music players to people who opened accounts online — would not have been as successful if the application Web pages had been cluttered with other offers.
Mr. Linabarger conceded that it is easy to distract applicants. “It’s a valid concern. You’re always worried that you are going to add unnecessary friction to the application process. It’s so hard to keep users in an application; anything that causes pause is usually a bad thing.”
However, “there are ways to do it without adding friction and ways to do it where you’re actually adding value for the consumer or, at the very least, not subtracting from the user experience,” he said.
When National City designed the application system, a primary goal was to ensure that applying for multiple products and services would not take much more time than filling out the basic forms for one account. Mr. Linabarger said people must fill out six to seven screens, no matter how many products and services they want.
Eva Weber, an analyst at the Boston market research company Aite Group LLC, said, “If anything is too complicated, that will definitely increase your attrition rate.”
And banks have a lot to gain if they can reduce that attrition rate, she said; it costs banks about $65 to have a branch employee open an account for a customer, but the cost of doing it online is just $15.
Many banks are eager to get more people to apply for accounts online, Ms. Weber said. “I’ve been hearing from banks that … the goal is definitely to streamline the application process.”
But they are also being conservative in their cross-selling during the application process, to avoid alienating prospective customers. “I don’t think that it’s any kind of return to dot-com fever,” she said. “It’s not ‘Everything on the Web at any cost.’ ”
Other banks have encountered resistance from trying to cross-sell during online applications, but National City may have tapped into something big by letting applicants create product combinations, Ms. Weber said.
Rather than annoy customers with unrelated pitches, National City has improved the chances that the customer will appreciate “being able to open everything they need with one application,” she said.
Alenka Grealish, who manages the banking group at the Boston market research firm Celent Communications LLC, said cross-selling to online applicants is a balancing act.
Because many people apply online after carefully researching different banks and specific products, “it’s a bit hard to cross-sell a very different product online,” she said. “You’re basically asking people to do a spontaneous purchase.”
She also said that if banks use a multiproduct application, people could be approved for some things and rejected for others.
“Customer satisfaction starts at zero and is based on interaction,” she said. “And guess where you would go if you rejected them?”
Mr. Linabarger said some people using the new application forms have been accepted for some offerings and rejected for others. “This is a new issue that we have not yet analyzed. … We’ll definitely be looking at this in the future.”
