Digital Account Opening: Why Community Banks Need Omni-Channel Support

Banks face the dual challenge of meeting heightened customer expectations for seamless service and increasing competition from digital-first entities. A pivotal strategy to address these challenges is the implementation of omni-channel account opening processes, particularly the digitization of in-branch and bank-directed account opening.

What is Omni-Channel Account Opening?

Omni-channel account opening via online, mobile applications, in-person, or a combination of all three allows individual and commercial customers to initiate and complete the process of opening one or more bank accounts and includes a bank-directed approach. This ensures that all customers - from individuals to highly complex organizations - can experience a consistent and integrated journey without any disruption or redundancy, regardless of the channel they choose.

Omni-channel account opening is simple to understand but historically complicated to implement. This approach has proven challenging for many financial institutions. While customers increasingly expect the flexibility to open accounts through their preferred channels, a significant number of banks and credit unions have yet to fully adopt true omni-channel capabilities. This gap highlights the complexity and effort required to integrate multiple systems and processes to deliver a cohesive customer experience.

Why it Matters: The Benefits of Omni-Channel Account Opening.

Serving customers efficiently and seamlessly across channels is fundamental to providing a superior customer experience. Customers want the ability to do business through a range of channels and expect the same high level of service as they move across each of those channels.

73% of customers believe companies should intrinsically understand their expectations while 62% expect them to proactively anticipate their needs.¹

1.  Enhance Customer Satisfaction and Loyalty

Customers with a positive experience are more likely to recommend their bank to others, use more products and services, and remain loyal for the long term. Meeting customer demands and expectations is all about convenience — you need to make their lives easier! Even customers who prefer visiting a branch expect the same seamless, efficient experience they get online. Digitized account opening eliminates paperwork and redundant data entry, ensuring customers spend less time filling out forms and more time building relationships.

While digital channels continue to grow in popularity, the physical branch remains an essential touchpoint for many customers. Digitizing the in-branch account opening process offers several advantages:

• Increased Customer Acquisition: Offering multiple avenues for account opening attracts a broader audience, including those who prefer digital interactions and those who value face-to-face engagement.
• Improved Customer Retention and Loyalty: A seamless and flexible account opening process enhances customer satisfaction, fostering loyalty and reducing the likelihood of attrition.
• Data-Driven Insights: Digital processes enable the collection of valuable data on customer behaviors and preferences, informing personalized services and targeted marketing strategies creating cross-selling and upselling opportunities.

However, banks and credit unions need to meet the expectations of all their customers, both young and old, but specifically within the fastest growing market segment, the Gen Z’ers. The Insider Intelligence report suggests that by the end of 2025, Gen Z will have about 42.9 million people using mobile banking, and the number is expected to grow at a pace of about 12.4% every year until the year 2026. 

This makes it essential for community banks to understand and meet the demands of every generation including those belonging to Gen Z. 

Source: graphic from emarketer²

A key demand for both Millennials and Gen Z is seamless digital experiences. They value online banking greatly, favoring self-service options they can access easily without delays or complications. Then there’s the mobile ability - this can’t be ignored either since, for Gen Zs these days, it’s all done on the go through phone apps³.

2. Increase Sales 

More satisfying experiences and more options to interact also mean more opportunities to engage, convert, and build long-term relationships. Research has shown that retail banks that excel at providing a good customer experience have customer recommendation rates that are 1.9 times higher than banks that do not, and their customers are 2.1 times more willing to purchase new products and services. In addition, companies that improve key elements of their customer experience can grow their share of deposits by as much as 16.5%⁴.

3. Provide Top-Notch Personalized Service

Omni-channel banking also helps retain context and continuity in every customer interaction, no matter the channel, by giving representatives a complete view of the conversation history. Here are some additional ways that a positive customer digital experience benefits banks.

4. Collection Of Data

Omni-channel account opening unlocks the door to powerful new opportunities for leveraging customer data and analytics. Financial providers can use these insights to deliver more personalized experiences and better anticipate their customers’ needs based on their profile and behavior.

It’s also the collection of data that enables AI, which will also improve the customer's digital experience. AI can be used in many ways to improve the customer digital experience, such as personalized product recommendations, fraud prevention, and virtual assistants.   

Requirements for Supporting Omni-Channel Account Opening

Digital transformation plays a crucial role in modernizing account opening to support omni-channel banking. The transformation unlocks valuable potential for personalized engagement, streamlines processes, and enhances risk management.

The problem with many community banks is the disparate technologies and intelligence layers used to support different channels.  Disconnected systems that don’t talk to each other lead to disconnected customer experiences - a troubling outcome in an era where customers have high expectations for a good experience and are likely to do less business with or even defect from a bank when those expectations are not met. 

The Importance of a Digital Transformation Strategy

To achieve the benefits outlined above, banks need to develop a comprehensive digital transformation strategy. This strategy should include a focus on the following:

• Customer Needs: The first step in any digital transformation strategy should be to identify the needs of the bank's customers. What are their pain points with the current account opening process? What are their expectations for a digital experience?
• Employee Experience: While customer needs come first, improving employee experience comes with a wealth of benefits that result in increased efficiencies and employee performance.
• Technology Stack: Banks must invest in the right technology, end-to-end digital workflows, and not just automation in silos and stop chasing the “shiny new toy”. 
• Change Management: Digital transformation is not just about technology; it's also about people. Banks need to have a plan for how they will manage change within the organization. This includes training employees on new technologies and processes and helping them to adapt to a new way of working.

While omni-channel is the way of the future, many financial institutions have been somewhat slow on the uptake. For some, they’ll have to implement an entirely new technical infrastructure with enhanced data capabilities to implement omnichannel management strategies.

Vikar provides a true omni-channel account opening solution, including bank-directed options, enabling customers to transition seamlessly between all channels during the account opening process.  This means a customer can start an application online and,  if needed, continue it on a mobile app or in a branch, without losing progress, documents, or having to repeat any steps. This cohesive experience enhances customer satisfaction by providing flexibility and continuity. Vikar’s platform seamlessly integrates KYC, KYB, and due diligence processes and connects directly to core banking systems enabling effortless data retrieval and utilization to enhance operational efficiency and support smarter decision-making. Vikar ensures greater efficiency and insight by eliminating all manual steps that slow down processes and hinder analytics.

¹ State of the Connected Customer, 5th Edition, 2022. Salesforce.

² https://www.emarketer.com/content/gen-z-banking

³ Navigating the Digital Abyss: Community Banks and the Gen Z Imperative

⁴ Kantar Study Shows U.S. Banks Can increase their Share of Deposits By 16.5% Through Improving Their Customer Experience, December 11, 2018.

For more information about this article or to learn more about Vikar products and services please contact Nancy Schneier at nancy@vikartech.com.