At a minimum, digital account opening should:
- Capture and auto-fill basic personal identity information
- Qualify applicants against risk and fraud threats
- Verify applicant identity (often with third-party data sources)
- Fund the account in real time through a debit/credit card or with mobile deposit capture
- Integrate with the core banking system
At its best, digital account opening should also include:
- Contextual prequalification and cross-sell of products and services
- Online and mobile single sign-on
- Omnichannel integration to save and resume account opening at any point in the process
- Electronic signatures
- Photo or file upload of supporting documents (identification, agreements, etc.)
Digital account opening (DAO) is the process of empowering an applicant to quickly, easily, and securely open an account digitally.
Digital is now the “everyday” banking channel, and DAO is accelerating at a rapid pace. According to research from Aite Group, financial institutions are reporting two to three times more digital application volume since the COVID-19 pandemic. Many FIs are unprepared to deal with the rising application volume as discovered in Aite Group’s survey of 2,413 US consumers in 2020:
- Digital account opening: 37% of respondents completed a whole application for a new account online or through a mobile app.
- Reasons for not completing an application: 61% indicated they had questions and went to a branch or called for help, while 32% indicated the application was confusing or complicated.
- DAO challenges: The DAO process has common challenges, which include:
- Lengthy and/or paper-based experiences
- Lack of omnichannel and personalization of the experience
- Lack of mobile- or digital-first design
- Identity validation and verification that is challenging
- Rising application fraud that must be balanced with low-friction DAO experiences
5 DAO maxims
There are five DAO maxims that can help FIs build their ideal portfolios in today’s dynamic and competitive landscape:
- Create an experience worthy of the best customers
- Keep fraudsters out
- Out-price your competitors
- Keep your funnel full
- Streamline the process for customers and valued prospects
Personalized, engaging, and flexible DAO is no longer a nicety — it’s a necessity.
Today’s digitally savvy customers demand safety, convenience, and personalization in their preferred channel when opening digital accounts. That means FIs must accelerate their digital transformation to build agile, low-friction, and engaging DAO experiences.
Best-in-class, turnkey DAO must fit where FIs are today and efficiently scale for where they’ll go for an unknown tomorrow. The key capabilities include:
- Integrated marketing with real-time prescreen
- Intelligent and interactive omnichannel communication services
- Seamless ID proofing and unobtrusive fraud detection
- Sophisticated workflow orchestration
- Hundreds of pre-integrated global data and service providers
- Onboarding and originations that are powered by a scalable decisioning platform to originate any consumer or financial lending product
- Analytics-forward, unified, and extensible solution built for business users
Key metrics for DAO
According to Aite Group’s interviews with 24 executives in 2019, these key metrics should be considered to build best-in-class DAO:
- 30%-69% of consumers start an application and actually complete the application.
- 5% of consumers save an application.
- 31%-70% of consumers start an application, but they do not complete it.
FICO’s recent survey on digital account opening and identity proofing provided insights across 14 countries and 14,000 consumers. Learn more at: North America Consumer Survey 2021 — Identity Proofing and Digital Banking
3 factors affecting DAO
- Risk: With this factor, FIs must:
- Validate identities
- Decision applicants for the right products and services
- Confirm that applications are not fraudulent
- Technology: With this factor, FIs must:
- Build workflows that support the application process, integrating systems and data to streamline the customer experience
- Implement business rules to enforce risk and compliance standards
- Provide the ability to easily add or remove products
- Operations support: With this factor, FIs must:
- Leverage workflows to move applications through the fulfillment process
- Reinforce risk and compliance standards
- Communicate the application status to applicants, offering engaging omnichannel communications and empowering self-service
Optimizing the DAO experience throughout the customer lifecycle
FIs have many opportunities to optimize the DAO experience throughout the customer lifecycle:
- Engage in finances: FIs can help consumers manage their accounts responsibly.
- Earn trust: FIs can interact with consumers in ways that help their financial wellness and create opportunities for growth and trust.
- Build loyalty: FIs can offer consumers the right products and services, at the right time, and in the right channel. This builds loyalty and deepens relationships.
- Win the customer: FIs can help consumers understand products that can help them meet their financial goals.
FICO’s recent market research uncovered what consumers really want from their financial institutions. To learn more, visit: What do people really want from their banks?
Connect with FICO for answers to all your product and solution questions. We look forward to hearing from you.