Credit Unions Show Growth in Online Account Opening, Lag in Online Funding of New Accounts
PROVIDENCE, R.I. -- A new study released by Aite Group focusing on online account opening revealed that 60% of the top 20 credit unions (based on assets) offer online account opening, a 35% spike over the previous year. However, only 42% of those that have instituted online account opening also offer online funding. By comparison, 80% of the top 20 banks (based on assets) offer online account opening and of those, 87% also provide online funding opportunities.
The availability of online account opening is often driven by costs, the report read. Aite Group estimated a per-case cost of $15 for online account opening and $65 per-case cost for traditional, manual processes.
For large credit unions, the report posed, if 3% of the eligible cases went through the online account opening process, the $50 savings per case would generate $50,625. If 20% of the eligible cases went through the online account opening process, the $50 savings per case would result in $337,500. "Credit unions are typically smaller institutions with limited geographic reach, so a higher percentage of new account opening takes place online," the report said. "It makes sense that larger credit unions will address this issue first, but assuming that a compelling business case can be made, there could be a lot of demand for these systems among smaller credit unions [and banks] in the near future. In fact, several vendors we spoke with said they are experiencing a burst of activity from mid-sized and smaller credit unions. A factor driving this increased activity includes the fact that credit union core systems tend to be newer and feature more accessible, real-time integration capabilities."
When it comes to features, credit unions fall short when compared to banks. Many credit union online account applications consist of a single page requesting the information necessary to open the account, the report said, and as a result, many credit unions' online account opening processes do not inform a potential new customer upfront about how long the process will take or how many steps are involved.
While a growth trend in online account opening for credit unions is apparent, the institution of online funding is not being met with the same enthusiasm, although that may be expected according to Eva Weber, analyst at Aite Group
"For some reason the credit unions tend to be a little bit behind their banking counterparts in terms of technology," Weber said. "I think the cost of solutions is driving that a bit. It's at least contributing to an apprehension of instituting these technologies. With 60% offering online account opening and only 42% offering online funding with it, credit unions are kind of missing the point, particularly those with a disparate member base. Although online account opening should continue its healthy growth, credit unions are not quite delivering on the customer service aspect by not allowing members to fund their accounts online." --firstname.lastname@example.org