A recent survey of community financial institutions revealed that 82% viewed regulatory compliance as the leading technology challenge. In today’s cost conscious, risk-averse environment, many risk and compliance professionals are left scratching their heads as to how technology could possibly help instead of hurt. It’s time to take another look at online account opening.
Since its inception in 2005, online account opening has advanced to provide a more secure and profitable channel for financial institutions and has become easier to implement and configure to an institution’s needs.
Online account opening removes the paper, human error and ambiguity from the process. There are even new complementary advances in the technology that prevent fraud before the damage is done and provide extra layers of ID verification to filter out the good applications from the bad ones in real-time.
Online account opening pulls triple-duty these days by configuring business requirements, automating rules, and helping marketing bring in the profitable consumers. Online account opening isn’t risky business; it’s flexible, easy to implement and provides enough reports and audit trails to keep risk and compliance people happy. So, here are …
The Top Five Reasons Why Risk Management Should Buy Into Online Account Opening
1. Automated steps are clearly documented
Online account opening enables compliance departments to automate requirements. Compliance requirements call for clear procedures and a well-documented audit trail. With online account opening, there is a secure and configurable process that is used every time.
2. There is a standardized process without case-by-case exceptions
Online account opening technology minimizes the potential for human error. The manual process of account opening introduces more opportunity for errors with case-by-case exceptions. Online account opening standardizes the processes for better adherence to strict procedural requirements.
3. Efficiency in risk systems processes including identity verification
From an efficiency and time management perspective, manual account opening is more time consuming than online account opening. Automating the multiple steps of the identity verification process online, turns a 30-45 minute in-branch account opening experience into a matter of five to six minutes.
4. Real-time fraud prevention is available
Extra controls are available online that are not available in-branch. Real-time fraud prevention is now available, and it detects unique applicant data patterns across a network of financial institutions to stop fraud before it happens. This level of detection isn’t available in-branch or at a call center (unless an online account opening solution is also implemented across these delivery channels). With in-branch account opening, every application is reviewed in isolation and either accepted or declined based on aging, contributed data such as credit history – and sometimes the subjectivity of human judgment. With online account opening coupled to real-time fraud prevention, that single application is instantly reviewed against thousands of other applications using constantly-updated criteria to filter potential fraud patterns.
5. Helps manage volume of various banking regulations
Finally, online account opening provides better compliance with specific regulations such as the USA Patriot Act, the E-Sign Act and Reg E, which require financial institutions to verify identity, provide disclosures, oversee electronic signatures, and capture consent. With the volume of information required to manage these processes, a seamless online solution is the way to go.
Online account opening is a solution that serves compliance and marketing personnel. Working together, they make integrated decisions that benefit both the front and the back offices. Deploying the same solution across all delivery channels magnifies the benefits. To address technology needs, meet compliance obligations, and promote profitability, it’s imperative to understand how online account opening enhances business processes. Yes, the technology once viewed as too risky can be the best tool in the arsenal.
Renee Chicoine is a program director at Andera Inc. in Providence, R.I.