Consumers Still Struggling to Open Accounts Digitally
Opening a checking account using only a smartphone or tablet is still a pipe dream for most users, according to new research from Javelin Strategy & Research.
According to a study of nearly 1,400 people who successfully applied for checking accounts at the nation’s 30 largest retail financial institutions, only 8% of successful applicants were able to complete the entire process from start to finish on their smartphones or tablets — a full 67% had to finish the process in another channel, such as going into a branch.
Online applicants fared a little better: 34% of the successful applicants said they completed the entire application online.
“Javelin’s analysis of five stages of account opening illustrates that the financial services industry struggles to provide the ideal experience: an end-to-end application process that is concluded in one session, within one channel,” the report said.
“No banker would find it acceptable to tell a prospective customer who walked into a branch, ‘I’m sorry, but you must drive to a branch across town to open the account you want.’ Yet that is effectively the message consumers get when they seek to open accounts in digital channels but learn that they’re unavailable or that the process is too complicated to be completed in a satisfying manner," Javelin Strategy & Research Director of Omnichannel Financial Services Mark Schwanhausser said.
Young millennials are often forced into branches, the study noted. Younger ones were significantly more likely to end up finishing their applications in a branch (62%); that rate was just 38% and 32% for older millennials and GenXers, respectively.
“One likely reason is that many FIs steer young millennials to branches because these applicants commonly have ‘thin’ credit files and it is more difficult to confirm their identities,” Javelin reported. The push to branches may also give financial institutions a chance to offer more guidance, it added. Making it easier to research and compare products in digital channels, and guiding young applicants to appropriate products can counter this, it noted.
Javelin also found that more than half of the people who successfully applied for accounts (56%) turned to digital channels to do research. Nearly a third started their applications on a smartphone or tablet, which is almost the same proportion as those who started the process at a branch, according to the study.
“This is a wake-up call for any banker who contends consumers are unwilling to fill out forms on small screens and keyboards,” Javelin noted.
In 2016, one in five Americans opened a credit card account, 16% opened a savings account and 15% opened a checking account, according to Javelin. At least half of those successful applicants relied in whole or in part on online and mobile channels to open those accounts, as well as retirement and brokerage accounts. At least a third relied on those channels to open CDs, mortgages and auto loans.
The study also found that nearly half of the applicants went to a branch or dialed the call center if they needed help or had to supply documentation. Only about a quarter turned to digital channels. In the end, branches and call centers close more deals, Javelin said.
The research, which excluded credit unions, also found that the nation’s four biggest banks were more likely than smaller regional banks to offer online applications for more products, provide grids for side-by-side analysis of checking and credit card accounts, and prevent abandonment in online applications.
“Because there is a risk of abandonment every time an applicant switches channels, financial institutions stand to gain if they perfect an integrated, satisfying, multichannel experience as applicants research products, start an application, provide documentation, seek information or advice, and finally hit Apply,’” Javelin said.