Digital account opening became table stakes for banks during the pandemic. In late 2020, First Premier Bank in Sioux Falls, South Dakota, relaunched its own version. At the same time, it considered how it could do two things: assign credit to bankers for new accounts opened electronically and encourage people to stick around a busy branch and open an account electronically — even when they originally planned to open one in person.
The topic of who gets credit for accounts opened digitally is debated by many banks as the percentage of digitally opened accounts continues to grow, said Emmett Higdon, director of digital banking at Javelin Strategy & Research. It can cause tension between digital and branch teams, if branch bankers regard digital account opening as competition to the relationships they forge in person.
“Digital teams obviously want credit — and future funding — when they add accounts,” said Mark Schwanhausser, director of digital banking at Javelin. “And banks historically have been branch-centric, arguing truthfully that there is power in face-to-face relationships. What financial institutions want to avoid are situations where an applicant begins the process in digital channels but must enter the branch to complete the application, and a branch representative is incentivized to restart the application in order to claim credit for the sale.”
The $3.5 billion-asset First Premier, a unit of United National Corp., wanted to ensure its bankers saw online account opening as a potential extension of their in-person relationships rather than something that blocks them from forging customer relationships. To do so, it integrated a banker-referral field into the online opening process to give credit to specific bankers for a new account, as well as enable personal follow-ups and automated emails from the bankers that prompt users to complete their applications. It also set up a digital account-opening kiosk inside a branch. The bank’s tech partner on these projects was the account-opening software company Mantl.
Other banks, especially community institutions that depend on personal relationships, may face similar challenges as online account opening becomes increasingly common. A 2021 survey about digital transformation in financial services by the accounting company BDO found that 73% of respondents had already implemented digital account opening; the survey polled 100 C-suite executives at middle-market banks, credit unions and other lending institutions.
Ron Shevlin, director of research at Cornerstone Advisors, says that some level of online or digital account opening is very common among banks with $1 billion to $10 billion of assets, though some still require customers to physically sign documents or put these applications through manual reviews.
First Premier had multiple goals beyond aligning bankers with its digital push: attract new customers, especially millennials and Generation Z, while increasing the amount of account funding and improving both the customer and employee experience. It has been pleased with the results, including a 30% increase in new accounts and the average starting balance for accounts opened online rising by more than $600 from the beginning of 2021 through October. Although millennials and Generation Z customers were the ones who initially gravitated to online account opening, the bank found a more even demographic spread after the first few months.
Giving credit to bankers for instigating new relationships has helped them feel more aligned with online account opening instead of viewing it as a threat.
When customers are filling out an online application, they will encounter a field where they can enter the name of the banker who referred them. For example, they may have heard about First Premier when a bank employee was giving presentations at a business or on a college campus, and handed out a card with a link.
Giving credit to individual bankers is especially important considering foot traffic is down in branches. “It’s so the banker feels it is a partnership and not a competition,” said Stephanie Jarovski, vice president of digital and customer care at First Premier. “We view the online account opening as another channel to use, not isolated and independent from the banker relationship.”
Nathaniel Harley, Mantl's CEO, said that the way First Premier integrates referrals into its online application is unique among the financial institutions Mantl works with.
“A lot of community institutions are afraid of losing the personalized approach to customer service they built their reputations on by going digital,” he said. “First Premier Bank viewed online account opening as a tool for the entire bank.”
The second unusual feature, which debuted in October, is an in-branch Express Banking kiosk with a computer where customers can open an account in the branch, but without waiting in line to speak with a teller.
First Premier chose a Sioux Falls location with heavy foot traffic and only two bankers, where employees had to frequently turn away customers.
“We added this kiosk as an option versus having people wait 30 minutes or potentially leaving,” said Jarovski.
Placing an account-opening device in a branch may sound counterintuitive. But it was important because, “If [people] are coming in to open an account in a branch, that was their initial intent,” Jarovski said. “They may have cash or checks they want to make for that initial deposit.” The bank plans to add a kiosk at a second branch in January.
This feature is also something that Harley has not seen widely among banks, he said.
First Premier found other benefits in using Mantl as its technology partner. When a customer requests a debit card, the Mantl system will automatically order it without requiring the staff to perform any required actions on the back end. Mantl’s “core wrapper” application programming interface lets Mantl software read and write to the core through that API in real time, which means customers can get approved for an account and start using it immediately. The company’s partnership with Alloy, a software company that helps banks and fintechs make faster onboarding decisions, streamlines know-your-customer and anti-money- laundering processes by using diverse data sources to make decisions.
Many of these features have contributed to the positive results First Premier experienced after refreshing its account-opening feature in late 2020.
In 2021, the average initial balance for accounts opened online went from $50 to more than $650. Jarovski credits this increase to Mantl’s integration with Plaid and its Instant Account Verification, where customers see their real-time balances from external accounts while funding. That means they can make a more informed decision rather than holding back because they are worried about overdrafts.
The application is also quicker. The online process takes less than four minutes for new customers and less than two minutes for existing customers, compared with a six- to seven-minute estimate with its previous account-opening product.
