Account opening has long been an arduous process for banks and their customers alike, due to banks' procedures and regulatory requirements. But some banks, including Citi and Wells Fargo, are devoting resources to streamlining the onboarding process and making it mirror the experience of shopping at Amazon.com, Apple or Netflix.
"The consumer wants and expects a fantastic consumer experience in the online channel," says Michelle Peluso, Citigroup's global consumer chief marketing and Internet officer. "There is a huge opportunity to innovate and differentiate."
Companies like Amazon and Netflix make recommendations to customers based on past interactions and buying preferences. Similarly, Peluso says, Citi aims to be more "relevant and contextual" to its customers.
For example, Peluso says Citi does not display banner ads for its American Airlines AAdvantage card to customers who do not use that airline. And "if they do, and they do not have the card, it is helpful to let them know they can get accelerated miles."
Peluso says Citi has also simplified the online account-opening process by limiting the amount of information it requires from, or pushes to, consumers at the outset.
"Understanding where they are in the journey is critical, and we don't need to inundate them with everything they need to know," Peluso says.
Citi ranked first in a July Forrester Research survey that examined the sales processes of the top six U.S. banks.
Brad Strothkamp, a principal analyst at Forrester and lead analyst on the study, says that Citi's process is deeply automated. It can recognize the difference between new and existing customers, pre-populating the forms for those who already have a relationship with the bank.
The information is also clearly and concisely presented, and the application procedure works seamlessly in the background, with Acxiom Corp., of Little Rock, Ark., doing on-the-fly verification of applicants.
For its part, Wells Fargo of San Francisco, which was ranked second in the Forrester survey, says it tries to make the account-opening process more customer-friendly by letting users save their incomplete applications online.
Eventually, Wells will allow consumers to move from channel to channel to complete the application process wherever they left off.
Wells Fargo has also spent a lot of time "thinking through how we can provide more relevant information for the product before the application process begins," says Katherine McGee, senior vice president and head of web channel management at Wells Fargo's Internet services group.
And in certain product areas that tend to be more complex, such as home equity loans, the bank is introducing technology such as live chat to help consumers determine which product might be best for them.
"Sometimes customers are unclear about how much credit to ask for, and what type of product is appropriate," McGee says. "Often a banker can help them through that process."
Between a quarter and a third of consumers have attempted to open up some type of financial account online, according to industry surveys. But less than half successfully opened and funded a checking account online last year, according to a Javelin Strategy and Research report. Most customers still use branches to open accounts.
Banks will soon have to get their acts together. Thirty percent of 18 to 34-year-olds prefer to open their accounts online, according to research firm TowerGroup, compared to 18% of 35 to 54 year olds and 10% of those 55 and older.
"Younger customers prefer to open accounts online," Nicole Sturgill, research director at TowerGroup, says, and that population is only going to grow.
"In the next couple of years banks will recognize it is not cost-efficient to maintain multiple processes for opening accounts," Ron Shevlin, a senior analyst with Aite Group, says. "The online experience is better in some ways, and has a better design to it, because it is newer."
Still, banks often shoot themselves in the foot, Strothkamp says, because they mostly talk about their products and services in terms of fees and rates. Instead, banks should do a better job merchandising their products and services, as retailers do.
For example, Strothkamp says that his research indicates most customers prefer to open an account online if they know there is a branch nearby. With that knowledge, banks should stress in the online application process that they have a network of thousands of branches, and could even show the location of the nearest branch, he says.
Wells Fargo, he says, does a good job providing contextual information, through special "balloons" that pop up as consumers runs their cursors over text.
McGee says the bank uses those balloons to cross-sell other products, and to present more complete information, without taking the customer off the page.
"Our online sales and information experience is … an evolution and we continue to learn about what is working as we launch new features and enhance them," McGee says.
