Imagine two banks that have decided to grow accounts aggressively.
Bank #1: Open Now, Fix Later
The first bank opens accounts for nearly anyone who enters the branch. Applicants walk in, meet with a banker, and walk out thinking that they have an account.
Back-office processing for new accounts takes place in batch mode at night. So the day after applicants visit, bank employees start looking for fraud, past charge-offs with the institution, and invalid ID data; they also try to correct any mis-keyed customer information. They shut down any new accounts that look too suspicious, and try to contact the would-be account holders by phone or direct mail to clarify information that didn’t quite check out. Unfortunately, new account holders can be hard to reach. Perhaps the account irregularities include incorrect or old addresses or phone numbers. Or perhaps a banker made keystroke errors when entering contact information or other data. (This happens more often that we like to think.) In the meantime, debit cards and check orders have already been ordered and are on their way – perhaps to a wrong address—or to a crook. In either case, more time and money will be wasted straightening this out.
After that initial visit to the branch, the customer might be disappointed or even angry that the account opening process—standing in line, filling out forms, etc.—resulted in the need for further follow up with the bank – or a closed account the next day.
Bank #2: Getting It Right the First Time
The second bank will open accounts for lots of people, but it verifies IDs, address information, and relevant customer history in real time. If there’s a problem, the banker and the applicant can discuss it right there in the branch, face to face. Perhaps it was a misunderstanding or a clerical error. Perhaps the applicant really does not qualify for a conventional DDA account, but might be interested in a special type of account or a prepaid card. Perhaps the applicant is a fraud operator and shouldn’t be given any type of account at all.
Whatever the outcome, a degree of trust has been established between banker and applicant (except the fraud operators). The banker has had an opportunity to sell or cross-sell appropriately. And the bank won’t be spending money in the form of staff time, IT operations, and special direct mail pieces or after-the-fact re-work to close accounts and repair the damage done by a fraud operator, simply because it had to wait a day or two to vet an account.
The Value of Real-time Analytics
For banks interested in growing accounts aggressively, it makes sense to follow the example of Bank #2. Using real-time ID verification and risk/confidence scoring, banks can make the most of in-branch visits and eliminate the costs of back-office Day 2 processing. That’s a good strategy for growing both revenues and profits.
To learn more about Accelerated Insight, our real-time identity verification service for financial institutions, please contact us.
Earlier this year the Financial Brand published the results of its survey of 228 banks, credit unions, and community banks about the state of bank and credit union marketing. The survey asked these institutions what their top three marketing priorities were for 2012.
Obviously, answers 1 and 3 are closely related. In addition, 51% of institutions said that their customer onboarding program would be more important in 2012.
None of these results surprise us. Engaging with customers more successfully—understanding their needs, and selling products and services to meet those needs—is the best solution for acquiring profitable clientele and growing sales in a tough economic environment.
So the goals are clear. What about the obstacles?
The majority of respondents said their biggest challenges came from internal factors such as:
If limited marketing and IT resources are the problem, then new sales and marketing initiatives will have to be highly cost-effective. Multi-year engagements with big consultant firms are probably out. Sales and marketing need to be fast and efficient in order to contain costs while addressing the needs of rapidly changing markets. And any new, widely deployed IT solution is going to have to be easy to use (minimizing training costs) and easy to deploy (minimizing IT costs).
We believe that financial institutions can achieve their sales and marketing goals by optimizing account creation with fast, efficient customer analysis and ID verification services. These services give branch personnel the best possible information for making real-time decisions that affect account growth, account profitability, and fraud risk.