Not long ago, banks and credit unions were flush with deposits – bringing lending functionality into the digital banking experience to help promote loan growth.
Today, that abundance of deposits is gone.
In fact, U.S. banks lost $472 billion in deposits during the first quarter of 2023 alone.[1] To combat the deposit crisis, banks and credit unions are raising deposit rates to attract and retain accountholders, leading to compressed margins and decreased profitability.
So, how can you compete without (figuratively) giving up your financial institution? The answer lies in technology.
Deposit Disruption
Did you know nearly half of all new checking accounts opened in 2023 were captured by digital banks and fintechs?[2]
It’s no surprise, given the market for new transaction accounts is driven by young consumers. Of those who opened a new checking account in 2023, 72% were between 21 and 42 years old.[3]
This underscores the need for a strong digital presence and a digital-first application process for new deposit accounts. After all, if given the choice to spend 20 minutes in a branch office (after finding the time in the day to get there during business hours) or five minutes opening an account using their phone or tablet – at any time of the day or night – which would win over the majority of today’s consumers and business owners?
Finding the Right Solution
With so many digital account opening solutions available to banks and credit unions, it’s essential to find the right one that aligns with your unique needs and strategy. Here are some key questions to consider as you evaluate whether your current solution is right, or if it’s time to look for something new:
- Does your account opening solution integrate across multiple platforms? You’ll discover friction points for applicants and see more manual back-office processes if your digital account opening solution doesn’t integrate well with your core, card systems, document imaging, and fraud solutions.
- Are you able to configure custom workflows based on a variety of criteria? When you can configure your applicant experience to reflect differences in account types, current accountholder status, application entry points (signed-in or signed-out), and other criteria, you can deliver a journey that’s right for your applicant.
- Do your solutions leverage third-party integrations to deliver best-in-class functionality? When the best-in-breed features and functions come from specialized fintech solutions (like Alloy does for CIP, fraud protection, funding, and forms) you can easily integrate them into your digital account opening solutions.
- Can you verify external deposit accounts in real time? Avoid fraud losses by confirming account ownership and availability of funds.
- Are your support teams or applicants rekeying data? You can reduce friction for the applicant by pulling data from the core to pre-populate applications for signed-in applicants. Then, reduce errors and manual re-entry from your back-office team by ensuring any data input by the applicant flows back to your core and document repository.
- Can both retail accountholders and businesses apply digitally? With business account balances five times larger than retail balances on average, you need to be able to serve both audiences digitally.
- Is your app designed to be mobile-first? If your mobile banking experience is an afterthought rather than a primary consideration, you’re missing out on efficiencies and likely adding friction to your applicant experience.
Feeling Abandoned?
Unfortunately, abandoned applications further complicate the quest for new accounts.
In fact, more than one-quarter of banks and credit unions see over 50% of their online account applications abandoned. To reduce abandonment, consider removing non-essential steps to speed account opening and provide desirable features in your application experience, such as:[4]
- Push notification updates on application status
- Easily accessed deposit insurance limits and information
- User identification via face recognition (selfie or photos of documentation)
- Viewing an up-front list of required documentation
These in-demand features that further demonstrate speed, transparency, and security are top-of-mind for today’s depositors.
Drive Deposit Growth Through a Digital Banking Platform
While you can find many stand-alone account opening solutions, solutions that integrate with your digital account opening platform will inevitably provide you with a stronger return and improved applicant experience.
Consider the tight integration now available between JHA OpenAnywhere™ and the Banno Digital Platform™.
It’s simple to add the “open an account” card in the main digital banking experience, rather than relegating it to a hard-to-find page. The information available in the core can carry over to pre-populate applications for signed-in applicants, and the core-connected nature of the integrations removes the need to re-key data.
You have the flexibility to determine what types of businesses can apply digitally – with many financial institutions choosing more simple business structures like DBAs or LLCs to begin with and adding business types as their comfort levels increase.
And, built with cloud-native, open APIs, it’s a fintech-friendly solution set – empowering you to integrate best-in-breed solutions.
Provide Stability in a Changing World
As potential applicants look for stability and safety, make sure you’re open about your digital account opening capabilities and deposit insurance coverage. You’ll discover transparency, ease of use, and 24/7 access can help you attract and retain the valuable deposit accounts you’re looking for.
Interested in learning more about how digital banking and deposit account opening work together at Jack Henry™? Contact our team to learn more.
[1] Insured Institution Performance, FDIC, accessed December 14, 2023.
[2] Ron Shevlin. How Fintechs Are Dominating New Checking Account Openings, Forbes, accessed December 14, 2023.
[3] Shevlin, How Fintechs Are Dominating New Checking Account Openings.
[4] Tiffani Montez. US Account Opening Feature Demand Report 2023, Insider Intelligence, accessed December 14, 2023.
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