Financial institutions have been offering online banking since the mid-1990s, but it took the COVID-19 pandemic to get most of them to embrace online/digital account opening. For years, opening an account at institutions meant paper applications and in-branch customer identification and funding of the account.
Now, many latecomers to this basic service are adding or improving their online or digital account opening capabilities as they recognize two major benefits. They see that allowing members or customers to quickly open and fund accounts online:
- Creates a bridge to new commercial and consumer relationships and
- Offers a moat around existing relationships to protect them from competition
Online account opening more than doubled at most banks between 2019 and 2020, according to the ABA Banking Journal. By early 2021, a small survey of C-suite executives by CCG Catalyst Consulting found all but 6% saying they provided some form of consumer account opening online.
Among top types of new systems banks seeking
“Digital account opening isn’t a particularly sexy idea. It doesn’t grab the attention the way concepts like open banking or cryptocurrency do,” wrote CCG Catalyst Director of Research Kate Drew in a report. “But it’s one of the most important capabilities for banks today.” Her firm’s survey during COVID was at a time financial institutions were using creative ways to open accounts online, she noted. And now, many of those institutions are building on those efforts to make the process easier and faster.
Not surprisingly, then, digital/online account opening solutions for consumers and digital account opening solutions for commercial or small business firms are among the top types of new systems banks are looking to select or replace in 2022, according to Cornerstone Advisors.
What’s all the excitement about?