2011 Online Account Opening:

Transcription

1 2011 Online Account Opening: Faulty Process Hobbles FIs in the Battle for Customer Acquisition, Profitability and Retention October 2011

2 Audience: Financial institutions: E commerce, mobile banking, credit card, debit card, and marketing strategists. Vendors: Online banking and mobile banking platform providers and vendors, mobile network operators, and online banking and mobile banking marketers. Others: Personal finance websites and web based service providers. Authors: Mark Schwanhausser, Senior Analyst, Multichannel Financial Services Keri Loftus, Research Associate Contributors: Philip Blank, Managing Director, Security, Risk, and Fraud Mary Monahan, Managing Partner and Research Director Beth Robertson, Director of Payments Research James Van Dyke, President and Founder Publication date: October 2011 Price: $1,500 Length: 35 pages 16 charts/graphs Overview Online account opening plays an important role because it can shape the first impression that consumers develop when they try to establish or deepen an online relationship with a financial institution. Javelin data shows, however, that barely more than half of online applicants for a basic checking account succeed in opening and funding the account. The remaining applicants are rejected, abandon the process or are forced to visit a branch. Further, failure and abandonment rates are alarmingly high for applicants who are new to an FI or are less techsavvy. The primary reason consumers apply online is to get it done fast, yet Javelin s analysis and a secret shopper survey of 15 banks and credit unions details a raft of frustrations that stem from limited application menus, unfriendly user interfaces, web glitches, human intervention in a supposedly automated process, and other shortcomings. This report also offers a glimpse of the future, with a case study of mobile account opening at Workers Credit Union of Fitchburg, Mass. Primary Questions How many consumers attempt to open various types of financial accounts online? How likely are applicants to succeed at opening an account online? How do success rates compare among consumers who use online banking, FI bill pay, and mobile banking, according to Javelin s segmentation of Moneyhawks, Online Banking Loyalists, Malleable Traditionalists, and Cautiously Content Consumers? How do success rates compare between existing customers vs. newcomers to an FI? How do giant banks and community banks stack up? What motivates consumers to apply for accounts online? What are the key frustrations of applying for accounts at a branch vs. online? How do frontline bankers influence the success or failure of online account opening? What types of accounts can consumers open at top U.S. banks and online focused FIs?What problems do applicants encounter when they attempt to open accounts online at the nation s biggest banks? Is there a role for opening financial accounts on a mobile device?

3 Methodology This report is based on data collected online from 5,102 consumers who were primary or shared financial managers in March The overall margin of sampling error is ±1.37 percentage points at the 95% confidence level. The survey targeted respondents based on representative proportions of gender, age, income, and ethnicity compared to the overall U.S. online population. Javelin s analysis examined consumers based on banking behaviors for online banking, bill pay, and mobile banking. To draw starker conclusions, Javelin focused on the 83% of consumers with defined behaviors. The report does not examine the 17% of consumers who exhibit infrequent behavior or inconsistent use of online banking, bill pay, or mobile banking. (See Figure 1.) This segmentation was first detailed in How to Attract and Keep High Value Moneyhawks : Increase Profitability Through Targeted Multichannel Service Messaging (Javelin Strategy & Research, July 2011). The findings in that report prompted Javelin to expand its definition of Moneyhawks to identify consumers with a mindset of closely monitoring and managing their money through a variety of channels and services with unusual frequency. In several previous reports, Moneyhawks were defined as consumers who received financial alerts on a 90 day basis. Javelin also examined two sets of FIs, using website research and calls to customer service representatives when necessary, to assess the types of accounts they offer for online applications: The nation s 10 largest depository banks according to American Banker s ranking as of March 31, 2011: Bank of America, BB&T, Capital One, Chase, Citibank, PNC, SunTrust, TD Bank, U.S. Bank, and Wells Fargo. Five banks and credit unions that have either a technology oriented focus or focus on serving customers who rely on nontraditional banking channels: Ally Bank, Desert Schools Federal Credit Union, ING Direct, Navy Federal Credit Union, and USAA. How Javelin Defined the Four Consumer Segments Figure 1: Methodology: Behavioral Definition Used to Segment Consumers 10% 33% 25% 15% 17% Moneyhawks Online Banking Loyalists Malleable Traditionalists Cautiously Content Inconsistent Customers Used online banking in past 30 days Used bank bill pay in past 30 days Used mobile banking in past 90 days No mobile banking in past 90 days/ Never Does not use bank bill pay Not examined in this report Never banked online 2011 Javelin Strategy & Research

4 Table of Contents Overview... 4 Primary Questions... 4 Methodology... 5 Executive Summary... 6 Key Recommendations... 8 Online Account Opening Shapes First Impressions And Deepens Relationships Why Consumers Apply Online Obstacles For Account Opening: The Branch Vs. Online Experience The Branch Experience The Online Experience Javelin Survey Of Top 10 U.S. Banks Credit Union Blazes Trail To The Next Frontier: Mobile Account Opening Appendix Related Research... 33

5 Table of Figures Figure 1: Methodology: Behavioral Definition Used to Segment Consumers... 5 Figure 2: Last Time Attempt to Open Checking Account Online ( ) Figure 3: Millions Attempted to Open Accounts Online in 2011 (by Type of Account) Figure 4: Types of Online Applications Attempted in Past 12 Months Figure 5: Success Rate for Opening and Funding Checking Accounts Online Figure 6: Success Rate for Online Checking Applications (by Moneyhawk Segmentation) Figure 7: Success in Opening and Funding an Account Online (by Relationship to FI) Figure 8: Motivations for Opening a Checking Account Online Figure 9: Accounts Offered Online by the Top 10 Banks Figure 10: Accounts Offered Online by 5 Tech Focused FIs Figure 11: Screenshots of Cyclical Links for a Citibank Home Equity Line of Credit Application Figure 12: Types of Applications by Consumers Who Attempted to Open Accounts Online Figure 13: Types of Online Applications Attempted (by Moneyhawk Segmentation) Figure 14: Applicants Based on Current, Lapsed, or No Relationship to FI ( ) Figure 15: Relationship of Applicants to FI (by Moneyhawk Segmentation) Figure 16: Motivation for Applying Online for Checking Account (by Moneyhawk Segmentation)... 32

6 Companies Mentioned Companies Mentioned Ally Bank ING Direct American Banker Navy Federal Credit Union Bank of America PNC BB&T SunTrust Capital One TD Bank Chase U.S. Bank Citibank USAA Desert Schools Federal Credit Union Wells Fargo Federal Reserve Workers Credit Union

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