Deposit and Loan Online Account Acquisition Lynn Jordan, ebanking Product Line Manager Kris Frantzen, Lending Product Manager
Agenda The market opportunity trends in online channel Product and marketing strategies Meeting regulatory requirements Making the business case Preparing for a successful implementation FIS solutions 2
Trends in the Online Channel
Transaction Channel Preferences 40 Year Shift 4
Online is Now the Prevalent Channel 5
Online Availability is Now Common for Deposit Account Opening 6
With Growth Expected to Continue 7
Steady Online Loan Origination Growth 8
Understanding Generational Differences 71% of all American adults use the Internet. Gen X represents the best intersection of online aptitude and need for financial products. With each new generation, expectation of online service will increase. 9
Meeting Regulatory Requirements
Lending Compliance Benefits of the Online Channel Tower Group identifies Fulfilling regulatory compliance requirements as the #2 Strategic Business Driver for Consumer Lending in 2010. How can an Online solution help? Transparency in the origination process An online solution can be used for the direct-to-consumer and assisted channel providing consistency in the process and data collection Consistent and accurate application of credit policy at the point-of-sale Automate the presentation of appropriate disclosures and track acceptance Easily track and report on application activity 11
Risk and Compliance Balance with Usability is Critical Involvement from the beginning Other channel practices may not apply Look to the large FIs for Best Practices Key to success is a design that does not ask more than is strictly required Not only what you ask but how you ask it will drive successful completion of the application. 12
Risk and Compliance A Few Key Issues for Deposits and Loans Getting through CIP, Know Your Customer, Patriot Act, etc. Applicant Screening Requirements for specific products Signature cards to use or not to use Disclosure and esign Act makes it simple Rate and APY / APR display should be part of account opening. Recent Reg E overdraft regulation HMDA reporting and 3-day disclosures triggers from a submitted loan application 13
Security and Fraud Issues to Consider While fraud certainly exists in this channel, it is not out of balance with other channels. Issues vary depending on the products and the markets. Applicant Screening process is a critical component. Create models for different products based on risk. This will trap some good candidates as well; be prepared to manage to a balanced approach. You can and should place holds on incoming funds. We recommend welcome letters as a process to detect identity theft. The ability to validate existing customer information provides a valuable tool for eliminating fraud. 14
Product and Marketing Strategy
Marketing Strategy How an Online Channel Fits In Expand deposit base and deepen relationships with existing customers Pre-populate existing customer data We know you 24/7/365 availability Capture younger and Do It Yourself consumers Online customers, on average, maintain larger deposit and loan balances, making active online customers more profitable Offer complementary branded sites for channel partners (Realtors, Builders, etc.) 16
Online Channel As a Research Tool for Lending Customers use the Internet 73% of the time prior to applying for a loan. 66% of customers who use traditional application methods use the Internet in their financing search. Of those applying in person, 60% went to the web as their first source of information. Source: Deloitte, The Silver Lining in Lending 17
Generational Differences Highlighted in Financial Product Research 18
Customer Satisfaction with Online Lending Customers who applied for a loan online have reported: That their information was more likely to be kept private and secure That the application costs was cheaper than if they applied in person 73% found it more convenient than traditional methods 66% found it easier to submit information 59% were more comfortable with the process 58% found the process was faster The bottom line: 61% of online applicants were significantly more likely to recommend their lending institution as a result of their application experience. Source: Deloitte, The Silver Lining in Lending 19
Business Case Summary
Consider the Cost of Conversion Conversion rates vary: Why? Follow-up strategies Product offer Market segments Applicant screening Process can be a factor Simple applications Review before funding Clear instructions 21
Building the Case For Deposits and Loans The Cost Side of the Equation There are many estimates that put the cost of the online process as significantly less than a branch process. Average comparisons reports run around $17 per deposit account online vs. $45 for deposit accounts in a branch. Originating loans online can reduce the cost by as much as 80%. 1 Caution this is only part of the expense story! A successful strategy includes other expense components. Investment in back office follow-up processes for failed or abandoned applications is needed to maximize the results. Products may need to be priced differently to compete in the online market. Don t forget online marketing and website sales components are needed to attract and sell to online customers. 1: Deloitte, The Silver Lining in Lending 22
The Case for Online Deposits & Loans The Revenue Side of the Equation With online sales marketing and fulfillment, you can reach markets that are out of range for your branches. Areas in footprint with fewer branches Consumers whose preference is to shop online Targeted areas out of footprint You can also empower branch personnel to take loan applications. Your long term success equation is driven by your strategic choices. Who are you selling to and what are you selling? Building relationships with the customers or banking easy money Consider the relationship between strategy and process requirements. Will your target market require more follow-up? Will you choose to follow-up or cherry pick? Do you have additional on-boarding requirements? Are loans a growth or accommodation strategy? 23
The Case for Online Deposits & Loans Summary ROI Cost Side Deposit Application Process for straight through will be less than a banker assisted process. Eliminate costly manual and paper-based processes (i.e., re-keying) Product pricing may need to be different depending on your target market. Additional follow-up requirements driven by strategy Products and target markets Your internal choices for screening Follow-up or not follow-up (follow-up will increase the overall success of your program) Revenue Side You can reach markets online that are out-of-reach for the branch, and empower branch personnel. Competition is increasing potential for lost revenue if you are not online Opportunity to build relationships with online customers 24
Building a Business Case Summarizing Why You Should Offer an Online Solution 1. Your customer and prospects are online. Your prospects are shopping online. Your customers are banking online. Your competitors are selling to your customers online. 2. It s efficient and accurate. Customer self-service they key in their own data and make fewer mistakes. Follow-up activities can be targeted. Process is designed to give customer standard responses. Electronic delivery of disclosures 25
Building a Business Case Summarizing Why You Should Offer an Online Solution 3. It s not that risky anymore. Verification processes are robust. All processes for screening applicants are in place. Underwriting can be pushed to the point of sale from the back office with credit policy consistently and accurately applied. 4. Allows you to respond quickly to market conditions. System can handle volume fluctuations. Changes do not require retraining of staff. Product offers and rates can be changed centrally. 26
Building a Business Case Summarizing Why You Should Offer an Online Solution 5. Customers want the ability to do it themselves and expect this from your bank. The bottom line: Your Website IS your bank. Period. - Jim Bruene, Editor & Founder, Online Banking Report 27
Implementation Best Practices
Online Account Acquisition Get the Customer, Keep the Customer Generate Interest Sell the Product Application & Account Opening Service Web site optimization Clear and simple product options Streamlined process straight through whenever possible Facilitate Online Banking enrollment Online marketing Tools to help the customer decide Meet standards for risk and compliance. Features the customer expects Competitive product offering Easy access to the application process Be prepared to follow up on leads. Opportunity to open additional accounts Strategy to attract the customers you want 29
Deposit Applications Expected Workflow Need for Multi-channel Support On average, 50-60% will complete online* Complete the Application Abandoned Pass all Applicant Screening Failed/Review Account Opened Online Back office follow-up activities New Accounts Opened (Conversion Rate) * The range can be from 80% to 20% depending on your strategy. 30
Top Reasons for Abandonment Focus on Simplicity 31
Tactics to Reduce Online Application Abandonment Educating online applicants before and after the process What they need to apply? How long it will take? What will happen after? Ensuring application asks only need to know information to apply or get a product decision Providing contextual help and FAQs to ensure application information requirements are clear Allowing online loan applicants to save their work in progress Removing any on-us online application issues including faulty business logic, slow-loading pages / sessions, and 99% availability 32
Key Dimensions of Online Best Practices 33
How FIS Can Help You Capitalize on the Online Opportunity
Online Deposit Acquisition Solutions Online Account Creation full featured solution for online deposit acquisition Allows customers to easily apply, open and fund new deposit accounts through your Client s Internet channel Supports checking, CDs, savings, money markets and health savings accounts Applicant information is screened and verified for CIP information. Applicant can be screened through debit bureau and credit bureau based on your requirements. Customers can fund the new account through card transactions, electronic ACH transfer or check. Includes a Fast Path for your current customers. 35
Online Account Creation Built To Be Integrated To the IBS Core The end-to-end account opening process is supported by integration across FIS solutions that are provided for the IBS Core to support these advantages: Maximizes the potential for cross-channel consistency Allows for a minimum of redundancy in back-office systems that need to be supported across the FI Enterprise Enables the FI to have a holistic approach to deposit account management Leverages system development and expertise across FIS for more robust solutions at each step in the process 36
CeB Account Open Account is opened immediately The new account is opened and added to the CIS record. The new account will appear immediately in the Accounts Overview Screen. Any initial funding transfer will show as pending. Quote from the Pilot Bank: We are using FIS enhanced ebanking solution in order to retain existing customers, attract additional ones and grow deposits. Because of our success with the CeB platform, we decided to participate in the Account Open Feature pilot. This new technology from FIS has enabled us to more than double our deposit growth while increasing customer satisfaction and reducing overall costs. - Matthew Kennedy, retail manager, Seacoast National Bank. 37
Online Account Creation and CeB Account Open FUNDING OPTIONS ACCOUNT TYPES ACCOUNT OWNERSHIP OPTIONS PRODUCT PRESENTATION ONLINE ACCOUNT CREATION (OAC) Electronic (ACH), Debit/Credit Card, Check Checking, Savings, Money Markets, CDs, Health Savings Individual, Joint, Custodial, Trust Presented on Bank's Public Website OAC WITH FAST PATH Electronic (ACH) Credit/Debit Card Internal Transfer Check Checking, Savings, Money Markets, CDs Individual, Joint, Custodial, Trust Presented on Bank's Public Website CEB - ACCOUNT OPEN FEATURE External Transfer Internal Transfer Check Checking, Savings, Money Markets, CDs Individual Presented within CeB to all CeB customers VERIFICATION SCREENING efunds/fis solutions: IDV, OFAC and QualiFile CIS, Deposit, Loan or Cardbase information CeB Secure Signon Verification Implement together or separately depending on your business strategy. 38
Online Loan Acquisition Solution Internet Direct comprehensive point of sale online loan origination solution for use by consumers and assisted channel users Attracts off hour business, including pre-qualifications Draws younger demographic to marketing campaigns Enables consumers to obtain pricing and eligibility results at the point-of-sale for mortgage and equity products Supports mortgages, home equity lines and loans, personal loans, automobile loans, and credit card applications Branded loan officer pages with publishing rights assigned to administrators. Branch managers and CSR s can originate loans Loans Companion to Online Account Creation 39
Internet Direct Key Features Modeled to your current web presence Automatic import of customer data into the application (IBS) Automated qualification and pricing to your credit policy Lead generation tools / tickler system All of your lending products available through one portal Lender managed content glossary, resource center, emails, disclosures Loan personnel or branch web pages supported as part of the product 40
Thank You Lynn Jordan ebanking Product Line Manager 414. 577.9181 lynn.jordan@fisglobal.com Kris Frantzen Product Manager, Internet Direct 484.595.2039 kristian.frantzen@fisglobal.com