Open a bank account online: fact or myth?

Every day more clients carry out the majority of their banking transactions online. From checking your balance or making transfers to requesting a loan, digital banking is completely integrated into our day-to-day life.

These processes are increasingly user-centered, since the user experience is more and more important to institutions.

In this sense, the sector is led by institutions that understand that digital adaptation is much more than moving paper processes online, and that it requires KYC (Know Your Customer) processes.

Among these processes, onboarding—which includes solutions related to opening a bank account, from identity verification to assisted form completion—is one of the most sensitive areas. Institutions must find a balance between user experience and data security.

When opening an account, the experience is even more important, since it is not just a one-time experience, it is also the client’s first impression that reflects their future relationship with the institution.

Open a bank account online: effectiveness of the current process

Opening a bank account online is still in the (very) early stages, as shown by the Celent experiment at twenty-six North American banking institutions.

The study found six common steps when opening a bank account online:
Access and a guide to different account types.

  1. Data collection.

  2. Verification.

  3. Decision and account approval.

  4. Sending agreements, obtaining consent.

  5. Providing funds.

  6. End of the opening process.

During these steps, the user encounters various problems such as technical difficulties in data collection, lack of adaptation to different devices, or excessive response times.

Also, some of the current requirements, such as the need for physical signatures to confirm identity, can be replaced by more efficient systems, based on Big Data and verification of people’s digital identity.

What should the online bank account opening process be like?

Some institutions have ended up with a mixed process, in which the application is started online and finished in person at a bank branch. But this is not what users want: they want fast, easy, efficient online processes with no gaps.

“The amount of time and information required to apply for a new bank account online leads to an inconvenient process which can dissuade consumers and lead them to abandon the system out of frustration, which translates to a loss of income for the business.”

Scott Carter
CEO of ID Analytics

The Celent study also raised four core considerations for banks that want to provide a good user experience:

  1. Design the process from the point of view of the client, not the bank.

  2. Keep in mind the possibilities offered by online media, such as a multi-channel approach and cross-selling, and do not merely convert the paper-based process into an online one.

  3. Look at your process critically to see if the established requirements are truly necessary.

  4. Develop a strategy that takes the following phase into account: opening a bank account via mobile device.

The most critical element of the process: security

We can conclude that opening a bank account online is a process that, when well implemented, benefits both parties. What, then, is the main problem causing other online operations to be well implemented while opening an account online is not? The answer is security.

On the one hand, the process has to project safety and confidence for the user, who is providing their personal and financial data on the Internet. On the other hand, the institution has to prevent the risk of online fraud, which implies millions of dollars of losses each year for the sector, in addition to the loss of trust of current and potential clients.

Thus, online fraud-prevention solutions through document authentication and identity verification are key for the banking sector’s adaptation to the digital world; they also translate into an improvement in the client experience and an increase in the profitability of digital channels.