Bank Marketing News Blog
June 28, 2007
Opening New Accounts Online
Based largely on CashEdge CEO Sanjeev Dheer’s presentation during a Webinar on May 3rd of this year, the blog entry represents Dheer’s view that all top tier institutions recognize the importance off offering online account opening and already have or are developing a solution.
“Boston-based Aite Group LLC estimates that only 3% of U.S. checking accounts were opened online in 2006, a share expected to rise to 4% this year and to 13% by 2010. This activity is only the tip of the iceberg for the potential for online account opening activity, according to Sanjeev Dheer, CEO of New York City-based CashEdge Inc.”
“Dheer also cited CashEdge's own October 2006 survey of 400 online banking customers which found that 78% of these customers would open accounts over the Internet.”
“Among the ‘top tier of institutions, everyone either has a solution or has it in their plans,’ Dheer said, adding that the economic rationale is ‘compelling’ from a bank's perspective. Banks that use automated online account-opening products can open and fund a new account for less than $20, compared to a cost of between $60 and $90 apiece for manual account openings, he said.”
“Also, because the online account approval and funding process is instant, Dheer estimates that between 50% and 70% of customers who apply actually complete the process. He suggested that banks make more of an effort to contact customers who did not complete the process. "Banks need to go after this low-hanging fruit," he said.”
“Retention rates could be improved by encouraging customers to set up recurring deposits or bill payments at the time they open their account, he added.”
“Dheer said that more banks are choosing to buy a solution for online account opening, as opposed to trying to build it themselves, particularly since the back-end tools that allow a bank to verify the customer's identity, sign and fund the account are complex and difficult to replicate.”