The conventional wisdom about first impressions is true, especially in digital channels—where other options are available with a simple click or swipe. These digital first impressions are particularly tricky for financial institutions (FIs), especially when courting small businesses—because small business account opening (AO) is a somewhat asynchronous process. It requires:
- document submission,
- KYC (know your customer) procedures,
- ID proofing,
- credit checks, and
- signatures (potentially from multiple parties).
It’s extraordinarily rare that a small business owner will seek out online AO, research their options, apply, navigate KYC and ID requirements, submit documentation, and fund their new account in a single online session. In fact, most business owners expect personal service or want a relationship manager to walk them through the process and ensure everything is done properly.
That said, there are a wealth of opportunities for FIs to streamline processes and reduce the friction of account onboarding with tools and workflows for the digital channel. And, doing so also gives them the opportunity to introduce online and mobile solutions that their freshly onboarded business account holders later use or purchase. Javelin Strategy & Research has observed up to 50 percent increases in usage of digital services when they are introduced immediately upon funding of an account. There is a high potential for increased profitability as well.
Better AO and onboarding may not only help smaller FIs compete with other community FIs, but potentially larger banks as well.
In 2017, Javelin reported on the small business digital AO offerings of the top-30 FIs in the U.S. The report found a wide variance in the approaches the FIs took to help new account holders research and acquire services—as well as varying degrees of success in their approaches. Many FIs presented very basic information about account options, but there were very few that took additional steps to make the process easier. It’s important to note that 73 percent of small and medium-sized businesses use the biggest 25 banks in the U.S. This leaves over 11,000 community FIs fighting for the business of the remaining 27 percent. Better AO and onboarding may not only help these smaller FIs compete with other community FIs, but could also potentially make them more competitive against the larger banks—many of whom are having mixed results with their own AO.
To make this happen, FIs shouldn’t wait for business owners to call or come into their branches; they should make it easy for prospects to fully understand the application process and what different kinds of accounts and services are available to them. Having simple FAQs or comparison grids available in digital channels can make a significant difference here—as can briefly spelling out the process and requirements for creating a business account.
Setting expectations through these kinds of marketing materials can go a long way towards reducing friction and abandonment. Think of the application process like a perfect Slip ‘N Slide experience.
It should be:
- completely frictionless,
- free of bumps or hazard that slow or hurt the user, and
- refreshing and quick.
To carry that analogy a little further, your educational marketing should provide the traction required to build up speed, which helps the business owner move through the application/checkout process easily and quickly. A laundry list of requirements won’t hurt you. Many FI will have basically the same requirements, and your spelling them out helps guide business owners into your application process.
Small business owners are looking for FIs to guide and educate them. Providing information, processes, and requirements is a great start to that relationship—and it sets the stage for engagement both online and off.
To learn more about small business account opening, watch Q2 and Javelin’s webinar Solving for Small Business Digital Account Opening.