The Digital-First Movement
By now, we’re all familiar with the digital trends that have taken over the financial services industry in recent years. Fewer people are visiting branches, more are conducting transactions on their phones and computers, and some have even left their traditional financial institution for a neo-bank, or digital-only bank. With the combined threat of neo-banks and embedded banking, financial institutions will need to think on their feet in the coming years.
Things that used to be accomplished inside a branch will be expected to occur quickly and conveniently using digital means. Having these capabilities could be a financial institutions’ best defense against neo-banks and embedded banking. But it’s not only convenience and brand loyalty that are gained by investing in digital services.
Taking financial services outside the branch and leveraging them through digital channels can also drive revenue-generating services. Let’s look at some of the most popular and reliable ways to drive revenue through digital services.
Opening an account is, in many ways, a consumer’s first impression of their financial institution. It gives them a read on what it will be like to interact with the institution moving forward. And unfortunately, it’s something many financial institutions struggle with. Writer and speaker Brett King summed it up by saying, “Twenty-five years into the commercial internet and banks still haven’t adapted to the most basic element of online capability, namely onboarding a customer.”
Because digital account openings are often seen as arduous processes, the abandonment rate for customers opening accounts online is notoriously high. Forbes quoted Javelin research in 2019, saying that only 8% of account openings were completed start-to-finish on a mobile device. The Financial Brand noted that “while the number of organizations offering digital account opening continues to increase, the ability to complete an account opening continues to be extremely slow. In fact, many consumers will notice that the digital process could actually be slower than an account opening in a branch.”
Without the proper digital solution, many financial institutions could be turning away large volumes of potential customers—missing out on future revenue by failing to make a positive first impression. But with the right Digital Communications Platform, consumers can quickly open accounts, sign and exchange documents, and even fund the account in only a few minutes—and from the comfort of their home.
Like account openings, loan applications have a reputation for being somewhat burdensome to complete online. Many loan applications can only be partially completed online—requiring the applicant to visit a branch at some point in the process.
The real problem with this friction in the loan application process is that it’s one of the things increasing the divide between traditional financial institutions and the booming new trend of embedded banking. As other products and services are moving into the increasingly digitized market, financial products are being rolled into other purchases and transactions. Embedded banking and Banking as a Service (BaaS) are gaining popularity all over the world, and are projected to cause quite a bit of turmoil for the financial services industry in the coming years.
Consumer attitudes are shifting and convenience is taking center stage. Auto buyers no longer want to visit a branch for an auto loan if they can get a loan directly from the auto manufacturer. “Embedded finance is growing because it gives consumers the all-in-one experience,” wrote The Financial Brand.
But with a Digital Communications Platform, financial institutions can also capitalize on providing a more convenient experience. The whole lending process, from application to closing, can be completed digitally. Not only does this make things easier and more convenient for the consumer, but it also contributes to a greater volume of loans being closed, and many financial institutions report growth to their market value after implementing an effective digital lending process.
Even higher value loans and mortgages that require a notarization to close can be completed with a Remote Online Notary solution, preventing the need for in-person meetings to complete the process.
If your financial institution could benefit from a Digital Communications Platform capable of leveraging loans and account openings outside the branch, we invite you to schedule some time to speak with one of our experts here!