The Challenges of Digital Banking Account Opening

By Cotribute

There is a digital transformation in banking that is forcing banks to keep up or fall behind. Digital Banking has become increasingly important over the last decade. For most customers, this is because it is more convenient, makes doing business faster, and is more environmentally friendly (i.e., no piles of paper or gas emissions from traveling to a physical location). It's also an excellent alternative for those who cannot make it out of their homes due to health reasons or other limitations. According to Statista, more than half (61%) of the American population utilizes digital banking, which is set to increase to 65.3% by the end of 2022. In the coming years, experts foresee that figure growing even higher. As digital banking becomes increasingly popular, banks are under pressure to offer digital account opening that is fast, simple, and convenient. By offering digital banking account opening backed by reliable software, banks can make the account opening process more convenient for customers and increase customer satisfaction.

5 minute read

Digital Banking

Customers

Account Opening

What Makes Digital Banking Different?

The most significant difference between traditional and digital banking is obvious — doing business in person versus online. However, there are several more differences to consider. Unlike conventional banking, digital banking allows customers to access their financial information from anywhere, at any time. With most people on the go and busy, this has become a significant incentive for organizations to offer digital banking account opening options.

Other differentiating factors include being completely electronic (i.e., accounts, documents, banking information, etc.), requiring fewer staff members, cloud computing (services done over the internet), and big data access (user data tracking and collection).

And because of these differences, there are different challenges and opportunities you will experience.

Digital Banking Challenges

These are the most common digital banking challenges (and how to overcome them):

  • Clearly communicating full product offering and digital banking capabilities to customers. This can be accomplished through customer onboarding and by creating informative content about your online product offerings and how customers can make the most of them. Videos, text, and images can all be used to create this content, making it easy for customers to find the information they need and learn about all the features available. The better your customers understand the ins and outs of your bank's digital banking, the better their experience will be and the more they can benefit.
  • Overcoming the security concerns that are traditionally associated with digital banking. Security concerns are one of the primary reasons why some customers have been slow to adopt digital banking. However, maintaining security through investments in encryption and two-factor authentication is essential. It's also important for customers to take steps to protect themselves from online attacks.
  • Digital banking can cause some disconnect between you and your customers. Building relationships is essential to any business, particularly important for banking since customers prefer to keep their money with organizations they can trust. Provide access to real people and digital customer service options to maintain connections.
  • Technical issues are more common with digital banking compared to traditional banking. Regular updates and monitoring can help mitigate the impact of any disruptions in service.

Digital Banking Opportunities

Despite challenges, digital banking comes with a number of opportunities for banks to capitalize on.

  • Attract/retain customers beyond the footprint of your current branches. Most consumers prefer to do their banking digitally, amplified by the changes necessitated by the pandemic.
  • Attract more borrowers when access to loans online makes the process easier. With opportunities to access loans online, borrowers benefit from streamlined applications and management.
  • Mobile banking reaches the millions of consumers who have gone mobile for most tasks. Mobile banking options appeal to a significant portion of the population throughout different age demographics.
  • Around-the-clock services maximize your profits. Digital banking enables users to access their money anytime, aiding those who seek financial services outside traditional hours.
  • Data collection capabilities mean more informed market predictions. Relying on first-party data allows banks to better cater to current and potential customers.

Types of Digital Bank Accounts

The three most common digital bank accounts are:

  1. Savings account
    Digital savings accounts are the same as traditional ones, designed to save money.
  2. Checking account
    A digital checking account refers to the ability to access checking account information online.
  3. Money market accounts
    Money market accounts involve savings pooled to invest in regulated investments.

Does Digital Account Opening Lead to Fraud?

Educating customers on security precautions is essential for maintaining trust and safety in digital banking.

Some essential digital banking security tips include:

  1. Create strong and unique passwords.
  2. Do not access bank accounts on public WiFi.
  3. Stay alert for phishing scams.
  4. Sign up for banking alerts to track fraudulent activity.
  5. Activate two-factor authentication.

Implementing Digital Banking at Your Institution

When implementing digital banking, consider customer needs and demand for services. Initiatives must ensure streamlined customer experiences and effective onboarding while providing relevant data collection throughout the journey.

With the right software and the latest digital banking trends, banks can meet and exceed consumer expectations.