Mobile Account Origination: Pass or Fail?

Easy question for you: can consumers originate a new account at your credit union within the mobile app?

I’ll bet you I know the answer and that is because the answer almost certainly is no.

This snippet from a recent Pymnts.com piece explains my confidence: “Only 8 percent of financial service onboarding applications, which includes personal account opening creation, can be completed on smartphones.”

That 8% number would have been terrible in, say, February. By now, it’s exponentially more awful, as many credit unions continue to keep branches closed or operating in a reduced form as ways of responding to the Covid-19 epidemic. So, where are consumers hunting for financial info now? In many cases, on their phones, because it’s the phone that always is with them.

The Pymnts piece continued: “Finding ways to address this gap only rose in importance for FIs looking to gain new customers during the pandemic, as these users searched for banks that could provide them with the quickest access to their accounts on their preferred devices.”

The mega banks of course lead the way in embracing mobile account origination. S + P Global Research found that 48% of the 70 largest financial institutions enable deposit account opening via mobile.

But it isn’t just them. The Pymnts piece noted: “Ecobank Nigeria has…created a personal account opening process that can be conducted through smartphones for Nigerian consumers…. The tool enables these individuals to create Ecobank Xpress accounts on the banks’ digital platform by calling in a specific code on their phones.”

In fact, any institution that seeks to serve the underserved is well advised to go all in with mobile because phones—not PCs—bring computing to increasing millions in the United States and around the planet.

 

Baby Boomers Go Mobile

Another new development is that many leading-edge Baby Boomers who had been holdouts regarding digital banking now are embracing it as their fears of branches and crowds dwarf their resistance to new technologies. Many credit union experts are telling me that suddenly Boomers are all in with digital. If they’re on board, all credit union executive resistance needs to melt away. (Hear more about Covid-19, Boomers and digital in the CU 2.0 Podcast with Carma Peters, CEO of Michigan Legacy Credit Union.)

What’s the hang up? Why aren’t credit unions—thousands of which explicitly state a core mission is to serve the underserved, and for many of which Baby Boomers are the central demographic—rushing to embrace mobile, and in particular mobile account origination?

Experts point to a number of key roadblocks:

  1. Vendor dependence. Smaller financial institutions “are more likely to rely on vendors for their mobile banking platforms. And that makes them dependent on their vendors’ technology roadmaps and development schedules,” said Cornerstone Advisors’ Ron Shevlin. (Hear the Shevlin CUc2.0 Podcast on key issues in the industry.)

So true. Many credit union CIOs and CEOs tell me they want more mobile tools, but their vendors are on a slower delivery schedule.

The tools exist—look at the many dozens of big banks with mobile onboarding already.

A faster pace of technology innovation may be needed by a credit union to compete today. Tell your vendors what you want, when, and check cancellation clauses in contracts if there’s no flexibility on the part of your fintech vendors.

  1. “Our members aren’t interested in this feature.” Probably they are, and because you don’t offer it, you assume they don’t care. What if the Covid-19 pandemic drives them ever deeper into mobile and your credit union is nowhere on that radar? Ugly ideas. Accept that just maybe a lot more members now are keener on mobile account origination than you ever imagined.
  2. KYC worries. CU 2.0’s Kirk Drake said, “credit unions are still working on digital onboarding via a browser—the idea of KYC over a phone still plagues them.”

And yet mobile phones are extraordinarily powerful instruments of identity management. Plus, they have photo capabilities. (Read the latest about digital identity management in the financial space here.)

The mega banks aren’t uncomfortable about KYC via mobile. It’s a solvable problem.

Some small FIs are doing KYC via Zoom and asking prospective members to send selfies. Does the face on Zoom match the selfie? They also ask the member to send a photo of their driver’s license, passport, or similar ID. Technology empowers new ways to KYC. Use them.

Here’s the bottom line: mobile is the warzone in financial services today and, suddenly, mobile account origination is emerging as a must have. These just are realities. And the credit unions that see themselves thriving in 2021 and beyond will climb aboard, now, not later, because later may be too late.

 

Additional Reading

Digital transformation is a bugbear in the credit union industry. And yet it’s a necessary evil. The world is changing, and credit unions must change with it.

But where can they start?

Clearly, mobile account origination is a must-have going forward. But that’s only a small piece of the puzzle. Check out our 2020 technology trends (updated for the coronavirus) for a few ideas.