Onboarding New Customers: Capitalizing on the Opportunity
Dove's Conprehensive Onboarding
Program
Upcoming Conferences
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expertise in payments strategy?
Debit Press Release
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2004 promises to be a year in which retail banks will be working hard to rebalance their profit flows away from heavy dependency on mortgage refinancing - and core deposit growth will be at the center of that activity. The onboarding process is rich with unexploited opportunity to grow core deposits, and an investment in onboarding can be made operational and profit-positive immediately. A focused start in early 2004 can result in substantial positive profit flows by the third quarter, or earlier.
This issue of On Payments focuses on ways banks can capitalize on the profit opportunities in the onboarding process.
To sign up for an online subscription to On Payments, please click here.
Onboarding New Customers:
Capitalizing on the Opportunity
The process of establishing deposit accounts for new retail banking customers - 'onboarding' - is a seemingly perfect opportunity for expanding customer relationships and growing core deposits:
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Customers are in an account switch context, so they are highly susceptible to the movement of multiple elements of their financial relationship. |
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Customers expect to spend time with the bank establishing their new account. |
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The relationship is new, affording the new bank the opportunity to establish an image and relationship afresh. |
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In most cases, the dialogue with the customer is conducted in person, offering the highest potential platform for relationship dialogue. |
But if the experience of most banks is any indication, their onboarding process squanders this opportunity. The majority of U.S. banks report first year attrition rates for new customers in the 25-30% range - triple the average attrition rate of established customers - and first year attrition rates above 40% are not unheard of. These alarmingly high loss rates do not include balance diminishment that occurs for other customers in the first year - rendering them active in name only.
New customers are leaving their newly formed banking relationships in droves - an indicator that the onboarding experience is negative not just for those who leave, but also for many of those who stay. This is hardly the picture of banks capitalizing on the onboarding opportunity.
What's Going Wrong?
We know from research that one of the main drivers of customer attrition is dissatisfaction (the bank makes an error, or delivers poor service) - and most banks readily acknowledge that their onboarding process is full of dissatisfiers. Checks are never sent; the customer misunderstands the terms and conditions of the account he/she was enrolled in; unexpected charges are encountered when the customer's expectation was that there would not be any fees, and so forth.
We also know that the majority of individuals who switch banks are local - they are changing from one bank to another nearby. As a result, when dissatisfied, they can easily 'snap back' to the old relationship and abandon their intention to switch.
The combination of too frequent dissatisfaction and easy abandonment of the intention to switch results in high attrition - the first component of lost opportunity.
But more is going wrong than significant loss of new customers. Recent BAI research reveals that almost 75% of all cross-sales from new retail checking accounts take place within three months of account initiation. The onboarding process in most banks does not contain sufficient relationship handling to maximize the cross-sell opportunity that exists in these first critical months of the relationship - so banks are almost certainly under-realizing the profit potential of those customers who stay.
In addition, potential new customers are unwilling to leave their existing bank because of the perceived difficulty of switching the account. Banks are missing the opportunity to create a switching process that is genuinely easy for customers - and so are not bringing in many of the new customers their marketing programs work so hard to attract.
To view the full article, click here.
Dove's Comprehensive Onboarding Program
Dove has developed a comprehensive approach to onboarding that allows banks to pilot and roll out high yield onboarding capabilities in as little as 13 weeks. Called Speed Switch, the approach contains all of the procedures, forms, data requirements, and training materials needed to implement a rapid switch capability for direct deposits and direct debits. Dove's Speed Switch consulting team is experienced in adapting these predefined materials to the specifics of a bank's onboarding process. Our team also has experience in the use of CRM capabilities to create a virtual customer contact capability to drive onboarding cross-sell.
Speed Switch capabilities are in use in three banks to date. For additional information on Speed Switch and its benefits for your organization, please contact Joleen Preuninger or call (773) 296-6915.
Upcoming Conferences
eBillXchange is hosting its annual conference to help organizations prepare for the future electronic transaction marketplace, with a focus on EIPP/EBPP planning, implementation and customer adoption strategies. The next Electronic Financial Management conference will be in Scottsdale, Arizona on February 18-19, 2004.
Banks, billers and aggregators are making significant bets on the future of electronic bill presentment and payment. However, the big unanswered question remains: if you build it, will they come? Melissa Fox will lead a session on "Understanding the Consumer Perspective for Billing" to address this and other pressing questions facing the industry.
One of the biggest and most important conferences dedicated to the changing face of payments is NACHA's Payments 2004. This year's event, to be held in Seattle on March 21-24, will kick-off with a keynote address by Meg Whitman, CEO of eBay. The remainder of the conference is divided into six parallel tracks addressing different aspects of the payments business.
On Monday, Tony Hayes, Managing Director at Dove, and Jane Yao, Managing Director at the American Bankers Association, will lead a session on Consumer Payment Preferences. Building on the recently completed 2003/2004 Study of Consumer Payment Preferences, this session will explore how consumers pay in different venues, why, and how they expect to pay in the future. This fresh primary research will be critical for any organization charting a path to navigate the future payments landscape.
Do you know someone with deep expertise in payments strategy?
Dove is currently looking for senior level consultants with electronic payments and consumer financial services experience to join our team. Our financial services practice works with leading banks, financial services companies, technology providers, and EFT networks to develop strategies and business plans, and conducts market research and competitor/industry analyses.
For a more complete description of the position and what we are looking for from applicants, click here.
Debit Press Release
If you've been reading On Payments, you know that the debit industry has undergone significant changes-and significant growth-in the last few years. But did you know that between 1999 and 2003, the percentage of consumers using debit cards to make in-store purchases increased from 48% to 57% (for PIN-based purchases) and from 42% to 54% (for signature debit purchases)? Or that, when given a choice, 45% of debit cardholders prefer PIN debit, compared to 38% who prefer signature debit?
Dove's 2003/2004 Study of Consumer Payment Preferences takes an in-depth look at consumers' use and understanding of the two 'flavors' of debit. To read Dove's press release about this specific section of the study, click here.
For our press release about the 2003/2004 Study of Consumer Payment Preferences and the overall payments landscape, click here.