Digital Account Opening And The Struggle With Omni-Channel Banking

Bank Technology Strategy - Picture of laptop with banking application open

Go to any bank conference or talk to any consultant and you will hear how your bank must be able to handle transactions wherever and whenever the customer wants. Retail and commercial customers must be able to start an application or transaction in a branch, update their information on their phone in the parking lot and then finish off the effort at night, at home on the laptop after everyone has gone to bed. The problem is, pulling off proper omni-channel banking is ninja-level in complexity. As a result, the question comes up - are customers really using various channels to complete a single transaction or is this more of a myth like Canadians using fake potholes to slow down speeders? In this article, we take a look at the data to forecast what banks need to start planning to handle the future of banking. 


The Problem With Omni-Channel


Most of those “experts” throwing around “omni-channel” do so with the mindset of a fintech start-up with little regard for practicality and little respect for having to deal with a traditional core system. The first problem is that if a customer starts and then stops an application, the information is not stored in the core system since the account isn’t opened yet, so the data needs to reside somewhere.


If a bank has a data lake, then great, problem solved with a little money and programming. Unfortunately, most banks don’t have a central data storage location other than their core, and so the bank relies on each respective application to store the pre-customer data. Unfortunately, your mobile account opening application may be different from your branch system which may be different than your online system. Add call center, voice, chat, interactive teller machines and any other channel that comes up in the future, and you can see how complicated keeping the data updated in real-time can become. 


Omni-channel Diagram showing the many options the customer has for banking channel


To further complicate matters, banks have to be able to cross-over between retail and commercial lines. Thus, if you start a loan or deposit account application for yourself but then want to turn it into an account for your sole proprietorship business, a bank’s application must be theoretically able to handle it. It gets even more complicated as an application is one thing but a secure transaction is entirely different. Holding an instance of a transaction resident so that you can start a deposit on your phone on Monday and then finish in the branch on Friday is a technological feat that is akin to the four-minute mile. Everyone is talking about it, no one has done it yet and one day many banks will.


Of course, even if you have a data lake and tons of money and engineering talent, banks still need a consistent user experience which means not only a similar “look and feel” across channels, but similar workflow. Account verification might be easy on a phone where you can snap a picture of your driver’s license and use a faceprint but how about if you are on your laptop? What about after you get the account open and you have to fund it? Funding a new account in your branch is easy, but this gets much more complicated to move money between accounts on your phone or worse, having to send an ACH from another bank on the mobile app without getting timed out from your first bank.


All this is possible, but not easy and very expensive. The question is – is omni-channel worth it?


The Data On The Omni-Channel Experience


It turns out, at least on the surface that it is, in fact, worth it. According to an AT Kearney 2018 study of some 800 bank customers, 40% of new accounts at larger banks used multiple channels when starting a new primary banking relationship. That number happens to be increasing as the prior year it was 36%, and in 2015, it was 25%.


Account Opening Utilized Bank Channel - Graph showing that 40% of bank customers have used various channels

This data would indicate that not only is being able to handle customer information and transaction data across channels materially important, but it is also increasing in importance.


It is data like this that has many pundits, analysts, consultants and even bankers concluding that all banks must have an omni-channel approach. However, tomorrow, we will take a different view of the data to conclude why omni-channel may be the wrong strategy and may lead banks down the primrose path of higher cost and more complexity.