By Ray Birch
AUSTIN, Texas—While many credit unions have invested in technology to allow for digital onboarding, the process involved remains based on the old paper-and-time model—and that’s creating dissatisfied would-be members and abandoned efforts, says one expert.
“When you see fintechs that are growing really fast, what they all have in common is they do 100% of onboarding digitally, and most of it is really fast,” said Rahm McDaniel, VP of strategic solutions at Q2, a company that provides digital banking solutions to financial institutions.
Abandonment Rates
McDaniel said when the digital process is based on the manual approach, the failings can be seen in abandonment rates.
“In digital account opening, you have really high abandonment rates,” said McDaniel, pointing to the more than 30% of all mobile account openings that are left unfinished. “People start the application, but often stop, and that generally speaks to two things—friction and time.”
Whether it's an indirect or direct member, McDaniel recommended a credit union approach onboarding of the relationship with an “e-commerce mindset.”
“It should be simple, it should be configurable, and eliminate time and steps,” he said. “Credit unions need to focus on removing steps from the process or removing the burden of data entry on the member from the process.”
But that is not taking place at a lot of credit unions, McDaniel said.
“Most onboarding solutions we see in the market that credit unions are using today are digital versions of what they do in branch,” he explained. “They simply take the in-branch onboarding process and create an Internet version of it. The problem is that process is not geared around making a consumer a member of the credit union as quickly as possible.”
‘Too Much Handholding’
What may be holding credit unions back from further streamlining their onboarding processes is their focus on building a strong relationship with the member during onboarding, McDaniel said. That can lead to too much handholding and too much detail.
“When I look at credit unions and their onboarding processes I see a focus on the value of the relationship more than a focus on the making it easy to begin the relationship—the focus should be more on starting the relationship than on the lifetime value of the relationship,” he said. “I would like to see more of them with a hyper-focus on reducing the friction to become a member and then turn their attention to building the relationship afterward.”
Rahm McDaniel
With too great a focus on relationship building at the start, that often leads to presenting all of the products the credit union offers, something that is not needed when speed and ease of signup are the goals.
“Those products are nice, and they are great services members can benefit from, but it's just too much. You can’t bombard people…just sign them up first,” he said.
The Indirect Channel
Another onboarding issue credit unions face is with indirect members. McDaniel said consumers should be able to sign up easily when they are working through sponsor companies to join the CU, such as when they join as an employee, and when they enroll through an indirect auto loan.
McDaniel emphasized what often occurs in the indirect channel is a two-step process in which the consumer gets the loan through the dealer and then has to go to the CU’s site to join. Or the consumer must join through their sponsor and then has to work through both the sponsor’s site and the credit union’s separately.
McDaniel said that with the use of APIs credit unions can “overlay” their onboarding process on the sponsor company’s site, and the consumer can then join the credit union from the sponsor’s site.
“Yes, they do lose some of their branding this way, but we are seeing this as making a big improvement in the credit unions’ onboarding efforts, with many fewer abandonments,” said McDaniel, whose company offers that service.
Cumbersome Data Entry
Moreover, McDaniel said data entry can be cumbersome for consumers with CUs’ digital onboarding processes, some even requiring completion of forms. He suggested methods that are being used by progressive CUs’ onboarding efforts that work best.
“Instead of requiring a lot of data entry, use ID scanning,” he said. “Instead of requiring a bunch of data entry for verification, use carrier data for data integration—such as an AT&T bill or other billing records—to auto populate fields. Employ workflows…you're doing data extraction versus data entry. You're using GPS and analytics rather than asking for where the person is. You're using the debit or credit card rather than asking for people to either enter a 16-digit number. And you are not asking for a micro deposit from an external account to set up money transfers, which can create a three- to five-day delay in account opening. That can’t happen.”