A version of this article first appeared in the April BAI Executive Report: Growing quality deposits and customer acquisition. In the report, you’ll find content tackling deposit behavior trends, tech-enabled deposit growth strategies, liquidity and funding flexibility, plus more.
Banks and credit unions are facing an uphill battle when it comes to deposit growth and accountholder acquisition.
While traditional financial institutions have long relied on branch networks to drive new accounts, the number of deposits flowing into banks and credit unions through in-person interactions has been steadily declining.
Meanwhile, digital-first competitors are redefining the landscape, demonstrating that a user-friendly and well-designed account opening process is a key driver of deposit success.
As customer experience (CX) expectations evolve, you can address these challenges head on by optimizing your deposit acquisition strategies and reducing friction in the application process.
The stakes are high
Deposit growth is the foundation of your organization’s financial stability and long-term success.
Without a steady influx of new deposits, you could face liquidity challenges, reduced lending capacity and competitive disadvantages. And beyond that, if you don’t consistently attract new accountholders, you weaken your financial institution’s ability to cross-sell additional products and build long-term relationships.
Despite the high stakes, however, many banks and credit unions continue to struggle with deposit acquisition because of outdated account opening processes. The message is clear: if your digital onboarding process is slow, cumbersome, or confusing, accountholders will look elsewhere.
Removing friction from digital account opening
To compete for new deposits, financial institutions must embrace digital transformation and remove unnecessary hurdles in the account opening process. A seamless, intuitive digital onboarding experience is essential for attracting and retaining accountholders.
Here’s how you can streamline the process and enhance deposit acquisition:
1) Implement configurable account opening workflows
A one-size-fits-all approach to account opening just doesn’t work. In fact, in a recent survey, 45% of respondents said they would consider changing where they bank if it meant receiving a more personalized experience.
It’s now a necessity to implement flexible workflows tailored to different types of applicants, including:
- Existing accountholders versus new applicants
- Users who have entered the new account process through a pre-authenticated channel (like digital banking) versus first-time visitors
- Retail accountholders versus business applicants with different compliance requirements
- Applicants for transaction accounts versus those opening a certificate of deposit
Utilizing configurable workflows ensures that your accountholders experience a streamlined process suited to their specific needs, which will reduce frustration and decrease abandonment rates.
2) Leverage modern identity verification tools
One of the biggest friction points in digital account opening is identity verification. Outdated authentication methods like knowledge-based questions contribute to a high percentage of abandoned applications.
To combat this, you should:
- Use multi-source data verification to quickly authenticate applicants
- Layer multiple data sources for a complete view of accountholder identity
- Reduce reliance on cumbersome document uploads and manual reviews
By adopting modern identity verification tools, you’ll enhance security while creating a smoother accountholder experience.
3) Enhance integration with fintech solutions
A modern, API-enabled account opening platform allows seamless integration with best-in-class fintech solutions. These integrations help you:
- Automate the risk assessment process
- Enable real-time funding and reduce reliance on microdeposits
- Provide instant approvals, reducing drop-off rates
If you leverage fintech partnerships effectively, you can differentiate yourself in a crowded market and offer a superior account opening experience.
4) Optimize the funding process
Another major pain point in digital account opening is the funding process.
Many financial institutions still rely on microdeposits for ACH transfers, which add unnecessary delays and discourage applicants from completing their account setup.
According to Cornerstone Advisors, the abandonment rate for financial institutions that require microdeposits for ACH funding was 27% – in contrast to a much lower 13% abandonment rate for institutions that don’t require microdeposits.
To improve the funding experience, you can:
- Offer multiple instant funding options, including debit card transfers and mobile wallets
- Ensure that identity verification is completed before the funding stage
- Provide real-time updates and confirmations to keep applicants engaged
The benefits of an improved account opening process
Strategic benefits
Modernizing your financial institution’s account opening process can significantly enhance your deposit acquisition efforts, improve accountholder retention, and help you stay competitive against digital-first challengers. A frictionless digital onboarding experience is not just about convenience–it’s a critical factor in long-term customer loyalty.
Managerial considerations
You must align your internal teams – including IT, compliance, and marketing – to ensure a smooth digital transition. Investing in the right technology provider and leveraging fintech partnerships is essential to your success. In addition, access to helpful dashboards for tracking and analyzing key onboarding metrics (e.g., application completion rates, abandonment rates, and funding success) will help you continuously refine your process.
Financial impact
An optimized digital account opening experience leads to higher application completion rates, more funded accounts, and increased deposit balances. Reducing friction in the process directly impacts revenue growth by:
- Lowering accountholder acquisition costs
- Increasing the lifetime value of new accounts
- Enhancing cross-sell opportunities for loans, credit cards, and investment products
Now is the right time to modernize
The future of deposit growth lies in removing barriers to entry and creating a seamless, accountholder-centric digital account opening experience. Banks and credit unions that fail to modernize risk losing valuable deposits to competitors that prioritize ease, speed and innovation.
In today’s competitive landscape, every friction point is a lost opportunity. That means the right time to act is right now.
Zac Sweet-Wright is Account Origination Product Specialist at Jack Henry.
