For decades, banks have been investing in digital account opening. The goal? Make it easier and more convenient for customers to open accounts online, driving deposit growth and expanding market reach. But here’s the hard truth: despite all the “advancements” from various new players who have come and gone, online account opening, to put it bluntly, still sucks.
In many cases, these digital-first account initiatives have led to:
- Increased fraud: More online applications mean more fraudsters testing the system.
- Higher operational costs: Banks are spending more time and money combating fraud and handling low-value accounts.
- Low balances: Many online-opened checking accounts sit nearly empty.
- Little to no cross-sell success: Banks struggle to deepen relationships with these customers.
So, what’s going wrong? The problem isn’t just how banks are opening accounts online—it’s what kind of accounts they’re attracting and prioritizing by not strategically thinking through their digital-first strategy.
Banks are targeting the wrong customers online
The default approach for most banks has been to push online checking account openings first. After all, DDAs (demand deposit accounts) do generate interchange revenue and are considered the foundation of a primary banking relationship.
However, data from StrategyCorps reveals that 35% of checking accounts generate less than $350 per year in revenue, which is about what it costs a bank to manage and maintain that relationship.
There are several reasons why these accounts are not always profitable. When banks push free checking account openings, they’re likely acquiring accounts that are:
- High-risk for fraud: Fraudsters frequently test stolen identities by opening new checking accounts online. According to TransUnion’s 2024 State of Omnichannel Fraud Report, an alarming 5% (or 1 in 7) of all newly created accounts last year were suspected to be fraudulent.
- Low balance, low engagement: Many online-opened checking accounts either remain unfunded or carry minimal balances. StrategyCorps data shows that more than one-third of checking accounts carry an average balance of under $1,000.
- Unlikely to generate meaningful long-term relationships: Given the low balances, these accounts don’t always translate into strong, profitable banking relationships.
Banks are essentially paying for acquisition without seeing meaningful growth. If most online-opened accounts are abandoned, fraud-prone, or unprofitable, is the strategy really working?
A better approach: Start with high-yield savings
Instead of defaulting to checking accounts, banks should rethink their digital strategy. A better starting point? High-yield savings accounts.
Here’s what we’ve seen at Plinqit: Across the nearly $3 billion in deposits we’ve gathered, the average balance for a high-yield savings account is around $45,000. These accounts don’t just bring in more money, they attract engaged, financially stable and savvy customers who are more likely to deepen their banking relationships over time.
Why does this work?
- Consumers looking for savings accounts are already thinking long-term. They want to build wealth and grow their deposits, making them prime candidates for other financial products.
- Higher balances lead to stronger relationships. A customer with $40,000 in savings is far more valuable than one with a $40 balance in a checking account.
- Reduced fraud risk. Fraudsters aren’t as interested in opening accounts where they need to deposit and save money. They tend to gravitate toward accounts that allow them to access credit or easily send money to another account.
Measuring success: A digital account scorecard
If banks want to build a smarter online account opening strategy, they need to start measuring success differently. Instead of focusing on the sheer number of accounts opened, they should evaluate their digital channel using these key metrics:
Average balance: Are online-opened accounts being meaningfully funded, or are they sitting empty?
Average account age: How long do these accounts stay open and active?
Cross-sell success: Are these customers adopting additional products, such as CDs, loans, or wealth management services?
Engagement metrics: Are customers logging in, using their debit cards, or setting up direct deposits?
If online account opening is driving a high volume of accounts with low balances, minimal engagement, and no long-term value, it’s time to reassess the strategy.
It’s time to break this cycle
The banking industry has spent decades trying to perfect online account opening—but we’ve been chasing the wrong goal. Instead of refining the digital mousetrap to capture more checking accounts, banks should shift their focus to the kind of accounts that are impactful to their bottom line. That is, the ones that drive real, sustainable growth.
That means leading with high-yield savings, attracting customers who want to build their financial future with your organization, and using smarter metrics to evaluate what success is. Because if online account opening continues to generate low-value, high-risk accounts, then what are banks really paying for?
Kathleen Craig is Founder & CEO at Plinqit.
