The Top 3 Consumer OAO Mistakes Banks Make and How to Avoid Them Moving Forward
Available On Demand – 21 minutes
Join the CCG team for a fireside chat with Scarlett Sieber and financial services veteran John Macaluso discussing the key mistakes that financial institutions make when implementing online account opening.
With a significant percentage of banks’ OAO process taking 10 minutes or more and the virtual world we now face, it is imperative to improve this process sooner rather than later. With the increased dependency on web and mobile channels for customer and account growth, this session seeks to explore some of the most innovative and successful approaches to available today to improve your existing capabilities.
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Scarlett Sieber Welcome back everyone to CCG’s Webinar, this series is specifically on the consumer side of digital banking. I am your host, Scarlett Sieber, Chief Strategy and Innovation Officer and Managing Director here at CCG Catalyst. Again, we’re looking at the consumer digital banking side. And as such I am joined by my esteemed colleague, who is a financial service expert and veteran for many years in John Macaluso, who is a Principal here at CCG Catalyst. And today, we’re going to be talking about OAO, most specifically about the top three consumer OAO mistakes that you as banks and credit unions make and how to avoid them moving forward. Mac and I have talked about this topic often. OAO is top of mind for us, certainly. So we thought we would try to take our knowledge and use it in a way that would be helpful to you all. So, Mac, thanks so much for joining us and we’re happy to have you back for round two of this webcast.
John (Mac) Macaluso Great, that sounds excellent. I’m ready to go, let’s do it.
Scarlett Sieber Perfect. So, you know, there is no lack of information or articles around online account opening and online account acquisition, it is just something that is a continuous topic of conversation but I still feel like banks and credit unions state over and over that digital account opening is a significant priority for them. It’s top three usually on the list that I’ve seen. Yet, so many still do a subpar job or they have extremely painful processes. One study that I read as I was trying to get some more data points thinking about this before you and I spoke today, was that one in five financial institutions, their online account opening process still takes more than 10 minutes, 5 if you’re lucky and usually more than 10. And so me coming from the world of these neobanks and spending a lot time with fintechs, you see that process done way quicker. It’s unfortunate that in 2020 now that’s still the case. And of course, with everything that’s happening in the world, we really need to dive into how to maximize and optimize that OAO process. Let’s get started. And I want to get this out of your brain, because I know you spend way more time than I do on this. So let’s look at it from the customers of the consumer’s perspective first. We all know how important an experience is. We are kind of hit over the head with that, we talk about it so often. What are consumers expecting when utilizing web and mobile products to open an account from their financial institution?
John (Mac) Macaluso This question is key because frankly, we’ve been trying to capture customers and accounts for the last 20 years on online channels, web first and now web and mobile. And I think we have to look at it very, very simplistically. Customers are looking for three things. They’re looking to ensure that their data that they’re putting into that mobile application is secure. They want to have confidence in that. Number two, they want it easy. And I want to be really clear when I say easy, I don’t necessarily mean fast. I mean, it needs to be easy. Customers like to select from menus. They like to select from drop-downs. What they don’t like to do is enter a lot of data with their thumbs. That’s the reality. We have to look at different industries and we’re going to talk about that a little bit later in our conversation. But we have to look at the model that other industries have built with how consumers interact when they’re opening an account, establishing a relationship. And then finally, the third item is it has to be immediate. I’ve seen too many situations where banks say, we’ll get back to you tomorrow or we have to go to a business cycle. No customers expect it to be secure. They expect it to be easy. And, oh, by the way, we expect it to be immediate.
Scarlett Sieber One hundred percent. And as you were saying that there was one thing that just came out which reminded me, quick housekeeping items, if you look at the bottom of your screen, you will see a level of buttons. The first one is Mac and I on the screen and our video, if you move over, you’ll actually see a picture of Mac and I. You go ahead and click on that. You will see our bios, our backgrounds. You can connect with us directly their on LinkedIn and you can connect with us directly from our email and the CCG logo, you click on that. That is your resource center. So the things that we’re talking about, there will be a variety of other resources that we have available for you. So if you click on the CCG logo, you can ask to them there or you can ask questions at the end. So on that note, Mac, I cannot tell you how many times, because I am a person who loves to test this out on different banking platforms, going through that experience can be so painful. And the amount of information required, you’re going to drop off. That’s why you see such high abandonment rates. In your perspective, how should that experience differ when I’m opening an account online or on mobile versus going into a branch? What are the key differences that you would think there?
John (Mac) Macaluso Guess what? There’s no difference. There is no difference. The only difference between me going into a branch and you can take some time and define what the branch is, and me doing it on my mobile platform, is that somebody else is standing there with me. The reality is mobile is the model. That is the bar that we have to hit. Whether I’m in the branch, I’m in the call center, I am at signup day for colleges, whether I’m doing it on my kitchen table. There is no difference between the online and mobile model and the in-person model. Now there is a difference and this is a great opportunity, I’ve seen this done very wrong and I’ve seen it done very poorly. There is a great opportunity where when you have that customer in front of you and you get past entering of data and the more mundane task, you have an opportunity when they’re in front of you to expand the relationship. The way I like to put it is, the in-person relationship, whether it’s the branch or some other event, should expand on the mobile relationship, but there should be no difference. Mobile is the model and the branch or the in-person activity should expand on the mobile process.
Scarlett Sieber I agree with that, and the personal aspect cannot be underplayed, but now more than ever, people are becoming accustomed to doing things online when they’re creating their Amazon account for Amazon Prime, when they’re creating their Netflix account. They’re not talking to someone in person. So the human behavior has shifted over time. So that’s going to become more and more comfortable. Yet when you’re talking about money, it certainly becomes a bit more sensitive than Netflix. While it takes a little bit of time people are definitely becoming more used of that. I would agree with you there. Let’s move over. We talked about kind of the consumer and customers perspective, let’s move from the banks perspective. With you and all your experience and years talking to banks and credit unions, what would you say if you could limit it to maybe the top three challenges that financial institutions are facing when it comes to adding customers and accounts via web and mobile channel?
John (Mac) Macaluso So I’m going to I’m going to call these the anchors. These are the anchors, these are the things that are holding us back as an industry, from doing the things on a mobile channel that have been very, very successful in other industries. Number one, there is this fear of not meeting know your customer (KYC), BSA, risk management. There’s a fear and there is a division between the folks that are talking about the customer experience and the people that are saying yes, but they need to be secure and we need to manage risk. The reality is those folks need to work together. Secondly, it’s a process discussion, which makes me crazy because we’re struggling with embracing the mobile model in the back office of the bank and we’re looking at established channels like the branch and saying, hey, that’s the model we want to have. No, the in-person model and the mobile model, as we already said, are one in the same. So the model, the bar, is the mobile platform and we must embed that process in the back office. That’s what I mean about immediate. The process can’t be I’ll get back with you tomorrow, Scarlett to let you know if you qualify for this account. And then thirdly, one of the big anchors that I see is purely inadequate technology. Inadequate technology that provides very cumbersome and troublesome integration and makes the process clumsy. And maybe that’s number one and fear of not knowing your customer and risk is number two and difficulty of embedding in processes is number three. But those are the three anchors that we as an industry have to get over.
Scarlett Sieber Yes, I would actually certainly agree that the inadequate technology is probably the most important and it’s challenging to know where to go and how to fix that, because a lot of this is so fundamental and core to their existence that even if they all are aware that the technology is not where it needs to be, they’re certainly not aware of how to go from here. So as far as these financial institutions develop and build out their OAO strategy, there’s a lot that goes into that. What should be their key focus areas? What should they dive into first? What are must-haves there?
John (Mac) Macaluso This is interesting because we actually talked a little bit about this the last time we sat down. A big issue of mine, and I know of yours, is where culture in the organization does not align and does not accept the fact that the reality is that this is a mobile first enterprise now. So when we can agree as a group, as a team inside of a bank, that this is a mobile first enterprise, then we take things like create a team that looks at the positive account opening and says, if I’m thinking mobile first, how do I open an account? How do I capture data? How do I manage my risk when I capture that data? How do I incorporate that in the processes of the back office? The very first thing you need to do, however, is make sure that your team that is going to design the customer experience that your team that’s going to manage the risk and your team that that is going to incorporate the process in your organization are fully aligned with the objective of a mobile first enterprise.
Scarlett Sieber It’s interesting using the word culture. People tend to make the assumption that we’re talking about fluffy HR. things and feelings and company values. And certainly all of that is as part of culture, but the part that you’re hitting on, I think is so spot on, which is really the foundation of who you are. It’s what is your risk tolerance? That is a direct response to what your culture is when you mentioned are we mobile first? One thing that Paul, our CEO, talks about often to me is when we’re looking at our clients and putting them into groups and thinking about how different ones work together, we look at are they technology led? Are they business led? Are they compliance led? It sounds so simple, but finding that component is what leads every other decision that’s being made, and the logical thought process after. So I’m totally on the same page with you there. So again, it’s 2020 and OAO is certainly not something that’s revolutionary. However, there is still certainly a percentage of the population of financial institutions who still don’t have OAO. For those who are brand new, where do where do we start? What does that look like for them?
John (Mac) Macaluso The worst thing we can do, the biggest no-no right, in your words, is let’s buy a product that does online account acquisition. And let’s stick it out there on the web, because what will happen for that is it will be a very disconnected customer experience and you will fail. And guess what will happen in the future? Customers will remember that. So the very first thing that needs to happen is leadership needs to say, am I going to be a mobile first organization? If leadership agrees to that model, let’s develop a strategy. One of the things that that I talk to customers about all the time is, are you going to acquire the customer first or the account first? Is this a tactical operation? Meaning if I’m just opening an account, say a certificate of deposit, I can capture customer information and account information simultaneously. If I’m establishing a relationship with Scarlett, I’m going to capture customer information about Scarlett first and make that my focal point and then I’m going to open up accounts because now I have a relationship. So first primary, in other words, we need to add a very senior level, decide what is our strategy for growth in our organization, particularly around mobile channels. The next thing you need to do, and this back to the very last discussion we had, we need to create a team. You need to create a team of believers. You need to create a team of folks that can take this vision inside the organization and move it beyond just a product, but to an entire enterprise capability. And that team needs to take this forward. The customer experience, the risk management, the back office processes. And then the final thing you need to do, and this is a bit redundant because we did talk about this is, you need to have good partners. And those partners, they could be advisors, they could be technologists, they could be process people. But you need to pick your partner. So your team needs to be a combination of your internal capabilities and your leadership as well as your external partners. Pull all that together and let’s move that forward.
Scarlett Sieber When we talked about being brand new to OAO building out that strategy. Is there any key differences for someone who, let’s say, already has the capabilities, but certainly is not leveraging or executing them to their fullest capacity? Is there any different strategy, is any different advice for those who are a bit further along but still not getting it exactly right?
John (Mac) Macaluso Here is the trap that we have fallen into and you’ve heard me discuss before that I believe we’re into generation of this. Gen 1 was kind of a rub between 2000 and 2004/2005. Gen 2 was more browser based web. Gen 3 was the first version of products for mobile platforms. And I think we’re kind of in Gen 4 now where people are saying, hey, this has to be more of a of a comprehensive strategy than an individual program. But one of the problems that all of those prior generations have caused for us is we settle on a concept called MVP, minimally viable product. And while minimally viable product is really good from a get it to market check the box that says I can acquire customer information, it generally lowers the bar for poor functionality and capability. And what has happened is there are industries that have won this battle and they are these minimally viable products that banks and credit unions have created are being measured around, and you said it earlier, the Amazons and the large investment companies that have really spent the time and made the investment to develop a high quality customer experience. My concern is that what’s out there today is MVP. What we need to be is true differentiators who are mobile first with a strategy. So my advice would be, go for where you want to be. Don’t just try to get something in market to check the box because customers remember that and that’s why banks are being beat today by these new entrants, is because the new entrants, they’ve moved the bar further. They don’t think about MVP. They think about what the consumer wants.
Scarlett Sieber With that, you dropped the mike there again. I’m sensing a theme with you, you end on the quotable, tweetable moments and we build from there. That’s extremely helpful so thank you, Mac, I appreciate that perspective and I enjoyed this conversation as always, a topic that I love to dive into. So for all of you, if you have questions, feel free to use that Q&A box at the bottom of the screen. Mac and I will be here to answer those if we don’t get to your answer during this webinar, because we will shortly go ahead and send us your question and we will send you an e-mail afterwards. You can still go ahead and put the question there, or you can reach out to us directly on our emails. Please join us next week on this consumer series, we’re going to continue we’re going to be talking about executing a mobile growth strategy. So what we started with today, but getting to the next level. If you’re intrigued and you want to get you want to get a level deeper, join us for that. We will have other insights and thoughts to share with you. And please, if there are topics here, we have a ton of ideas between Mac and I and the rest of the firm around things that we love to talk about as it relates to consumer digital banking, but if there are things that you’re interested in that you want to hear from us about, drop us a note about those as well as we would definitely love to hear those perspectives. I know you would, Mac. If you’re interested in discussing how we can help you build out a successful OAO program, of course, reach out to us. Small questions, big questions, we want to be here for you. Thank you again for taking this time on your Thursday or if you’re watching this on demand afterwards. We appreciate you joining us. And we look forward to seeing you again next time. Stay safe. And thank you again from the CCG Catalyst team.
John (Mac) Macaluso See you next week.
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Chief Strategy & Innovation Officer Scarlett Sieber is one of the world’s premier voices in financial services. She is among the industry’s most sought-after speakers as a thought leader and innovator with expertise in driving organizational change at both startups and enterprises across the financial services and fintech ecosystem. Scarlett has been invited to speak at over 100 prestigious financial services and technology conferences globally, including Money20/20, Finovate, South Summit, and NASA’s Cross Industry Innovation Summit.
Scarlett’s experience includes founding her own startup as well as working at banks such as BBVA, USAA, and Opus Bank. She is a leading fintech influencer, included on lists such as Top 100 Women in Fintech 2019 and Top 10 Fintech Influencers in the U.S. Scarlett also has deep experience in digital strategy and innovation implementation, making her a key asset to building cutting-edge programs for our clients.
As Principal of our Technology Strategy, John Macaluso has built a reputation within financial services as a trusted advisor to banks and fintechs. With over 30 years of proven leadership, John’s experiences include all areas of information technology, business planning, innovative solution design & deployment, business & operational leadership and business & technology transformation. John advises a vast area of technology within financial services from fintech startups to established global financial institutions. Specialties include digital transformation to established core technologies.
Previously, John held senior roles at Fiserv (a fortune 500 company) driving large-scale change from multi-channel to traditional and non-traditional banking services, national to international markets. Additionally, he served as a CIO for the MLB New York Yankees diving innovation and technology to major league baseball.
