Digital account opening is centerstage today in the banking industry, especially against the backdrop of the Covid-19 pandemic, which made being able to acquire and serve customers remotely a necessity. In retail banking, this capability is nearly ubiquitous, with focus now shifting to optimizing the experience and achieving differentiation to pull in customers. In our recent report, Digital Account Opening in Retail Banking: Competing On First Impression, we explored where banks in the US currently stand on this area and how it is evolving into the future. In this second installment, we tackle digital account opening for business banking — a much tougher and newer frontier.
- Business banking has long lagged behind retail when it comes to digital account opening. This is largely down to the more complex relationships and workflows involved, which make it difficult to automate key functions. As a result, there are not many business deposit accounts currently being opened fully digitally.
- However, that doesn’t mean there isn’t progress being made — all but 6% of respondents to our 2021 US Banking Study, which surveyed 109 C-level bank executives this past winter, at a minimum plan to offer some form of digital account opening capabilities for their business clients. This suggests that, in time, this offering will move to the mainstream.
- As that happens, it’s important to remember that the focus for business banking executives is, at least for now, more on automating parts of the process to introduce efficiencies than on creating fully digital workflows. On the retail side, banking providers are competing on things like “time to open,” while, here, they are making choices about where to leverage technology in the first place.
- Digital account opening for businesses will likely evolve to pull greater automation as pacesetters push the envelope, and the industry, forward. Those at the forefront of this movement include leading banking providers, enabling technology vendors, and, of course, digital account opening solution providers.
- Such players are experimenting with advanced technologies to tackle particularly difficult parts of the process like business and document verification. Today, these solutions are generally used in conjunction with manual effort, but, in time, as they become more well-known, the human component will likely become further reduced. As we move forward, much of the progress we expect will likely be tied to getting banking executives comfortable with the technology available.
- Most of the effort, right now, is aimed at small- to medium-sized businesses (SMBs), but as digital account opening for businesses matures, attention will likely turn to bigger and more complex businesses, with some providers already working to solve for those entities.
The Bottom Line
There are two major elements at play when it comes to digital account opening for businesses: where the technology is currently and where banks are comfortable using it. Those two elements often do not line up with each other, which means the industry is in essence a bit further behind than it could be. The good news, though, is that the technology exists and will expectedly be proven over time by forward-thinking institutions intent on getting to the next level.
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