When it comes to the delicate balance between complying with regulations and losing prospective members during mobile account opening, the answers aren’t always obvious.
What is obvious, besides the hard fact that regulations are regulations, is that it’s worth the trouble to carefully consider how to simplify every step in the process. That’s because most of the attempts to open accounts on mobile devices are abandoned—either before opening or before funding.
In a new white paper from Gro Solutions, “Digital Account Opening,” this high drop rate is attributed to friction in the process. Friction that is created by every added screen, checkbox, lookup, upload and document. Prospects fall victim to “decision fatigue,” which quickly leads to decision avoidance. They just walk away. When they do, the huge investments credit unions have made to enable them to open and start using new accounts, are not paying off.
And yet, they should. Consumers are very clear in their demand for the convenience of mobile account opening, and about their willingness to go where they can find it.
The problem is that a tangle of regulatory mandates, regulatory guidelines, and traditional practices keep the gatekeepers in institutions on the alert. Adding each simple step to the account opening process may not seem like much, but they add up quickly to a virtual door slam for a new member prospect.
So, should compliance get top priority? Absolutely. But are there ways to minimize the negative effects of compliance on mobile opening? Absolutely.
Here are a few highlights to help unravel this knotty subject. Note that in this brief space we can’t cover truth-in-advertising regulations, or the ability to pay requirements associated with credit accounts, such as loans, credit cards, or overdraft protection lines. For a comprehensive treatment of compliance in the mobile world, start with the Gro white paper here.
1. The “know your customer” or KYC, regulations in the Patriot Act and Bank Secrecy Act are intended to keep accountholders from using an institution to commit crimes or acts of terrorism. These regs require credit unions to collect information that assures them they know who their customer really is.
They do not, however, mandate a one-size-fits-all way accomplish to these goals. Each institution must create and then enforce its own customer identification program, identity verification methods, and customer due diligence practices.
Some fairly simple steps can streamline the mobile process without compromising security:
Scanning the barcodes on drivers’ licenses to autofill name, address, DOB and ID number fields
Obtain name and address from mobile carrier records as well (with applicant consent)
Use the flexibility provided in the regulations to estimate activity methods by classes of members, and limit the questions you ask individuals during opening
Use “out-of-wallet” questions from a third party provider to obtain additional verification in preference to asking consumers to locate and submit large documents, or even visit the branch to complete the process
2. The E-Sign Act, which permits electronic information to replace physical documents, protects consumers with required disclosures and consent forms, and ensures they have access to all the relevant details about their accounts and fees. In the branch, members have become accustomed to being handed a series of forms to read and authorizations to sign. These do not translate well to the mobile environment. Especially inhibiting is any step that requires visiting another website.
To step up the process, the best practice is to streamline, using email, one-time verification codes, which are familiar to most consumers, a single consent to receive information electronically, and a consolidated confirmation they have done so.
3. Signature cards have a long history. Until recently, transactions were verified in branches by pulling a physical card (or, later, an image of the card) from a file and comparing it to the check or deposit slip.
Checks and deposit slips will be with us for some time yet, but the need for a signature card is nearly extinct. A member who has consented to electronic signatures, can confirm acceptances and decisions using simple checkboxes. Sample signatures can also be gleaned from transaction documents later, if needed, once the account is opened.
The bottom line is, to avoid facing an empty queue where your prospective new members should be lining up, find the most convenient possible ways for accounts to be created. Use the flexibility already built into regulations to maintain compliance, and find technology that fully supports your unique process.
On a final note, it can be tempting to use the account opening process as a platform to present related products or collect information that may help you identify future service sales potentials. Resist. The next checkbox you ask your prospect to answer may be the last.