3 Minutes to Secure Success: Financial Institutions' Battle for Customer Retention

As the digital era continues to reshape industries, banking stands at the forefront of this transformation. The traditional brick-and-mortar banking model is rapidly giving way to a landscape where convenience, efficiency, and seamless experiences are non-negotiable. One of the main driving factors of this shift is a new generation of consumers, young and tech-focused, who are not only driving demand for better services but are also reshaping the way banks and credit unions need to understand and adapt to customer expectations.

This generation of younger, digitally native customers represents a significant portion of new, high-value accounts. Raised in an era of instant gratification and accustomed to the convenience of digital interfaces, they approach banking with a different set of expectations. For them, banking isn't just about transactions but the overall experience. And when that experience falls short, they have no problem seeking alternatives. In fact, they pivot rapidly if they find a prospective bank or credit union can’t suit their needs. 

In this hyper-competitive landscape, where options are endless and innovation is relentless, banks and credit unions find themselves fighting for attention in a crowded marketplace. The constant introduction of new products, services, and elevated experiences has raised the bar for what is expected in banking. At the heart of this competition lies the crucial first impression: the account opening experience.

Today, more than ever, the account opening experience is the gateway to attracting and retaining customers. It's the first introduction where banks have the opportunity to make a lasting impression. However, in a world where patience is in the past, there is no room for error and no time to lose. Customers demand a flawless, frictionless process, and they are quick to abandon any bank or credit union that fails to meet their expectations.

The data speaks volumes: 48% of consumers who reported experiencing digital friction took their business to another bank. Moreover, account opening abandonment rates exceeded 50% if digital account opening took more than three minutes. While this stat may surprise you, it shouldn’t. Three minutes is enough time for a customer to grow frustrated and move on. Therefore, banks and credit unions are up against a tight timeline of just a few short minutes in order to open and verify a new user account. A staggering 68% of consumers have abandoned online applications for financial services, underscoring the high stakes involved. 

In 2022 alone, 25% of customers switched banks. Of those customers, the top reason for switching was seeking out better digital experiences. 

However, there is hope amidst this intense competition. By streamlining the account opening process, financial institutions have the opportunity to not only retain customers but also drive significant growth. Onboarding drop-off rates using micro-deposits can reach as high as 49%, while the drop-off rate for instant account verification (IAV) is as low as 1%. This highlights the obvious contrast between traditional methods and modern, seamless solutions.

Challenges extend beyond the account opening process to security and trust. As new account fraud rises—increasing by 109% in 2021 alone—consumers prioritize security and trust above all else. More than half of survey respondents reported having either opened a new bank account or considered switching to a new bank in the past six months. The importance of security and trust cannot be overstated; 35% of respondents say the top factor in determining where they choose to deposit their money is if a provider is trusted to keep their information and money safe.

The preferences and behaviors of consumers demonstrate the significance of a frictionless account opening experience. Nearly 1 in 4 consumers open new financial accounts at least once per year or more often, with Gen Z leading the charge. However, 6% of U.S. consumers cite the primary reason for keeping their oldest account as being too much hassle to switch, highlighting the critical importance of a smooth transition process.

When asked if they would seek a new financial provider if their current provider couldn’t deliver on their most wanted features, over half said they would likely do so. This sentiment was even stronger among Gen Z and Millennials. Similarly, when faced with limitations in connecting to their favorite fintech apps, a significant majority of consumers expressed a willingness to switch providers, highlighting the importance of compatibility and flexibility in today's digital landscape.

Amidst these shifting dynamics, financial institutions must adapt or risk losing relevance in an increasingly competitive landscape. The key lies in delivering a frictionless account opening experience that not only meets but exceeds customer expectations. Enter OnBoard+ by Mozrt—a comprehensive solution designed to empower financial institutions to thrive in the digital age. 

OnBoard+ prioritizes robust compliance, security, and trust, ensuring a seamless and secure account opening experience for customers. With OnBoard+, institutions can enjoy seamless integration, 24/7 accessibility, and uncompromising security, all at an accessible price point. Meanwhile, consumer and corporate clients can open, verify, and fund accounts in minutes, and the entire process is automated from start to finish. It’s fast, simple, and tech-forward, built to support banks and credit unions in stepping up to serve today’s most contemporary clients. So why settle for outdated processes when you can embrace the future of banking with OnBoard+?