Digital Onboarding: The Relationship Gap (Part 1)
Despite the wealth of technological features offered by many financial institutions, banks and credit unions often have difficulty getting their customers and members to engage fully. Digital Onboarding, an alum of the DCU FinTech Innovation Center’s Winter 2017 Cohort, has built a digital platform that helps financial institutions effortlessly build and maintain relationships with their customers. This is part one of the series showcasing Digital Onboarding.
The Relationship Gap
In order to help traditional financial institutions stay relevant in an increasingly competitive industry, Digital Onboarding is making it easier for banks and credit unions to build relationships with their customers.
The rapidly rising level of competition in the banking industry is spelling trouble for traditional banks and credit unions. In recent years, neo-banks — essentially venture capital-funded digital banking applications — have gained much traction in the banking space by offering specialized financial services to customers at a low cost. While neo-banks’ individual offerings are not as comprehensive as those of traditional banks, together they represent a significant threat to established financial institutions. They have access to large amounts of funding, much of which is invested into targeted digital and television advertising. These sophisticated marketing techniques mean that neo-banks are encroaching on traditional banks’ primary sources of growth: customer acquisition and retention.
Soon, traditional financial institutions may need to find new strategies in order to stay ahead. Digital Onboarding, a Boston-based fintech startup and graduate of the DCU FinTech Innovation Center’s Winter 2017 Cohort has just the answer. According to Digital Onboarding, it’s engagement, not acquisition, that represents the greatest area of untapped potential for traditional banks and credit unions. While attracting new customers is certainly an important aspect of business, it is even more valuable for financial institutions when customers adopt account-related services like online and mobile banking, direct deposits, recurring card payments, and e-statements. Even if neo-banks hold an advantage in marketing funds, traditional financial institutions have a head start in the engagement arena due to their large bases of existing customers.
“If a credit union’s thinking about spending a scarce dollar on new acquisition — getting a brand-new member and competing online with large institutions that have massive budgets who are always going to outspend them — or spending that same scarce dollar enriching their existing members by bringing them more services, they’re better off spending to better serve the existing members because that’s their competitive advantage,” said Digital Onboarding CEO Ted Brown.
It’s engagement, not acquisition, that represents the greatest area of untapped potential for traditional banks and credit unions. — Ted Brown, CEO & Founder, Digital Onboarding
The statistics are staggering: 60 to 90 percent of digital account applications are left incomplete, and 25 to 40 percent of new checking accounts are abandoned within a year. Although many banks offer a variety of digital services to their customers, these attempts at engagement fall short due to ineffective communication. Banks bombard their customers with information about various features and services, but struggle to facilitate the adoption of those features, ultimately leaving the customers to decipher the complexities of the banking platform. Digital Onboarding is working to make this communication easier and to bridge the gap between small businesses’ needs and financial institutions’ resources. It provides a modern technology solution designed to help facilitate the building of relationships between financial institutions and their customers.