Opening a new bank account in today’s digital world should be easy. Visiting a branch and other manual processes should be a thing of the past.
I recently put this to the test by opening an account with one of the new digital challenger banks. I can confirm it is easy. Everything was done through my smartphone using the camera to take an image of an ID document as well as a video recording of me looking into the camera and speaking.
I have to admit it is the first bank account I have opened for nearly 20 year so can’t compare it with any others. I won’t give the name of the bank but I must say it was incredibly quick and easy.
But according to a study from technology advisory company P.A.ID Strategies most traditional banks still expect new customers to complete manual tasks and even visiting a branch in one case. “Visit a branch” I hear you cry. If I was going to open an account with a bank and it asked me to visits a branch I would look elsewhere. Unless you live in a big urban area you might not have a local branch such is the rate that banks are closing them.
The P.A.ID Strategies study covered Barclays, HSBC, Lloyds Banking Group and RBS (including NatWest) in the mainstream. It found that RBS was the only one of these that enabled applications to submit proof of identity electronically. Although it said applicants couldn’t do it via a smartphone or tablet.
“We were surprised to see so few traditional banks had made progress towards a 100% digital experience through the mobile channel. Many failed to offer a fast, secure and digital account application and activation process, including verification of the applicant’s identity. This means the banks aren’t truly digital, degrading the user experience at first point of contact and increasing the chance of abandonment,” said John Devlin, author of the report and Principal at P.A.ID Strategies
This reminded me when I got a mortgage a few years ago. It was with the same organisation I have a current account with. I applied for a mortgage with a division of my retail bank. This is the bank that received my salary every month. Yet the mortgage division insisted I send paper copies of pay slips and my bank statement by post. But that was ten years ago when digital banking was in its infancy.
It also looked at challengers: Atom Bank, Monzo, Revolut, Starling Bank and Virgin Money.
Monzo and Starling scored highest thanks to their 100% mobile-first digital account application taking 9 minutes 50 seconds, and 9 minutes 49 seconds respectively. The traditional banks didn’t take that much longer but some still required manual steps. Customers even had to visit a branch at one bank.
We don’t open bank accounts very often so perhaps people are prepared for it to take a bit longer that ten minutes and people will be prepared to put a bit of effort in to the right bank. But what this research really shows is that the big banks have complex infrastructures and although they would like to offer on-boarding as easy as their digital challengers they simply can’t yet.
“This study’s underlying hypothesis is that the advancement in the analysed banks’ digitalisation of their current accounts and savings accounts could be used as a barometer of each institution’s progress towards a full digital transformation,” said P.A.ID Strategies. “The results clearly show that challenger banks are stealing a march on their traditional competitors across all metrics.”
“Being unburdened by legacy technology and infrastructure is a distinct advantage but more so is the desire to be truly digital, and arguably the understanding of what potential customers are looking for.”
If you want something to help you picture the complexities of traditional banking IT take a look at this article and the diagram within it.
It is a similar story when it comes to fixing glitches in online and mobile banking services big banks have huge and complex IT infrastructures with thousands of interdependent systems. As a result when something goes wrong it takes to e to fix.
I was recently with the CIO of a major bank and asked how far away we are from having artificial intelligence automate the fixing of glitches when reported by customers and he said we are some way off that. But we know the technology is there so it is another case of banking IT complexity holding things up.