Online account openings: leveling the playing field: although fewer than one in five community banks currently offer this service, banks should not be inhibited by the challenge. One key recommendation is to create a comprehensive e-strategy before jumping in.

• Author: Glagola, Doug M.

ONLINE ACCOUNT OPENING is one of the tools that effectively arms community and regional banks to compete with larger financial institutions. Naturally, these smaller institutions do not have the resources--or much less the need--to advertise their services on a national scale. What they can do, however, is respond to existing and prospective customers with a competitive level of service and convenience.

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It is estimated that less than 20 percent of community financial institutions offer online account openings. Among those that offer them, some find it challenging to encourage adoption and continuous growth of their online services.

The realization is that while having this technology in place is great, and being an early adopter of it is even better, banks often struggle with the question, "What next?" Even the best online account opening solution will not reach its full potential if customers are not driven to use it. For that reason, it is necessary to couple online account opening services with a comprehensive e-strategy.

The demand for Web-based financial services is increasing across all generations and neglecting to provide customers with the option to conduct financial services online will, in all likelihood, encourage them to take their business elsewhere. Online account opening is a vital customer growth and retention tool. The convenience of opening an account immediately while researching products online moves more people to act. It adds another level of customer service to those located outside the easiest route to a branch.

Vendor selection

To effectively market online account opening, banks must keep vendor due diligence in mind prior to implementation. Banks must examine each vendor's integration capabilities; the technology cannot be just about online account opening. The question must be: "How can this solution eventually integrate with all channels and incorporate other services like loan processing as well?"

A solution must have the potential to seamlessly integrate with a bank's core data processing system as well as with other ancillary programs, like an ID verification program. Working with a company that provides a full array of solutions--from account opening and deposits to loan processing and tracking--will optimize a financial institution's ability to cross-sell products and services. An end-to-end platform, which can handle automated account opening and funding in addition to online lending, enables banks to easily and routinely examine an individual's credit and then automatically qualify him or her for multiple products.

Even if this end-to-end integration is not particularly relevant at this point in time, progressive banks should keep growth in mind. As the old saying goes, "If you are not moving forward, you are moving backward." Working with a vendor that only supports a single service, like online account opening, makes it likely that the bank will need to move to another provider when it decides to add lending capabilities or other services to the platform.

When selecting a vendor, banks should keep the following questions in mind:

* How will the platform integrate with our core system?

* Can we customize workflow?

* Will we be able to integrate other software programs into the platform?

* What reporting capabilities does the platform offer?

* Can the system handle account opening and loan origination?

* Does the platform provide any cross-sale capabilities?

* Is the solution hosted or nonhosted?

* How much does the system cost?

Marketing

Vendors are there to help financial institutions get started with online account opening, but ultimately banks must take responsibility to ensure that their rollout and initial adoption are effective. The addition of services and...