All financial institutions have some skin in the Payments Game, but who’s holding the winning hand? No matter the size or scope, make no mistake—everyone is a player in this game.
Why? Because people buy a lot of stuff, and they want their payments to be a no-brainer: convenient, secure and reliable. What’s more, everyone—from merchants to financial institutions to fintech and big tech—wants in on the game. Financial institutions are going to have to up their game to compete.
The average financial institution opens a fair number of new checking accounts and debit cards, supposedly easy tools for payments. But what kind of effort goes into helping customers get on board with these payment tools? Is it quick and easy? Or old-fashioned and clunky?
While it may seem a bit hypothetical, compare these two very different approaches to onboarding, first at the Apple Store then a typical FI:
A customer visits an Apple Store to look for a new iPhone. A friendly representative matches the customer’s needs and desires to a new phone. The rep works with the customer to quickly set up the phone, demonstrating the phone’s features and navigation tools. A short time later, the customer departs, happy and excited with the ability to get the most out of her phone, knowing that if there is ever an issue, the Genius Bar is there as a resource. Seamlessly, the purchase is complete.
Bank/Credit Union Onboarding:
A customer/member hands the service rep some cash to open an account. The CSR/MSR asks if she would like a debit card. It’s a yes, but the branch can’t create the plastic; instead, the rep orders a card and promises delivery in a week, at most 10 days. Even if the rep can create the card onsite, the interaction typically ends with an activated card simply handed to the customer. She is not introduced to the ways the institution can support paying for items with the card, the mobile wallet not mentioned, and the customer is unable to get the most out of her options.
Is it business as usual? These onboarding experiences feel pretty real to us.
Maybe it’s been too long since we’ve opened our own accounts to remember the exact “process.” But we do know that onboarding presents a glorious window of opportunity for any FI to capture a customer’s payment defaults – to bring her on board with all the FI’s cool products before the window slams shut with a resounding thud.
Making payments central to onboarding
What if we flip the paradigm to follow the Apple model, where intent shifts to capturing the customer’s payments before she walks out the door. Where netting the customer’s mobile wallet, direct debits and P2P transactions is the goal.
Consider the above script, rewritten to focus on payments:
A customer/member hands the service rep some cash to open an account. The rep takes the cash and walks to an instant-issue debit card machine, creating a shiny card without the customer having to ask. Meanwhile, the customer downloads the bank’s app. The rep returns and helps the customer navigate a bit while asking a few pertinent questions: “What card is the default on your Amazon account? Netflix? PayPal? Venmo?” Casually, the rep takes the customer’s phone and enters her new card info as the default. Or inserts a pic of the card into her mobile wallet.
Just like Apple, the CSR seamlessly assists the customer, takes a load off her shoulders and successfully captures her mobile wallet, the first slice of the payments pie. Next is securing the customer’s direct debits and P2Ps – the rest of the payments pie.
Getting auto debits, the “mailbox money”
Auto debits, things like the electric bill, gym membership and auto insurance, are admittedly more challenging to snare. Customers lament how painful it is; on occasion, employees agree.
But there are software solutions to help overcome this objection—software that enables the customer to switch several debits falling under one account at once. So, if the customer has auto debits for her gym membership, car insurance and electric bill, all can be switched with a few clicks. It can also target the ubiquitous Amazon, PayPal and PlayStation payments, inserting the new account info as the default.
Transforming the way business is done
Getting on board with the new onboarding model requires the right processes, tools and talent. First and foremost is investing in instant-issue card machines. There’s absolutely no reason to make a customer wait for a debit or credit card these days. Second is educating consumers on the institution’s digital capabilities, highlighting the functionality and flexibility the customer demands.
Now think about the employee serving the customer. What kind of individual is needed to create a differentiated customer experience? People who like to make things easy for customers. Confident and engaging, without a doubt. But also look for those eager to be advocates and those who love leading a customer through the journey.
And it’s not just finding a person with technology swag and paying them more. It most likely requires a cultural shift in hiring and an evolution in the way onboarding is done.
Living up to the hype
Financial institutions will lose if all they do is open accounts and order debit cards. FIs must continue to ensure their place as their customers’ primary payment vehicle. The non-banks are poised and hungry to disrupt, to claim more of the payments pie. Former Square CFO Sarah Friar, in a recent interview with Market Watch, suggested that anything a customer can do today with a bank account, the Cash App will begin to emulate.
More than transactions are at stake. Billions upon billions of dollars are tied up in accounts like PayPal, Amazon, Venmo and even PlayStation—money that used to sit in an FI’s checking accounts. Ron Shevlin, Cornerstone Advisors’ director of research, defines it as deposit displacement: the diversion of funds away from traditional checking accounts into these other accounts. Health Savings Accounts, retailer apps and robo-advisor tools are also part of the blend. Capturing payments at onboarding can help take back some of these dollars. It can also cement customer loyalty, increase incremental spend and add revenue to the bottom line.
Trends are coalescing, and it’s time for everyone to ante up.
If FIs aren’t effectively onboarding new customers, they risk losing future deposits. And as the battle intensifies, there is no doubt that the winners will maximize every opportunity afforded to claim more of the payments pie.