One area of focus for many banks and credit unions today is increasing efficiency in account opening by using technology. The process of manually opening a deposit account for a small business is tedious and time consuming, requiring a continuous back and forth between the bank and the borrower.
For many small business owners, these legacy processes are not something they have time for. If community banks and credit unions want to attract and retain business customers, they’ll need a strong digital presence.
In order to help lenders understand where they rank against their competition and set goals, Cornerstone Advisors recently released their 2022 Digital Banking Performance Metrics. These metrics are based on a study of 66 financial institutions ranging from $300 million-$40 billion in asset size.
Cornerstone divided participants into three levels: high performers, middle of the pack, and low performers. These categories were determined by performance in the following categories: return on equity, return on assets, efficiency ratio, 2020-2021 loan growth and 2020-2021 deposit growth.
By dividing lenders into these three levels, Cornerstone was able to identify trends among the participants in the high performers group.
Digital Banking Metrics of High Performers
Those in the high performers group were able to leverage technology to increase customer engagement and decrease application abandonment rates in digital deposit account opening.
High performers saw a 6.4 percent increase in digital deposit account opening year/year, from 2020-2021. Digital deposit account opening abandonment rates were also significantly lower, at 34 percent abandonment compared to the 47 percent abandonment rate of those in the middle of the pack.
The most important takeaway is that lenders do not need a billion dollar tech budget to see efficiency gains. In fact, according to this report, high performers are only investing $255,132 on digital per $1 billion in assets.
Top Takeaway for Lenders Interested in Digital Account Opening for Businesses
As Cornerstone concluded, “across a wide range of digital banking metrics, financial institutions with superior [return on assets], [return on equity], efficiency ratio, and loan growth outperform their peers.” And, by and large, these institutions are achieving these higher efficiencies through digital transformation.
For many, that means transforming the way in which their institution lends to businesses. But, it’s important to note that significant efficiency gains can also be made by focusing on lower-levels of transformation; for example, reimaging Digital Account Opening for Businesses.
Digital Account Opening for Businesses should be top of mind for lenders that want to compete in the small business segment, as competition for these deposits heats up among megabanks and alternative lenders. Digital Account Opening for Businesses enables lenders to offer the convenience of an online application and customer portal to business owners, helping banks and credit unions generate new deposit growth.
How Banks and Credit Unions Are Quickly Making Up Ground in Digital Account Opening for Businesses
With the right fintech partners, banks and credit unions are quickly making up ground and offering their customers award-winning customer experiences. At Numerated, we’ve worked with over 140 of these institutions to transform the way they lend to businesses, and now we’re helping them reimagine Digital Account Opening for Businesses.