Make Onboarding a Competitive Advantage for Your Community Bank

In recent years there has been a plethora of articles about the importance of onboarding bank customers. Industry studies have reported impressive statistics that provide proof of the payback for timely, multi-touch programs. However, only half of banks and credit unions have a formal onboarding process in place. Even fewer institutions closely manage the execution or monitor the effectiveness of the programs they have established.

While these numbers continue to baffle us, we believe there is a silver lining around this cloud for community banks. Think about it, there is measurable proof that onboarding helps build more loyal customers and most banks either don’t do it or don’t do it well. Sounds like a good way to differentiate your community bank – doesn’t it?

Why community banks should prioritize onboarding.

Community banks and credit unions have limited resources which can create hurdles for making changes. With all the things competing for these resources, why prioritize onboarding? Here are some of the most obvious reasons…

  • Community banking is all about relationships and onboarding. When done right onboarding helps build long-term relationships.
  • It’s a great way to differentiate your bank because most banks don’t have programs in place.
  • It provides an opportunity to even the playing field with the big banks because they aren’t really doing a great job.

Learn from the big banks.

As the industry is prone to do, we looked at what community banks could learn from some of the bigger institutions that have been recognized in the industry for their onboarding efforts. One valuable source was a recent article, Best-in-Class Multichannel Onboarding Trends to Watch in 2019 by The Financial Brand. Many of these big bank examples made impressive use of digital tools to engage customers early and often in the relationship. However, our biggest takeaway was that all these programs were very impersonal. This issue alone presents a major opportunity for community banks to improve on these efforts.

Smart onboarding for community banks.

Community banks are uniquely positioned to be better at onboarding because “relationship banking” is in your blood. Let’s look at how community banks can think about onboarding differently and make it a real competitive advantage.

“Customers make a conscious decision when they select a community bank. If community banks would build personalized onboarding programs they can make these decisions payoff for the customers and help build long-term relationships.”

Keith Henkel, CEO & Founder, FI Works

Below is a recipe to build a highly effective community bank onboarding program. If a bank focuses on these critical areas there will be measurable, immediate results.

Onboarding maps. Most of the onboarding programs we’ve seen are one-size-fits-all processes, highly focused on consumers, and treat every scenario like it’s a new customer. A great way to avoid this impersonal approach is to clearly map out paths to cover the different onboarding situations. The most obvious place to start is to separate business versus consumer scenarios. Make sure to also consider if a new account is opened by a current customer and the other banking products they already use.

Needs-based selling. Community banks can change the playing field by using “needs-based selling” as a critical component of onboarding. Everyone cross-sells during the onboarding process, but they just don’t talk about it. Some of the big bank programs are careful to differentiate their approach by calling them “educational” or “insight-based” engagement strategies. No matter what you call it, it’s still selling. Here’s the point everyone is missing – the problem is not selling, it’s that banks are typically just pushing products. Customers have a much higher propensity to add new products and services during the first year of the banking relationship which increases the long-term potential of the relationship. Not taking advantage of this window of opportunity is not smart and is not serving customers well.

If bankers take a different selling approach it can prove to be a secret weapon in onboarding because it can be an opportunity to really engage with customers about what’s important to them. “Needs-based selling” is driven by advanced analytics and is completely focused on the customers’ needs. Most banks (even big institutions) don’t have access to this type of customer intelligence or don’t use it to drive onboarding. Today there are cost-effective technologies available for banks of any size that use artificial intelligence (AI) and machine learning techniques to predict the products and services a customer needs. Armed with this type of insight, a banker is able to become the type of advisor a customer wants to work with.

A personal touch. The top reasons customers choose a community bank is because they want personal attention and to build a trusted relationship that will help them manage their finances. There has been a lot of attention placed on the use of digital channels as a primary component of onboarding programs because they are inexpensive and make it easy to continuously engage with customers. We don’t dispute any of these benefits, yet digital can be as impersonal as it gets. Particularly in community banking, you can’t underestimate one-on-one attention. A way to differentiate your bank is to make outreach personal – phone calls, handwritten letters, emails personal – a priority in your onboarding process. Also, if you pick up the phone and have a real conversation, you can learn about what your customers need.

Monitor, measure, manage. One of the major reasons onboarding programs fail is the simple reason that banks don’t monitor if the process is actually being done. Onboarding automation has been around for years, so technology is not the complete answer, but it can help provide the visibility you need to make the process efficient and measure its effectiveness. We’ve seen when technology is utilized correctly bankers can be really successful spending as little as 15 minutes a day on onboarding. Banks don’t need to make this complicated, but we all know what gets measured gets done. It’s important to gain visibility to your bankers’ customer engagement activities. If you shine a light on your bankers’ customer engagement activities, retention metrics and relationship growth by individual banker and branch, you’ll see the needle move because everyone can see what’s working. 

Make onboarding work for everyone.

Even though onboarding may be an over-served topic, it’s still a huge area of missed opportunity. Customer-focused onboarding which includes needs-based selling is a win-win for everyone. Community banks have the most to gain from this type of onboarding programs because the drive home the reason why customers choose a community bank in the first place – a trusted relationship. The key is to make it personal and to manage that it’s getting done. The results can be significant. See how one community bank’s onboarding program resulted in a 23 percent drop in attrition and $400,000 increase in annual profits.