The combined effects of changing consumer behavior, a volatile external environment, and government regulations are taking a toll on how traditional demand deposit accounts (DDAs) are being originated. Traditionally, consumers could quickly and easily be approved for DDAs, but the bar has been raised on approvals. In the past, these kinds of accounts experienced high attrition rates and low consumer loyalty so they were not a focus for realizing profit. Now, however, FIs have started to realize that great returns can come from these kinds of accounts, both directly and indirectly. To improve account origination processes, there are software solutions that can increase customer loyalty and decrease attrition rates through more rigorous decisioning processes, better customer service, increased availability of information, and more end user flexibility for FIs.
More rigorous decisioning processes can improve DDA openings by using alternative data in analyzing the account worthiness of consumers. Alternative data can include information such as rent and utility payments, accounts closed for fraud, KYC, OFAC, check cashing history, and payday lenders. This improves the account opening process because it helps banks get a more holistic view of consumers because they are seeing their fiscal responsibility through various facets, not just the information provided by credit bureaus.
Better customer service comes from the banks focusing on the potential profitability of consumers. By using predictive analytics, banks can generate more attractive offers at more relevant terms. This includes both instant prescreen and cross-sell. Instant prescreen, or prescreen of one, is done when a consumer is applying for a product or already is using a product and is simply interacting with the bank. Based on their history, the bank can analyze the customer data against decisioning criteria to find out what products they are eligible for and what products the consumer may be interested in. Cross-sell is offering personalized that are suited for each individual consumer. When both of these processes are combined, the consumer is offered products that are relevant and tailored specifically for them. This decreases the number of generic offers made that the consumer may or may not be eligible for and instead focuses only on the offers that are likely to be accepted. Because these offers are made in realtime and the consumers know exactly what the offer is when it is offered, they have an increased propensity to accept the offer and the financial institution gets an increased wallet share of the consumer.
Increased availability of information can be achieved through the use of a vendor network. A vendor network connects the bank to multiple consumer credit information providers. This is beneficial because it allows the banks to access the lowest cost information and it also allows the bank to have access to a wider set of consumer data. If one provider is down and the bank is connected to a vendor network they can quickly and easily switch data sources. Without the vendor network, retrieving consumer data from other providers can be much more difficult and much more costly.
End user flexibility for FIs is important in DDA opening because it allows the FI to cater to needs of consumers in a timely fashion. Software solutions that have an easy-to-use interface can be modified for promotions and can also be used to react to changes in the external environment. This means that consumers are always going to have rates and terms that reflect current conditions, rather than having to wait for a number of months before changes are implemented.
Overall, there are a number of ways in which software solutions can help improve the DDA opening process both directly and indirectly. Solutions can make the account origination processes more efficient, faster, and can help the FI increase wallet share that will provide increased returns in the future. In using the software the consumers can also realize benefits because they are presented with offers that are more relevant and they are offered these products at the best terms possible based on their credit history. DDA opening is important for banks and there are platforms that can be used to make them profitable now and in the future.
