Innovation Fail – Bank Account Opening Fail

I recently moved to a suburb of Houston and decided I would open up a local bank account. I debated whether I needed one; the fact is, having a “local” bank isn’t really as necessary as it once was. But, I figured there would be advantages to having access to local ATMs and in-branch support when needed. I did some research and selected a multi-state regional bank that had a branch near my office. More importantly, I discovered this bank has purchased and installed one of the truly innovative online banking platforms available in the U.S. Since they had an option to sign up online, I decided to go that route.

The Online Account Opening (OAO) process was straightforward and included a progress bar to denote the step-by-step process. The electronic transfer from my existing account to fund the new account went smoothly. They even included some “out-of-wallet” questions to authenticate my identity. At the end, I was asked to print two documents, sign them, and put them in the mail. I got a confirmation of my account number via email. I was very impressed with the overall OAO experience.

The next day, I was trying to set up direct deposit using my new account and realized I didn’t know their routing number (the unique bank identifier), so I called their 800 customer service number. A very professional help desk associate quickly gave me the routing number, but when I mentioned that I was setting up direct deposit, she informed me that while I had been issued an account number, I could not use that until I received a separate verification that the account was approved. She stated that they used an “external vendor” for online account opening, and it would be at least three business days before I could use the account.

Hmmmm. “What if I had opened an account in your branch?” I asked. “Would I have to wait three days?” Nope, for in-branch account openings, they can be used right away. That was a total bummer, and seemed like a breakdown in the whole efficiency of the online account opening process.

Since I needed to get direct deposit going, I decided to go to the local branch and get the account opened. There was no one in the branch (everybody is doing their transactions or are opening accounts online, of course) and I was immediately seated and speaking with an associate. She was moving through all of the steps to open an account, including verifying my identity, so I gave her my driver’s license and my passport. She thanked me for the documents, but stated that they were both “primary” identity sources and I needed a “secondary” source. After a few back and forth exchanges, I realized that she needed to see something that had my name and local address on it. But that had never been a part of the online account opening process. What a big disconnect between the online and in-branch processes!

But since I was so new to the area, I didn’t have any documents, such as a bill with my address on it. Fortunately, I remembered that I had received an email from Xfinity that morning, and was able to log in and find a PDF of a bill—branch account opening crisis averted. After a few more keystrokes, she asked how I would be funding the account, and I said she could do an ACH transfer from my existing bank.

“Sorry,” she said, “we cannot do that in the branch.”

What? How is it that the online can do an ACH transfer but the branch can’t? This was totally crazy, and was disconnect #2 between online and in-branch. But, thankfully, I happened to have a check and told her I could write out a check for the initial deposit.

That’s when she informed me that there is a seven-business day hold on deposited checks.

What??

Yup, turns out that the bank’s policy is to put a seven-day hold on all checks deposited. She initially referenced that it was only for new accounts, but when I pressed her for the timeframe of when an account is no longer “new,” she stated that, in fact, all checks would be held for seven days without regard for how long the account had been open. Now, there was a time, decades ago, when this might have been warranted. But virtually all checks are now imaged and cleared the next day. While a two-day hold could have been justified, a seven-day hold is ridiculous. And I stated as much to the associate, who quickly went from polite to “I can’t get this guy out of my branch fast enough” mode. She made no attempt to help me understand whether there was an opportunity to see if we could get on the same page. She pushed my documents back across the table and icily bade me to “have a nice day.” I cannot read minds, but I suspect she was annoyed that I questioned the bank’s policy of holding checks for four times the length of any reasonable timeframe. Or maybe I just knew too much about how banking actually works for her taste.

Here’s the thing: setting aside the customer service/customer experience element of this event, there was a massive failure in technology and innovation. For several reasons, financial institutions in general have lagged behind in what is now expected from an online experience. But note that the online experience is not just the screens you see on your computer, tablet or mobile phone. It is the whole experience. There is no excuse, external vendors notwithstanding, for there to be completely different experiences in opening an account online or in the branch. The idea that a branch associate cannot execute an electronic transfer to open an account via ACH is ridiculous. Is a bank seriously going to claim that there is some regulatory or compliance issue in doing this?

No, this is simply the fault of individuals that oversee the channels in a financial institution and the failure to examine how the customer experience is consistent across those channels. Add to that outdated policies, such as the exorbitant time for check holds, and it is no wonder that there is constant talk about Apple or Amazon taking over banking. And let’s face it: If I can open an account in a branch, but must wait at least three business days to open an account online, is that acceptable service? Does that fit what a bank would claim to offer as a “great customer experience”?

Companies like Apple or Amazon have their own issues. They are not perfect, but they foremost understand the importance of the customer experience and how it must be consistent across channels. And they consistently get this right. U.S.-based financial institutions need to get very innovative very fast or they will face a crisis as more and more customers who deal with what I dealt with today determine that banks are not keeping up.

And I don’t mean to pick on this one regional bank; they just happened to be the bank I visited today. But they represent substantially how most banks deal with this customer experience issue. Trust me, as an electronic banking expert, I know that the tools banks need to be successful in delivering a truly great customer experience are available. But they must value delivering that great experience. Perhaps there were options available from their vendor to better automate the OAO to deliver next-day availability but they didn’t feel that is was cost-effective to pay those fees. Maybe their external OAO vendor is completely separate from their online banking vendor. It’s one thing to make a decision about how much something costs in a vacuum, but today, it cost them a customer that would have represented a profitable account and a much different blog entry.