Financial institutions can streamline digital account opening (DAO) for their clients by reimagining the process as neobanks do, rather than digitizing their existing processes.

For the past 15 years, FIs have been focused on digitizing — rather than rethinking — the customer’s digital journey, Alex Jimenez, managing principal, financial services consulting at EPAM Systems, told Bank Automation News. EPAM Systems is a digital platform and product designer based in Newtown, Pa.

Banks can rework their account opening processes without the need for complicated artificial intelligence (AI) or machine learning (ML) processes, he said. Instead, FIs should consider “how to use digital technology to be able to drive the process with real simple algorithms.”

San Francisco-based Chime, for example, allows clients to open and walk away with a usable account in five minutes, Jimenez said, noting neobanks are “very specific in who they’re targeting … they start with a problem statement, which a legacy organization doesn’t necessarily do.”

Buy vs. build

Organizations, particularly small banks and credit unions, often pick a vendor for digital capabilities but don’t plan for follow-through or flexibility, he said, noting, “They just pick a vendor and say, ‘OK we will do that, and that’s that.’”

In the case a bank selects a vendor to work with, they must consider their problem statement: What they are solving for and who is their target audience, Jimenez said. He noted that when buying technology, there are some systems that you “get what you get” out of the box and end up married to the solution.

However, the alternative to working with a vendor is building your own process, Jimenez said. “There are tons of low-code, no-code applications that you can use to build the workflow of an application with APIs you can connect to the author of know your customer (KYC) processes and systems and get the best of digital specific KYC processes,” he added.

In addition to neobanks setting the bar, big banks like Bank of America, Chase, US Bank and Wells Fargo have also figured out how to streamline their DAO processes because they have digital manpower that can focus on how to make decisions quickly and appropriately.

“A lot of organizations don’t have that, so it’s not just the system, it’s the whole rethinking of the process,” he noted.

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