Anyone who has opened a merchant bank account can attest that the client onboarding process is slow and complex. As margins decrease and merchant attrition increases, bank executives responsible for customer experience are searching for ways to remain competitive by understanding the problem and finding a solution.
Current reports, fintech professionals, and industry experts point to the solution again and again. Modern technology has enabled new business processes to automate client onboarding, shorten application time with one standardized process that uses intelligent forms, automate underwriting, and automate data collection capabilities.
Understanding the problem of slow customer onboarding and how to put all these puzzle pieces together, however, can be challenging and requires an understanding of the customer’s needs and expectations.
What Do Merchants Want, And Why Do They Leave?
Merchants sign up for a merchant account because they need the services the bank provides, and they need those services as quickly as possible. Slow client onboarding can disrupt a merchant’s normal operation and leave a negative first impression on your customers. There is a real risk of losing customers within the first few weeks or months after an account is opened; especially if your sales team set expectations that are not fulfilled.
Too often companies are opaque in their messaging, leading to miscommunication in the services that they offer (Choosing the Right Payment Processing Solution For Your Solution, Forrester 2016). For example, some merchant acquirers claim to be processors, processors claim to do everything a customer needs, or customers end up finding themselves with poorly handled chargebacks.
Most merchants that open new accounts with an acquirer are switching services from one acquirer to another. In 2008, merchant attrition rate was at 16%, which rose to 22% in 2014 and continues to increase. Merchants leave their current acquirers because they have been convinced that switching to a new acquirer will improve their business. Save money. Decrease risk. Provide higher return on capital.
Switching merchant acquirers, however, can immediately cause a sense of dread for merchants. A clunky client onboarding experience can lead to uncertainty and anxiety about future business with their new merchant acquirer.
The shorter and more comfortable the transition period, the better. A fast and efficient client onboarding process instills confidence in the customer, which results in an immediate customer experience, and allows them to use the bank’s services more quickly, which results in sooner revenue impact.
Why Is Speed So Important?
Today’s merchants and businesses use the internet to determine what to expect from banks. They use specific websites that compare features and pricing before even speaking with a sales person, and have a greater understanding and awareness of fees, rates and competitors’ offerings. Their research on new players, such as Payment Facilitators (PayFacs), and the current state of technology in general has conditioned people to expect a fast experience.
In an effort to match new customer expectations established by disruptors like Square, global powerhouse like Global Payments has adopted Agreement Express to reduce client onboarding time from 2-13 weeks to 30 minutes. With Agreement Express, Vantiv was able to reduce their client onboarding times from 120 minutes to 5 minutes.
A fast client onboarding process creates a positive first impression and will increase the chance of your customer choosing you over the alternative, especially if the alternative is much more difficult to apply for.
Failure to meet customer expectations are two-fold:
1) You’re not keeping up with the competition. It means you’re still using traditional, manual, labour-intensive client onboarding processes that pose a scalability issue. Customers are no longer willing to wait weeks for application approvals.
2) Customers won’t bother. Frustrated customers during the application process risk increased application drop-out rates. Prior to improving operational processes, Global Payments had a 40% return rate in applications, while another large payments firm faced a 25% return rate. With Agreement Express, Global Payments now experiences a 100% application return rate.
Ultimately, banks that do not meet customer expectations will risk losing prospective customers who value a fast and smooth onboarding experience.
Speed is critical to reduce customer uncertainty and manage expectations. With technological advancements, we are able to deliver an automated customer onboarding solution, and measure the gains it offers. According to Forrester, price is the reigning incentive offer that merchant banks offer to their customers in an effort to reduce merchant attrition (Choose the Right Payment Processing Solution For Your Organization, Forrester 2016). An automated customer onboarding platform can help reduce cost per application, increase underwriting speed, and ultimately allow for better price incentives and customer experience without sacrificing margins.
Changing your customer onboarding process can be risky, but not if you employ an automated onboarding platform tailored specifically for your needs. With faster times to revenue and lowered back-office costs, you can realize dollar gains with an automated client onboarding system.
Interested in how an Automated Customer Onboarding Solution works? Download our most popular eBook, The Merchant Acquirer’s Ultimate Guide to Onboarding More Merchants