subject: The Secret to Effective Account Origination in a New Market [print this page] The Secret to Effective Account Origination in a New Market
When a potential customer walks into your bank's branch and applies for a checking account, they are initiating a relationship with your institution. What value are they going to get from that relationship? What value are you going to get from that relationship? The secret to effective account origination lies in developing a strategy that leads to an equal value exchange between the customer and the bank.
Let's break this down. When a customer opens a checking account with a bank, what value are they hoping to gain from that account? It starts with trust. Customers want to be able to trust their bank. When they open up a new DDA account, they trust that:
They will have a safe place to deposit money.
They will be able to easily access and manage that account using whatever channels are most convenient to them.
The bank will not annoy them with irrelevant and ill-timed cross-sell offers.
Basically, customers want a bank that offers them a reliable, hassle-free financial relationship that they can maintain complete control over.
What do banks want from a new DDA relationship? It used to be that the DDA relationship itself was enough. Banks made enough money by managing the arbitrage between customers who never incurred fees and the customers who consistently incurred fees. Banks offered all customers free checking and paid for those services using the fees generated by customers that defaulted on the terms of their accounts. With the recent regulatory changes to lower or eliminate such fees, banks can no longer count on the arbitrage. Soon, banks won't be able to afford to offer all of the advantages of free checking (which customers have become accustomed to) without a way a new way to pay for it. This is where prescreen and cross-sell origination enter the equation. By looking at DDA as the gateway to a deeper, more profitable relationship with their best customers, banks can reestablish the importance of DDA account origination in their broader customer acquisition efforts.
Effective account origination utilizing prescreen and cross-sell looks something like this. A customer walks into your one of your bank's branches and opens a demand deposit account. During the account opening process, your origination system instantly prescreens that customer for the product that they are most likely to accept. If they are approved for the product, your customer services representative offers them the product. If they accept the offer, they are immediately booked for both products. If, for whatever reason, the customer declines, the product offer is stored in an existing offers database. The next time the customer initiates contact with your bank, the offer can be represented without the need for additional processing.
