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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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How Often Do You Quit an Online Account Application?

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If you have opened bank or credit union accounts online, you have probably used an Andera online application. Andera has provided online applications to banks and credit unions since 2004. If you have a long history of online account opening, you probably have also experienced problems that made you quit the application. As was described in Sheryl’s post on how to take the hassles out of online banking applications, there are many hassles that can occur when you apply online. Last month I reviewed the issue of signature cards and how these often cause problems in the online application. I recently came across this Andera blog post and whitepaper which provide details about the problems that can make you quit an online application or can cause your application to be rejected. According to the whitepaper:

Of every ten applications started on Andera’s account opening platform in 2011, approximately five applicants abandoned before submitting their application, two failed the institution’s risk management strategy, and one abandoned after approval.

The whitepaper details seven reasons applicants quit the account opening process. I’ll just review and give commentary on three of these:

Application Frustrations

The first reason that applicants quit is frustration, and the whitepaper describes issues like not clearly describing the online process and the information that will be required in the application. One thing that it didn’t mention that often frustrates me is when the institution doesn’t clearly state who is eligible to open an account. This is especially important for banks which don’t have fields of membership. Banks will often limit new customers to their market area or to their state, but sometimes, they will accept people from any state. I wish more banks would make it clear at the start of the application who can qualify.

Another thing that frustrates me when I want to open accounts online is when the institution doesn’t provide important details online that can be reviewed before I start the application. Reviewing the details can take time so I don’t want to review the disclosures when I’m in the middle of an online application. I want to review them before I start. Details like early withdrawal penalties are very important for CDs. Another important CD issue that is rarely described in the online documentation is how one can receive the funds when the CD matures or is closed early. Some banks will only issue checks that will be mailed. The best banks will allow the funds to be transferred by ACH.

Identity Verification

I’ve been fortunate is my past online application attempts in that I have always passed the applications’ automatic identity verification. However, I’ve seen many readers who have reported problems in the automatic verification. When this occurs, a manual review is often required, and the financial institution will ask the applicant to send in photo identification by mail or fax. Applicants will often end the application when this occurs.

Why so many failures? The whitepaper describes the typical two steps that are used for ID verification. The first step is matching the data entered by the applicant with third-party data, usually from the three major credit bureaus. Applicants who don’t have much credit history may fail this check. The second step is asking the applicant authentication questions. I’ve seen several reader complaints about these application ID authentication questions. The whitepaper admits that these questions are often difficult to answer.

Funding Verification

Another source of problems is funding verification. Andera online applications allow the applicant to fund accounts by credit/debit card or by an ACH transfer. According to the whitepaper, 70% of the applicants choose to fund the account with a credit or debit card, and only 30% choose ACH. The choice of ACH is often due to the size of the deposit since credit cards have low deposit limits. This is especially the case for CDs when there’s a need for a large initial deposit.

When ACH is used for account funding, banks have to worry about funding verification. The two common methods for funding verification is “instant account verification” and “challenge deposit” which is also called trial deposits. The instant account verification method allows the applicant to provide the login and password of his or her account that holds funding source. The application will then verify that you are the owner of that account. The challenge deposit method involves the bank making two small trial deposits into the other bank account. The applicant is then required to check on the trial deposit amounts, and input those amounts to verify ownership.

I always have preferred the challenge deposit method since I don’t like giving out my login and password to another website. However, this isn’t a typical preference. According to the whitepaper, “around 60% of applicants choose instant account verification, but 40% choose the more difficult method [challenge deposits].” Institutions that have the challenge deposit method without the other option are more likely to lose the applicant.

What Has Caused You To Quit Online Applications?

If you have experienced problems in online applications that has caused you to quit the applications, please leave a comment. Also, if you have been rejected by an online application, please leave a comment. Online applications can save you time when everything goes right, but when there are problems, you might wish you could just visit a branch.



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Comments
11 comments.
Comment #1 by Anonymous posted on
Anonymous
My biggest pet peeve is the membership eligibility not being clearly explained up front.

5
Comment #2 by Sandra posted on
Sandra
I wonder how many of those abandoned application attempts are actually failed attempts at ID theft. Does the white paper consider that possibility?

Regarding my own experience, I have been rejected because my "identity could not be verified". Most recently, this was due to the fact that the Experian credit bureau company had lost all credit info about me.

 

 

4
Comment #3 by 767-223 (anonymous) posted on
767-223
My credit files are frozen. It would be very helpful to know which credit bureau a bank uses so that I can unlock the file before beginning the process. Since it costs $5 each to unfreeze a credit file, it doesn't make sense to unlock all 3.

 

5
Comment #4 by 51hh posted on
51hh
Most of the ID authentication questions are tolerable and answerable.  Erie FCU is the only one that I ran into stupidly-ancient questions that nobody would ever remember.  I think the reason behind is that they want to discourage out-of-towners. 

When I called, the manager claimed that they did subsequent verification already and my driver license number did not amtch, either.  This was what I call an insult to my intelligence.  Then they said, "By the way, you have to send in your church membership letter for qualification."  Thus I learned, the whole application process is bulit to deter out-of-town applicants. 

4
Comment #5 by GeorgeTA_Steele posted on
GeorgeTA_Steele
51hh says:  "When I called, the manager claimed that they did subsequent verification already and my driver license number did not amtch, either.  This was what I call an insult to my intelligence. "

No has ever been able to insult my intelligence..... 

2
Comment #6 by Anonymous posted on
Anonymous
Rejected because I had "too many names" per ChexSystems.  So I contacted them ... seems one of my accounts did not use my middle initial, all the others did.  The bank in question wanted a copy of my SS card.  Did not send it, account not opened.       

1
Comment #7 by Anonymous posted on
Anonymous
I was lazy to mail in DL and other papers. After 30 days they deleted the application.

2
Comment #8 by Anonymous posted on
Anonymous
Never!  Too many hasles and too much room for fraud.

2
Comment #9 by Anonymous posted on
Anonymous
I've had problems where you had to go through several layers of the application process, filling in info; just to find out the full disclosures, terms, and full schedule of fees near the end of the process. After not liking what I saw, I stopped the application. Banks, brokers, and other online services should post their full disclosures, terms, fees, and all agreements online prior to someone filling or going through the application process.

9
Comment #10 by Anonymous posted on
Anonymous
I have called the bank or credit union and they let me snail mail the application and preserve the rate until it gets there or I fax.

 

1
Comment #11 by Anonymous posted on
Anonymous
if i cant open by phone i dont open  **** them its my money and my time . plus they want too much paper work , copies that need faxed all too much trouble . i want local and the ability to phone in . seems like the credit unions are the worst . never been able to open one up in 2 yrs . wont try now am not good on computer . just old but appreciate this info on line read it often and have made good money , when the banks were paying . took me 6 min to type this . 

1