How to Take the Hassle Out of Online Banking Applications
Increasingly, people are opening bank accounts online. According to the 2012 Fiserv Consumer Trends survey, opening savings accounts online increased by 9% to 31% from 2011, and opening checking accounts online increased 4% to 25% from 2011.
While opening an account online can be convenient it can also be complicated. James Morrison recounts his tale. “The first day I entered all of my information and all of a sudden I was logged out and lost all of the data I entered. I couldn't go through that process again until my blood pressure went down.” Day two, just when he was close to inputting all of the required information (except for a problem that required him to phone customer service), “blammy: I was logged off again. I called customers service and the able was able to locate the information I typed in, but then had to ask security questions from my initial CD accounts,” he says.
Then to open the new CD accounts, he was asked for passport/driver's license number, social security card, and a utility bill with his address on it. He told the representative that he had a passport scan on file that he could email as an attachment and that he was at the same address as when he took out the initial CDs. The response? He still had to send a copy of a utility bill showing his address. Morrison's response? He chose not to complete the process and asked the representative to make a note to not renew the CDs when they matured and to mail the checks to the address that the bank had on file for him. Says Morrison, “I have never had such a frustrating experience in dealing with a financial institution.”
His experience is not unique. “Industry data from a 2011 survey shows only 53% of applicants were successfully able to open and fund an account online, 25% abandoned the process, 17% were able to open, but could not fund, and 5% were rejected,” says Kavita Singh, product strategy manager for Fiserv, a provider of information management and electronic commerce.
“While early online account origination versions were clunky and were simply meant to be a service for people who didn't want to to go a branch, today's versions are fully integrated and have an emphasis on speed and ease of use. Not all banks have made the transition yet, but there are lots of banks with streamlined processes. The banking industry as a whole is in the process of upgrading their online account opening process. Some banks will have a more fluid process than others,” says Nicole Sturgill, CEB TowerGroup research director.
Knowing what to expect can help simplify the process. Here's what you need to know about applying for an account online.
Look for the best
Singh describes what's the best of the best. “You should be able to apply for a range of products online, and if you're qualified, you should be approved and funded in an automated single session, eliminating the need to visit the bank's branch.”
Furthermore, she says, the best in class provide simple online forms for input; provide online wizards or other user friendly ways to help applicants choose the right product; ask questions to verify identity; protect user data; provide live support via a chat window or direct the user to a call center; save applicant data automatically as they go through the screen, and the applicant should be able to complete an application started online at a branch if they choose.
Be sure you have all relevant information handy, including driver's license and the bank information for the account that you'll be funding from. Banks check third party databases to confirm an applicant's identity and assess banking history. Each bank has different policies on the approval process. Some will require more information or a phone call, or branch visit if you haven't lived at the same address for two years, for example, says Sturgill. “It's not personal, it's just a way to guard against fraud.” The bank may be able to offer you a PDF for the verification process that you can print out, sign and fax or email back.
Don't be surprised if you're asked to mail in a cashier's check or money order for your initial deposit, if you don't have an existing account, points out Tom Feltner, director of financial services at the Consumer Federation of America.
The best online application processes allow you to apply for multiple products at once (a savings and checking account), without re-entering information twice. “Look for banks that provide clear upfront instructions on what documentation will be needed and how long the process will take. The institution should also offer online help to answer questions throughout the application process,” says Sturgill.
Don't over apply
If you're not sure which bank you want to work with, do your research before going through the application process. “Third party databases track online account applications and a lot of applications in a short period of time will set off fraud alert triggers,” warns Sturgill. “You may just be shopping around, but databases don't know that. While it won't stop you from opening an account, you may have to go through a few extra steps (like visiting the branch) to make it happen.”
Read the fine print
Entering your information into a couple of screens is much less time-consuming than driving to the bank and listening to a banker sell you extra products you don't want. Plus, you can get a much higher interest rate than with traditional banks, says Erik Larson, president of NextAdvisor.com. But before you fill out the application, read the fine print. Some online banking accounts may have monthly fees, opening deposit requirements and minimum balances to uphold, points out Larson. Evaluate how you will be depositing and if you meet the criteria. If you notice that the service you're signing up for charges fees, chances are that you can find a much better account that fits your needs for free, he says.
Another key consideration is the institution's ATM network. How much will it cost to use non-bank ATMs? When you use the internet bank's own ATM, how do the fees compare, are they no-fee, low-fee.
Says Feltner, “Online banks open up a lot of options, but be aware of how you will use the account and what are the ultimate costs.”