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:
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.
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.
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.