| By Jim Bruene on February 28, 2007 11:31 AM | Comments (6) |
The folks at BAI, using research by Raddon Financial, ran the numbers on new checking account sales per branch and found that Bank of America is opening 31 new checking accounts per branch per month, or just about one per day (article here). WaMu did better with 39 per month or 1.3/day. The article said community banks typically get only about one-fifth that, just 2 new checking accounts per week per branch.
I'm not sure exactly what those numbers mean, but someday in a meeting when you are trying to make a case for new investment in your website, you can counter the, "but customers love the branches" with, "sure they do, but even BofA, who spends more than $200 million/year advertising, only manages to sell one checking account per day per branch" (see top 2005 advertisers here). It still might not mean anything, but it makes it sound like you've done your homework.
The problem with comparing branch-account openings to online-account openings is they are not separate ecosystems. Would the account have been opened online without a nearby branch? Or did that account, opened at the branch, come as a result of research conducted online by the customer? In the U.S., you need both channels for the foreseeable future, unless you sell a financial product that doesn't need physical support, like a savings account (see note 1).
Another wild card: How do you gauge the impact of increasingly prominent website offers like this one currently running on the checking account page at <bankofamerica.com> (see note 2)? Naturally, to get the $50 you have to open the account online.
Notes:
1. For more information on the future of the online channel vs. branch, see our report, The Demise of the Branch, published spring 2006 in Online Banking Report (OBR 128).
2. The offer was presented to a non-customer browsing the main Bank of America site from a Seattle IP address and indicating their state of residence was Nevada.
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It would be really interesting to know what percentage of new checking accounts become primary accounts (e.g., account with direct deposits, bill paying, etc.) by channel. I agree with you that the channels are dependent on each other, but this percentage would be useful to understand the on-boarding efficiencies of branch versus online -- and that would go a long way to understanding how valuable the Internet is as an acquisition channel compared to branches.
Rob raises a potentially misleading question. Knowing the percentage of new accounts that become primary accounts by channel might lead execs to attribute the cause of "primary status" to the channel, when in reality, its the underlying demographics of the customer base that's dictating channel performance.
In english, what that means is that, if younger consumers are more likely to make a new checking account their primary account (perhaps because it's their first account), and are more likely to use the online channel to open that account, then a banker might conclude that the online channel was the cause of primary status. When it's not -- it's the age of the consumer.
But Ron, banks shouldn't care about checking accounts, they should care about customers. Focusing on the number of accounts opened doesn't reflect whether they actually have an engaged customer. Some people may open an account and never use it. What's easier, filling out a form online or going into a branch?
Understanding the level of engagement of customers based on their acquisition channel is essential to understand ROI of online-only incentives like the one mentioned in the post.
Somehow, Rob, I suspect we agree with each other more than we disagree. If, in your original post, your first sentence had read "It would be really interesting to know what percentage of new checking accounts become primary accounts" - and stopped there -- I would have said "Amen!".
But you added two little words: "by channel". And that's what I got caught up with.
Also, you're absolutely right that banks shouldn't care about checking accounts, but about customers -- IN THEORY. But go tell that to the product manager in charge of driving account volume. She'll smile, nod her head, all the while wishing she could kick your butt out of her office. :)
[thanks for letting us hijack your site, Jim]
Ron, in December 2000 my Forrester Report (for the CPG industry) was "Manage Cohorts, Not Brands." I think the big idea is still very relevant for banks.
Rob/Ron,
You both make interesting points regarding the BAI story on Net New Checking accounts per branch. What cought my interest most was Ron's following comment:
"Also, you're absolutely right that banks shouldn't care about checking accounts, but about customers -- IN THEORY. But go tell that to the product manager in charge of driving account volume. She'll smile, nod her head, all the while wishing she could kick your butt out of her office."
As a person who works at a bank and is expected to track household counts and new to bank customers, I just can not believe in today's customer focused world that there are still banks just focused on selling accounts and not concerning themselves with growing the number of households they service.