Regions Financial is pouring a lot of money into digital banking, and it says the effort is beginning to pay off.
The Birmingham, Ala., company is spending $625 million on technology this year — 42% of that is on investments in new technology, such as digital improvements to speed up credit decisions, vet loan applicants’ identities and simplify online mortgage lending.
Regions says it had 2.7 million digital users at March 31, up 5% from a year earlier. Moreover, it claims big gains in several key metrics over the same period: checking account openings (49%), credit card sales (16%) and mortgage applications (112%). Regions declined to disclose totals in those three categories and has not reported them to investors.
Yet Emmett Higdon, director of digital banking at Javelin Strategy & Research, says the $128 billion-asset Regions seems to be making good progress. The 5% growth in users is on par with the rest of the industry as adoption of mobile banking has slowed along with growth in smartphone users — most people have all this by now, he said. But increases in account opening and credit card sales stem from hard work and creativity at the company, he said.
“They have clearly put a lot of effort and investment behind their digital account opening processes, both for online and for mobile,” Higdon said.
Regions has created a guided experience for consumers who apply for credit cards on its website, and it could appear on its mobile app eventually.
“If you’re not really sure which of the 47 credit cards you want, they have a little questionnaire that helps you through the process,” Higdon said. “Unfortunately, they don’t have that on the mobile side, but they’re thinking carefully about that process.”
The company is launching a digital feature that lets existing customers determine in less than a minute if they qualify for a credit card; only a small amount of information has to be supplied. Customers who qualify can accept an offer in as little as 90 seconds.
Andy Hernandez, chief digital officer at Regions, credits its digital banking growth to a handful of things: agile development methods, an accelerated customer sign-up process, customer research, process re-engineering, and an online mortgage portal that keeps customers updated on the status of loan applications.
“I think as an industry we’ve underachieved in terms of getting customers to open accounts online,” Hernandez said. “The customer of 30 years ago wanted speed, ease of use and convenience. It’s what they want today. But they’ve raised the bar; they’ve redefined, as is their right, what those terms mean.”
Regions began adopting agile methods four years ago; the term refers to an approach to software development that relies on collaborative, cross-functional teams to divide a task into small parts and be dedicated to flexibility and continuous improvement. Developers, analysts, product owners, scrum masters, compliance officers, legal experts, risk specialists can all participate.
“The hardest part of agile is, you have to be dedicated,” Hernandez said. “You can’t say this is going to be someone’s part-time job. You’ve got to pull top talent and put them on these teams, and have everybody lock arms on the objective.”
The agile teams work side by side, and they dress more casually than traditional bankers. A couple of teams were given the full-time job of picking apart the digital account opening process for checking accounts, mortgages and other loans, and making it faster and simpler.
Their goal was to open new online and mobile accounts within 10 minutes. Currently the process takes five to seven minutes.
“When we started doing this years ago, the industry just took the paper application and said, let’s throw it online,” Hernandez said. “And there are a lot of steps, fields and pages that just don’t make sense in a digital world and the advent of fully legal e-signatures.”
The agile teams removed steps and data fields from the sign-up process, often “asking questions of our friends in legal compliance that we didn’t know were fair to ask,” Hernandez said.
The teams were also tasked with making sure all features available on the online banking site were accessible in the bank’s mobile app.
“Even though our applications have been mobile responsive or mobile optimized, we didn’t have certain things accessible directly in our app,” Hernandez said. “Prior to some of these enhancements, you had to go to regions.com. You could go from your smartphone or tablet and it would look clean and nice on the screen, but it wasn’t in the app. We have a growing percentage of customers, as all banks do, using the mobile app.”
Regions partnered with an authentication technology provider to automate identity verification and security. Hernandez declined to say which one.
Soon the bank plans to offer useful customer insights about things like upcoming bills that might strain a customer’s cash flow. This will replace the early generations of personal financial management software.
“Those software applications were very difficult to use and in hindsight, it’s not surprising that they had low adoption,” Hernandez said. “We’ve finally reached a point where there’s no heavy lifting done on the customer’s part.”
Hernandez says Regions was one of the first banks in the industry to offer a true end-to-end digital mortgage. Higdon backs this up.
More recently, the bank launched an online Mortgage Status Portal, which gives customers real-time updates on the status of their applications. They can receive these updates through text messages or emails if they prefer. Through the portal, people can upload documents and complete other steps.
Regions brought its mortgage loan officers into the online loan process, too. It created personalized web pages for each mortgage loan officer that can be shared with potential borrowers, so the loan officers can direct people specifically to their site to apply online. Having unique URLs connecting to the online applications ensures the right person gets credit.
“Our mortgage loan officers are very good at what they do,” Hernandez said. “Now they have a digital presence, removing what we used to call channel conflict. They’re now speaking digital.”
The ease and speed of the online mortgage application are other reasons for the increase in digital mortgage applications. Regions markets the digital mortgage throughout the regions.com website.
Regions also lets users save any kind of loan application they’ve started on its website or mobile app, so if they get interrupted, they can go back to it later.
According to Higdon, less than 25% of the top 25 banks let customers save an application in the mobile channel.