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New account opening
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New Account Opening is the process in which financial service institutions use forms and gather information when creating a new customer account. The information obtained in the account opening is used for financial and compliance purposes. The process is usually complex and has in recent years started to use technology solutions to streamline the process. New Account Opening Scope Account The term Account can be applied to a customer relationship with any financial services organization for almost any type of service, including: insurance products, brokerage services, mutual funds, annuities, etc. Existing Customer/Member, New Account Opening Account Opening is the process that a financial services organization goes through to set up an account offering a new service or financial product for a customer. For some products this can be a straight-forward process, especially if the customer currently has a relationship with the organization and the value of the product is relatively low - the account can be funded by the customer easily and the organization can set up the account and link it to the current customer details they already have. New Customer/Member, New Account Opening Opening an account for a new customer who currently does not have a relationship with a financial services organization is a more difficult process, even for relatively low value products, and increases in difficulty to match the value and complexity of the product. New Account Opening is the process that the financial services organization uses to handle the potential new customer, from the point of the customer submitting an application through to the organization creating the account and issuing a Welcome Package to the customer. Business Applicability to financial services All financial institutions require account opening procedures to cover the multiple operational and compliance requirements of account opening. Compliance, fraud and credit risk set many of the internal controls and processes that must be performed. This is implicitly linked to the complexity of the products offered, so more complex products that are considered high-risk or are created out of multiple components will require more detailed and effective business processes. are complex financial products for standard consumers, due to their high value and compound nature. They are also high underdeveloped in the processing of new accounts, using highly paper driven applications and processes, and little formalized messaging between the business partners. Business Challenges Traditionally New Account Opening has been a very paper-intensive process, and even online accounts struggle to avoid this. Combine this with the fact that many organizations run this process largely manually and you can see that there is a great potential for errors and inconsistencies to be introduced. This can lead to: * Low customer satisfaction * Customers abandoning the application process * Regulatory fines * Lawsuits for accounts managed incorrectly due to inaccurate information * Damage to brand This switching cost is one of the reasons financial institutions are advised to drive bill payment adoption among their customers/members, because the customer/member will see the investment in setting up bill payment as a reason to not switch financial institutions. However, it is likely that NAO vendors will offer automated solutions to harvest existing bill payment configuration data and populate the new bill pay solution. This technology will rapidly eliminate the purported "stickiness" of bill pay solutions. Process Complexity The process is complex due to the fact that at the outset (the point of application) the financial services organization has little or no reliable information about the customer. The process controls the collection of that information to satisfy many financial and regulatory requirements, including: * Collecting and validating customer details, identity, etc * Generating a profile of the customer appropriate to the product being offered, such as credit history, employment, etc * Assessing the suitability of the type of product or products being offered * Completing anti-money laundering (AML) risk ranking and other AML program tasks * Funding the account * Generating business system accounts and records * Fulfilling the process with a Welcome Package to the customer The process can be significantly more complex when the product being offered is composed of products and services from multiple business partners and offered by a third-party sales agent. Annuities are one example, where the product consists of combined securities and insurance products in a complete annuity wrapper. The communication of customer information, ensuring suitability and enabling trust required between organizations are big challenges. Regulatory Issues Regulatory issues add complexity to the process, with the requirements of the individual regulators for each type of financial organization, coupled with the legal requirements of the Bank Secrecy Act (BSA) and USA PATRIOT Act, especially around anti-money laundering (AML). Related Areas Loan origination Business Process Management 
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