Redesigning the account opening experience with inclusion in mind

The pandemic shined a bright light on the financial inequities that exist across America. While credit union leaders were already well aware of the challenges faced by traditionally underserved communities, COVID-19 provided extra motivation to aggressively solve those challenges. 

Since March, we’ve seen the industry rise up with creative, compassionate and smart strategies to advance financial inclusion in multiple ways. And, we’re hearing some really great ideas and bold proposals for doing even more as the country continues to strive for recovery. 

As momentum for inclusive products, processes and outreach builds, there’s an important prerequisite credit unions must consider. As credit unions work to achieve big-picture things, like reengineering impact strategies to better engage the underserved, it must turn a critical eye to a crucial and often overlooked touchpoint – the account opening experience.  

Ensuring prospective members become actual members

Today, account opening is often a credit union’s only shot at a first impression. Whereas prospective members once had to visit a branch to initiate a relationship, that is not always the case today. Many credit unions have innovated to allow for online or mobile account opening, which can mean the first introduction to a credit union – and importantly, it’s commitment to inclusivity – happens in the digital realm. 

Of course, a smooth account opening is not only about making a good first impression. More pragmatically, it’s about ensuring a prospective member becomes an actual member, quickly, easily and in a way that aligns with their expectations. An account opening process, redesigned with inclusivity in mind and staying within regulatory requirements, drives right at the heart of those expectations. 

GRC pros as inclusivity champions

My governance, risk and compliance (GRC) colleagues out there will be excited to hear that your expertise can be a highly valuable contribution to the redesign of the account opening experience. That’s because many of the hurdles that have traditionally stood in the way of an inclusive account opening practice center on fears of non-compliance. You are in a perfect position to help your team members understand that those compliance hurdles are not insurmountable. 

Here are a few things GRC leaders can implement within their cooperatives to improve the inclusivity of their account opening policies and procedures:

Train frontline staff on different forms of ID: The Bank Secrecy Act (BSA) requires credit unions to verify a new member’s identification with a government-issued ID, which includes foreign governments. However, frontline staff may not be as comfortable determining the legitimacy of a foreign-issued ID. That discomfort can create an awkward or strained interaction between a prospective member and the first person at the credit union they meet.  Helping team members understand what is allowed under the credit union’s policy, as well as which security features to look for on non-traditional IDs, can ease their discomfort and help them provide a more welcoming first impression for newcomers to the credit union. The same is true for identification numbers. GRC leaders can help educate team members on forms besides Social Security numbers that are allowable, such as Individual Taxpayer Identification Numbers (ITINs).

Prepare for less common situations: A key piece of information credit unions must collect from a prospective member to open an account is a physical address. However, the economic ripple effects of COVID-19 have created financial strain for many people in America. Some are even struggling to stay in their homes. They may be moving from place to place or even experiencing homelessness. Beyond the immediate pandemic circumstances, the same can be true for recent college graduates, migrant workers, victims of domestic abuse, newly divorced individuals or previously incarcerated people. A relationship with a human-centered financial institution may be exactly what they need to get on the path to financial wellness or access critical social services. 

GRC pros can review existing polices to be sure they encompass the full scope of permissible physical addresses. For instance, Title 31 Chapter X concerning customer identification programs states that an address must be collected. However, the regulation also allows for individuals who do not have residential or business street addresses to provide an Army Post Office (APO) or Fleet Post Office (FPO) box number, or the residential or business street address of next of kin or of another contact individual. GRC team members can also help staff prepare to answer prospective member questions who may struggle to provide a personal address. 

Focus on establishing a reasonable belief: BSA/AML guidelines call on credit unions to establish a “reasonable belief” that an individual is who he or she claims to be. This year put front and center the fact that not everyone conforms to a static, inflexible checklist of items to prove who they are. It is imperative that credit unions continue to assist in fraud detection and financial crimes. However, GRC leaders have a meaningful opportunity to become change agents by designing new ways for credit unions to establish reasonable belief in a person’s identity. 

Start by reviewing the cooperative’s BSA and CIP policy; it may be more restrictive than it needs to be. While it can be fine to retain the traditional checklist, credit unions should look to build in alternatives for prospects who aren’t able to provide mainstream evidence. Consider additional supporting methods, such as calling the member back at a phone number provided, checking bill payment histories or even requesting references. It is also important to remember that all prospective members should be treated fairly when confirming identity. Each of us carries unconscious bias that can show up particularly when we find ourselves in new or different circumstances. Credit unions must provide training and resources for staff to ensure they handle new member applications appropriately. 

Ensure disclosures are fully understood: New members are presented with account disclosures that may not be easily understood by someone who speaks a different language, comes from a different financial system or struggles with poor eyesight or literacy challenges. Frontline staff should be properly trained on ways to help everyone understand the terms and conditions of their newly established relationship with the credit union. 

Credit union members are as unique as the cooperatives they want to be a part of. While no credit union can be prepared for every circumstance, proactively investigating the underserved segments within a local community can point the cooperative’s inclusivity advocates and compliance preparedness in the right direction. With a few small tweaks to the way things have always been done, credit unions can open their doors to a larger and more diverse group of individuals, more fully living out the people helping people mission.