ClickSWITCH: Friend or Foe

March 6th, 2017

clickswitch.png

Transferring accounts has long been considered a cumbersome process. Now with a simple click, the company ClickSWITCH has created an easy system that will allow its users the ability to transfer their accounts from one bank to another. ClickSWITCH further eliminates the need to contact each individual biller to transfer bill pay services. The process isn’t 100 percent automated yet (currently about 60 percent of deposits can be digitally transferred without paper documents), and it isn’t instantaneous. However, it does dramatically reduce the effort the consumer must make to switch accounts or open new ones.

THE GOOD
The automated account transfer solution is a white label service that banks can use to offer new account holders the ease and speed of digital onboarding. When the transfer is complete, it gives the consumer the option to close the previous account. It takes 5 to 15 days to complete the transfer, although bill pay and automatic deposit data transfer immediately.

The company touts its product as a way to increase customer engagement, a retention tool for banks that have acquired another bank, and as a way to reduce the amount of time that employees spend onboarding new customers manually in the branch.

ClickSWITCH gets paid a fee of approximately $30 for every account onboarded. By speeding up the transfer of direct deposits, the banks get a profitable new customer faster. The company is using resellers instead of creating a large sales team. Most banks using ClickSWITCH range between $500 million to $10 billion in assets, with some larger institutions also using the product.

THE BAD
Banks inevitably will be concerned about data and security issues. That said, over 300 financial institutions in the U.S. and Canada have found a way to get comfortable enough to use the platform. ClickSWITCH is SSAE16 SOC1 certified. (SSAE16, or Statement on Standards for Attestation Engagements No. 16, is a new internal controls standard put forth by the American Institute of CPAs). The company is bullish about its security practices.

The bigger and broader question: If this works, why wouldn’t every bank have ClickSWITCH or ClickSWITCH-like capabilities? If seamless transfer becomes an industry standard like bill pay, how will banks retain their assets? Deposit flows could become far more volatile, and competition for consumer and business deposits would push banks to create better user experiences. Nontraditional banks and nonbanks that are pouring resources into user interfaces and customer engagement would have a better chance to win the hearts and wallets of customers.

OUR VERDICT: FRIEND
ClickSWITCH is a friend that wants to change how you compete if you’re ready to compete on the strength of your products and customer service. However, for those preferring to rely on the tedious process of changing accounts as a disincentive to prevent your customers from going elsewhere, clickSWITCH is clearly a foe.

jsusie

Joan Susie is the Chairman of Bank Director, an information resource for directors and officers of financial companies. Connect with her on LinkedIn or follow @BankDrector on Twitter. You can also get additional updates by visiting www.BankDirector.com.