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This Week in Retail Banking | July 18, 2020

New cases of COVID-19 are accelerating and the CDC is forecasting that rates will continue to rise over the next four weeks. While there were encouraging results on the vaccine front this week, the road to a widely available vaccine is still a long one, suggesting that we will have a prolonged period of disruption from the virus. The implications of this ongoing surge demand an examination of digital account acquisition and the accompanying considerations for banks.


Even as many states experience record new cases of the virus, Americans are moving around more frequently. Consumers have gotten better at protecting themselves, but this is also leading to more risk from greater movement and larger gatherings. As a result, medical experts increasingly believe that there will be a prolonged period with protections in place.

For banks, there are a few key questions to consider:

  • What should the branch reopening strategy be?
  • What will happen to switching rates for the rest of the year?
  • Is it safe to increase marketing again?
  • What should I expect from the digital channel and are there near-term opportunities to optimize my performance?

Visitation by State Type
(1.0 = Avg Weekly Visits from Jan. 30 – Mar. 4)

Currently In Second Peak
Risk of Second Peak
Low Risk of Second Peak

COVID Cases by State Type
(1.0 = Avg # of Cases from Mar. 26 – Apr. 8)

Currently In Second Peak
Risk of Second Peak
Low Risk of Second Peak

Source: Novantas Analysis, NovaLocation, PlaceIQ


Most banks with digital account opening capabilities saw more than a 20% increase in digital sales during the crisis, according to a Novantas survey of 46 banks. This is not surprising given that many branches across the country are closed and many others are operating in a more limited fashion with appointment-only access to lobbies. Interestingly, though, digital account opening rates have declined in recent weeks after spiking in April and the start of May. (They remain elevated from pre-COVID levels.) This is likely because some banks have reopened branches and consumers are more comfortable leaving their homes.

The trend suggests that many consumers opened accounts online in April and May because they weren’t comfortable going to the branch or the branch wasn’t available. As consumers adjusted to the new normal and banks began reopening, some preferred to open accounts in the branch. This suggests that, at a minimum, there will be a bounce back of branch-based account opening when markets normalize again and branches can be reopened. The degree of the rebound will likely be influenced by the length and severity of the retrenchment.

Weekly Industry Digital Household Production*


Weekly Industry Digital Deposit Production*


Source: Novantas’ Comparative Deposit Analytics, representative sample of banks submitting weekly
Note: Includes Checking, Savings, CD and MMA


Based on pre-COVID data, we have found that checking accounts opened digitally have retention rates that are 30% lower than accounts opened in branches and balances that are more than 80% lower. While part of this gap is driven by different demographics (online accounts are often opened by younger people who have lower balances), this only contributes to part of the quality gap that banks are experiencing. As banks are looking at a prolonged period of COVID-related increases to digital account acquisition, closing the gap in quality must be paramount.

Household Retention

Household Avg Balances Index (Avg = 100)

Source: Novantas’ SalesScape
Note: All numbers reflect 8 months on book | Balances include Non-Interest Checking, Interest Checking, Savings/MMA, CD, and IRA

The account-opening process in a branch tends to take significantly longer than one that is opened online, in part because an associate is talking with the customer the whole time to better understand their needs and help identify other products and services that may be a good fit. When we unleash customers in the digital channel, this same interaction model doesn’t occur. As a result, customers are more likely to walk away with just the checking account. Over time, we would expect that a person-assisted digital experience could begin to become more popular. That is already the case in other industries like insurance and brokerage firms, which use technology like chat functions to communicate with potential customers.

Once a consumer opens an account online, banks then have the challenge of getting that customer to fund it and activate debit/credit capabilities. The more that banks can streamline the process to accomplish these activities and nudge consumers through email, SMS or outbound calling, the better onboarding rates can be expected. This is a very different operating model than banks use today in which most of the emails deployed are part of standard, broad campaigns that, for example, encourage customers to setup direct deposit even if they have already done so. Consumers are far more likely to engage with a bank that delivers a personalized approach that makes it clear that the bank knows who they are and what they are doing.

It will certainly take time for banks to adjust to a new way of engaging with customers. In the near-term, however, there may be an opportunity to close the gap in experience between digitally-opened accounts versus those opened in a branch by leveraging excess branch capacity to conduct outbound calling. Longer-term, the bank should put technology in place to nudge the consumers at the appropriate time so they experience a personalized journey.


Deposit balances rose slightly, but the next few weeks will be particularly telling as balances reflect the payment of taxes that were due on July 15. The modest balance increase was driven almost entirely by higher-tier customers, while lower tiers were stable from the prior week.

Notably, savings growth slowed significantly in the prior week to the lowest level since the end of March. The impact of tax payments in the higher tiers, combined with the expiration of government stimulus programs and rent moratoriums in the lower tiers, may lead to a net drawdown of savings in the future.

CD portfolios are now on pace to run off 40% of balances over the course of a year, reflecting a slight increase from levels seen in 2007-2009.

A full weekly deposit tracker is available to CDA clients. Contact Adam Stockton at for details.


SoFi filed an application with the Office of the Comptroller of the Currency to create a Utah bank to offer traditional banking services like checking accounts, credit cards and mortgages. It is the fintech’s second attempt to obtain a bank charter. The startup withdrew a similar application in 2017.

Yelp said it was bringing back nearly all of the 1,100 employees it furloughed in April. The company, which also laid off 1,000 employees at the same time as the furloughs, has extended its office closures into 2021.

CNBC reported that commercial real-estate owner Brookfield Properties signed a deal with an entertainment company to turn the parking lots of some of its malls into venues for drive-in theaters for movies and concerts.

U.K.-based banking startup Monzo re-launched a subscription-based checking account that pays 1% interest on some balances. The service, called Monzo Plus, costs $6.30 a month. The company originally launched the product last year, but then cancelled it.

Meanwhile, another digital-banking startup is expanding its customer base. Banking Dive reported that Rho, which focuses on providing banking services to small businesses, launched a new platform aimed at larger companies that need more complex products.

Average rates on a 30-year-fixed mortgage fell below 3% for the first time ever to 2.98%, according to Freddie Mac. The average rate for a 15-year fixed loan was 2.48%.

Total headcount at small businesses rose 2.4% in June from the previous month, according to a survey issued by Gusto, which provides payroll and benefit services to small businesses. The survey also found that the number of salaried workers who have seen their wages reduced by at least 10% is up 80% from pre-COVID-19 levels.

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