Your Customer Onboarding is Broken

Jim Marous (00:11):

Welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous.

Jim Marous (00:16):

Organizations are spending massive amounts of money in digital transformation, and most banks and credit unions are also still struggling to deliver a seamless, intuitive, and simple account opening experience.

Jim Marous (00:33):

In fact, most financial institutions could double their digital account opening just by following a few simple strategies. In other words, your customer onboarding process is broken.

Jim Marous (00:46):

Today on the Banking Transformed Podcast, I'm joined for the third time by Frida Leibowitz, the co-founder and CEO of Debbie. It's a FinTech platform that not only helps institutions attract younger members, but also rewards positive financial behavior that boosts engagement and loyalty.

Jim Marous (01:06):

We'll not only discuss Debbie's rapid growth, but more importantly, the findings of the recently released study on digital account opening, where they review all the players in the business, tell you what works, what doesn't work, what's good from a customer experience perspective, and what's good from a financial institution perspective.

Jim Marous (01:25):

If your organization is looking to update and improve your digital account opening, onboarding experience, this is an episode you can't afford to miss.

Jim Marous (01:39):

According to a recent study, banks and credit unions can increase application completion rates from a dismal 15% to over 50% or more by focusing on speed, simplicity, trust, and intelligent integrations. The key is to actually treat account opening as the beginning of a relationship, not the end, using behavioral incentives and personalization to build long-term loyalty.

Jim Marous (02:08):

So, welcome back to the show, Frida. Despite being a relative newcomer still to the banking space, this is the third show we have done together, which says something about how much I love your Debbie platform, as well as really enjoy time with you.

Jim Marous (02:24):

So, for those who may not know who you are or have not heard of the Debbie platform, can you provide a little bit of a background?

Frida Leibowitz (02:32):

Sure. And thank you so much for having me. This is so fun. So, anytime you hit me up, I'm ready to do another podcast.

Frida Leibowitz (02:39):

A little bit of background about myself. I'm Frida, co-founder and CEO at Debbie. My background is actually — even though maybe not many, many years but I did spend a couple years at Marcus by Goldman Sachs in its early days.

Frida Leibowitz (02:52):

I went through that entire train ride and then train wreck, but learned a lot, and then started Debbie really with the mission of helping consumers make better decisions with their money, specifically focusing on what we call the 99% low-middle income consumers.

Frida Leibowitz (03:08):

What Debbie really does is we are a rewards program for financial wellness. Think of us like credit card points, but reversed. Instead of getting points when you spend money, you get points when you save, pay down debt, reduce spend in certain categories, and behave in any way that helps you mitigate your risk over time and perform better.

Frida Leibowitz (03:30):

We partner with financial institutions, primarily credit unions to date to really help drive new membership and engage that membership in a way that is really focused on long-term health for the member, and really high ROI for the financial institution as well.

Jim Marous (03:49):

It's interesting because in the discussion we've had with you in two previous podcasts, it becomes more and more apparent that this is a tool that's needed that really will get a high response from it. Because anybody who has credit that's a little out of control is looking for that breakthrough, that reason to change their behavior, and rewards can do that.

Jim Marous (04:12):

And what's interesting is it's actually, as you said, it’s a gateway to new relationships for financial institutions. How has the response been to your very unique platform? Can you share a success story with me?

Frida Leibowitz (04:27):

Absolutely. So, I think on the consumer side, we've started to hit that virality. Today, a lot of our growth is coming from referrals, for example, and that really tells you if someone loves your program, they're inviting their friend, they're inviting their family member, that's a very positive sign.

Frida Leibowitz (04:41):

I think also, we get love letters from users on a daily basis at this point. People really tell us that even though these are seemingly small little nudges as they're moving on the right path, it's changed some of their lives.

Frida Leibowitz (04:57):

We get that feedback from them all the time. They will use those words. It's changed my life, this helped me think of myself, celebrate my wins, and think of myself as someone who can handle money, as opposed to only hit me with fees and punish me when I'm not good with money. So, I think from the consumer side, that's been great.

Frida Leibowitz (05:12):

From the financial institution side of credit union specifically, we've also had an incredible growth path and some very, very positive feedback. We grew last year from two-partner credit unions to now having 11 on the platform. So, we more than 5-xed in a year, and I think that that has also been very telling of the credit union industry and how there is willingness.

Frida Leibowitz (05:35):

There's a lot of willingness to innovate, to be the first to do something, especially when you think about consumer wellness, I think credit unions are the first to kind of get on board. And so, yeah, we're feeling very grateful to be here and be working on something that clearly matters to people.

Jim Marous (05:55):

So, it's interesting, as I mentioned in the introduction, you just did a recent study of digital account opening processes and experiences as well as the people that are actually providing the gateway to better digital account opening.

Jim Marous (06:08):

And I got the impression when I read the report that the reason why you did this was not just because you wanted to get a nice report out to the marketplace that needed it, but because you're really an onboarding process; you're a way for organizations to get leads of people that are ready to open a new account to get your service.

Jim Marous (06:28):

However, I think you found out (as I am well aware) is that for most organizations, the digital account opening process is dramatically broken from beginning to end. And what ended up happening, I think from your study, was that you were giving lease to financial institutions, but so few of them were being closed not because people didn't want your service, not because they weren't willing to open an account digitally, but because the service was broken from internally to the financial institution.

Jim Marous (07:02):

What really jumped out, and I mentioned it in the intro, is that a 15% average completion rate for digital account opening which is actually something very similar to what we've seen in the past, that the process in the digital world as opposed to the in-person world is really fragmented. Why is that number still so low in 2025 when everybody's talking about improving the digital experience?

Frida Leibowitz (07:32):

Yeah, absolutely. You're right on point. And I'll even add to that — that number is still low after credit unions have implemented, and done all this work to get their digital account opening in place.

Frida Leibowitz (07:41):

They've done so much work, they've spent so many resources, so much money, and after all of that, we’re at a 15% application submission rate. Mind you, one of the other things that I would like to break down later, it's not just the completion rate; the next phase of that funnel is the approval rate for accounts, and that is abysmal as well.

Frida Leibowitz (08:00):

I have credit unions right now that are declining 70% of the applications that are being submitted. So, after someone jumped through hoops, did everything they needed to, found their ID, found their mother's maiden name, found their mother's, father's, best friends, dogs, whatever — they're still getting denied for membership.

Frida Leibowitz (08:17):

And it is absolutely wild, we can break all that down. I say to credit unions, "We could bring people to your doorstep, but I can't make them enter the door if you are going to make them walk around, first, go on a little treasure hunt or whatever it is."

Frida Leibowitz (08:33):

Like start looking for things, maybe go to the backyard, climb up the water pipe, switch pipe — they're making people go through such hoops. And even though there's so much interest, people are coming to the doorstep by the droves.

Frida Leibowitz (08:47):

We have consumers signing up, getting excited, wanting to earn those rewards and they're willing. And by the way, here's the other crazy stat for us: we have a page on during our onboarding that matches consumers with a credit union that will allow them to earn these points.

Frida Leibowitz (09:01):

On that page, the acceptance rate, how many users are actually accepting a credit union partner and showing willingness to join a credit union they've never heard of before, is 87%. 87% of them are saying, "Yes, I would like to join this credit union."

Frida Leibowitz (09:17):

And out of those, only 15% are going to actually submit an application. And out of those, maybe on a good day, 50% are actually going to get their membership. So, that process over there, there are a lot of things that we could break down and understand where are the real challenges today.

Jim Marous (09:36):

So, it's interesting, in a call and also in some conversation with you, you mentioned about the whole turning down based on the credit bureau. Now, I could be an outsider and say, "Okay, part of your platform are people that are challenged by their credit right now, that they're being tugged both ways."

Jim Marous (09:58):

But you found something very interesting because what's happened is we've tried to make the process fast and simple, which could very easily mean I'm sending things to a credit bureau and taking whatever they send back to me, and either approving or not approving them right off the bat.

Jim Marous (10:14):

But in your study, your research, you found that I think at least one organization said, “Let's look at these again and let's see if we maybe made the wrong decision.” What did they find?

Frida Leibowitz (10:28):

Absolutely. So, this has been interesting. We're doing this now with a few of our credit unions and I have to say some of them have been absolutely incredible, super open to feedback, to understanding how to do things better.

Frida Leibowitz (10:39):

I think when we started digging into the applications, I think we break it down between fraud and credit-based. So, when you talk about credit based, it's really mostly based on qualify actually. So, we break it down to understand where this is coming from.

Frida Leibowitz (10:54):

On the fraud side, definitely as always, when you start doing digital marketing, you're going to hit some fraud problems. However, the policies that these credits have implemented, even with our fancy digital account opening, are still so outdated and really, they're so completely tone deaf to what's going on with millennials and the young generation and how they behave digitally, and I'll give you some examples.

Frida Leibowitz (11:17):

I, me, got denied for one of our credit unions and I was flagged for fraud. I got denied for membership. When I called and tried to understand — and of course, I used my special connections, I called up our partners. I'm like, "Hey guys, I applied, I didn't get accepted."

Frida Leibowitz (11:33):

The reason for that was that my IP address was in one place, my license (I think I was maybe I don't know, traveling at that point for a conference) was a New York license and my address was a Florida address.

Frida Leibowitz (11:49):

Now, this is very old school thinking. If you’re a millennial today, especially if you're a Gen Z, it is very likely that you are traveling, that your license is still based on who knows how many addresses ago, and that you now live somewhere else.

Frida Leibowitz (12:04):

We are not going and updating, we're not living in the same house for 40 years; we're moving. Every year, we're moving somewhere else. So many of our users, our license is still based on their parents' address. They still have some of their mail going there on any official documentation. So, that to me is a very tone-deaf way of kind of not really understanding where the times are at. That's one example.

Frida Leibowitz (12:30):

The other one is even the ones that are a little fancier, they're looking at digital footprint. They have this threshold. We saw one user got denied because they had excessive accounts open digitally in the last six months.

Frida Leibowitz (12:44):

Now, again, you're looking at a demographic that's literally coming through FinTech. They are trying out so many different apps, they're opening up different accounts. That threshold, and then I think this credit union was very open and amenable to saying, "Hey, actually maybe we need to loosen this threshold for a digital channel because these are consumers who their lives are digital. This is not 1999. It's very easy to open up an account in new places, it's very easy to try out different apps."

Frida Leibowitz (13:10):

And so, I think on the fraud side, there are so many credit unions will just automatically dismiss it. They're like, "Oh, it's fraud, it's fraud, so no." I'm like, "No, no, let's, let's look at this applicant. Let's see why you tagged them as fraud." And those are the kinds of things that we find, and I think really we need to raise a lot of awareness about.

Frida Leibowitz (13:26):

So, on the credit side, let's break that one down. We looked at some of these accounts and what's interesting to me (and this is just baffling), I have LIDs based or LIDs certified credit unions who declined a teacher who is at one of the local counties. This woman was just in debt, clearly had not a great history, and couldn't get access to a credit union membership.

Frida Leibowitz (13:55):

If you are a credit union that says everywhere, preaches everywhere that you are focused on this demographic, the very least you have to do is not auto decline this person, this individual who is really … this is again a teacher who's working in the public school system, who's working really hard, who's making way too low of a salary and is struggling.

Frida Leibowitz (14:21):

And yes, has had some black spots in her credit history and her ability to be responsible with her bank accounts. But if you are saying everywhere that you are going to be that institution for these kinds of consumers, then you need to put your money where your mouth is.

Jim Marous (14:40):

It is amazing. We went through a situation, my wife and I, we lived in California for three years during the mortgage crash. Not the appreciation of properties, but during the mortgage crash. And it was interesting because when we left, some state agency thought we made money on our house over the three-year period that nobody made money on their house, and therefore, put a lien on the account, and then we had to work through it.

Jim Marous (15:08):

But during that process, we were turned down by a lot of companies for credit and none of it was true, and once we worked through with them (that was another thing), what was interesting is I almost could understand it when I was applying for credit. A consumer has a very hard time understanding why you are turning them down for a deposit account because of a somewhat adverse credit relationship.

Jim Marous (15:35):

And as you said, some institutions are able to approve after they've looked at this, more than 50% of those people that they turn down just off the bat because they use some electronic way to determine credit adjudication or fraud risks, anything of that nature.

Jim Marous (15:52):

Not that risk and fraud are not important, the challenge is are you shooting yourself in the foot with the consumers that will actually give you loyalty for a very long time for looking out for them?

Jim Marous (16:06):

It’s interesting, your report talked about an outline for a 50% completion rate possibility. What were the biggest friction points you saw that were killing conversions today and just importantly, which one do you think are the easiest ones to fix?

Frida Leibowitz (16:25):

Yeah, absolutely. At this point, it's very data-driven because I have today a credit union on my platform whose completion rate is 5%. I'm not going to mention the name of their account opening provider, I'll let the crowd guess. There's really only a few names that with be possibility for this. And then I've got a credit union whose completion rate is over 60%. So, they're beating even the benchmark we're setting.

Frida Leibowitz (16:57):

And by the way, that credit union who has a 60% … we have another credit union using the same digital account provider who's less than 20%. And that's because digital account-only providers, they can only give you the tools, but if you are going to force your old policy into these tools and try to just do it digitally, sure, maybe you'll do better than paper applications, but you are really not going to make it all the way there.

Frida Leibowitz (17:26):

If you're going to still think that people need to provide every single bit of information about themselves and their entire history and their entire family history, they're not going to do all of that for a checking account when they can go to Chime or Varo or SoFi and apply within three minutes with much less information. It's just not what's going to happen, that's who you're competing against.

Frida Leibowitz (17:48):

And so, let's break down the actual differences of what we saw between the applications. I would say the absolute number one drop off point is ID upload. And I know this is such a sensitive one and every time I bring it up, I already see the credit union just get hibbie jibbies. They're like, "No way, no way, no way."

Frida Leibowitz (18:08):

But this credit union, they knew they had aggressive goals and they removed the ID upload. They are using very sophisticated integrations and digital ways to verify consumers, and they only do an additional ID upload requirement if there are certain risk triggers. So, you basically start creating a smarter path.

Frida Leibowitz (18:30):

At this point, there are plenty of ways to do digital identity verification without requiring an ID upload. So, I would say that's the number one current, like what we see just completely kills the process. So, I think right there is like 60% drop off.

Jim Marous (18:45):

What's interesting is organizations will pay for a partner to help them with their new account opening process, again, looking for that three-to-five-minute account opening process. They think they've gone through every single dynamic of it, and then the organization comes in, is ready to put it in place, and they go, "Well, I still need the regular ID," and you go, "Why?"

Jim Marous (19:08):

As you said, two organizations, the exact same platform, one’s successful, one's much, much, much less successful, and that's because for lack of a better term, the bankers got in the way. They said, "Well, I like everything you're doing, but we won't let go of this to get there."

Jim Marous (19:27):

That shows not only a poor sales plot process because you're selling to somebody who's not really ready to buy what you offer, but it really shows a bad buying process where you're not willing to do what the organization says is needed to make it work.

Jim Marous (19:45):

Everybody who listens to the podcast knows there's very few podcasts I go through without complaining about the new account opening and the fact that the tools are all there, the problem is as you said, I can't change management if management's going to buy the technology and not use it the way it was built. It's not going to work. What's the one you'd fix?

Frida Leibowitz (20:07):

I think the ID definitely. It really depends how comfortable and also, I think a lot of the time, the folks that we're working with, specifically the individuals we're working with are so motivated to bring about change, and then they keep hitting roadblocks inside of their own organizations, and so it makes it very tough for them.

Frida Leibowitz (20:24):

But one of the things that we are trying to help them do and help them pitch is how to jump into the deep end with floaties. So, what do I mean by that? You got to figure out how you're going to take risk, but manage it. That's why I call it risk management.

Frida Leibowitz (20:37):

It's not that you're just going to accept it. You're not going to just say, "Okay, sure, I'm just going to do completely digital identity verification without requiring an ID upload," which we could even debate if it's even more risky to do digital. I don't even know.

Frida Leibowitz (20:53):

But let's say you feel that it is, what this specific credit union that had the 60% completion rate did, is that they push any consumer that we send that is above a certain threshold of potential risk for them.

Frida Leibowitz (21:09):

What they just do is they push them to a very simple checking account that has no overdraft capabilities as very basic, and then they wait for them to prove themselves for a little bit before they can then qualify for a better checking account.

Frida Leibowitz (21:26):

That's a great path. You're letting someone in the door, you're giving them the most basic service, a checking account. The risk is minimal. They've got checks after the fact, after the account's been open, they're checking, they're making sure if they see suspicious activity on that account, they shut it down.

Frida Leibowitz (21:41):

But the upside that they get, the amount of people who are good actors, who are just not going to put up with all of these crazy hoops you're making them jump through, they get in. So, the worst-case scenario, you open up a few accounts that you then have to close within three months, but you still brought way more members into the door.

Jim Marous (22:05):

Well, and the losses, even the losses that happen are not that great. This whole thing we talked about before you got on the air, the whole issue of complete risk avoidance as opposed to managing risk, and it's interesting, your study was very unique.

Jim Marous (22:20):

At least I haven't seen one of its kind where you actually looked at all the organizations that help in the new account opening platform, and you tested them all. Not just test them with questions and answers to the organization, use them, but you actually opened the accounts and said which ones of these felt right from a customer's perspective and from an organizational perspective, and you went through all the big ones.

Jim Marous (22:47):

I'm not going to go through the names here, but bottom line is you opened accounts to all these platforms, and you found some experiences that were really good, and you rated them based on why they were good, and some that were not so good. So, what were some of the good experiences and what was one of the bad ones that really stood out?

Frida Leibowitz (23:06):

Yeah, absolutely. And I do want to put a pin quickly in the cost. I want to put a pin in the cost point that you made because I want to get back to that because I want to talk about the numbers and the math, and let's really figure out how to think about the cost benefit analysis for this.

Frida Leibowitz (23:19):

But if we go back to the report that we had put out about the different account opening providers, I think we try to be very fair, and I do think that especially when it comes to the top four or five that we looked at and we're partnered with a bunch of them — also just disclosure, we have integration partnerships with some of them that are great, that are helping us kind of make change together, and I think what really stood out are a couple things.

Frida Leibowitz (23:48):

One is of course, the user experience. Each one of them, some of them do a better job, some of them do a good job, but maybe not as good as some of the other ones. I do think that all of them though, have a pretty strong baseline. At this point, the top couple of digital providers are the ones that are growing the fastest right now. You can kind of see they've got a really nice digital experience and I think that that piece is great.

Frida Leibowitz (24:14):

I think the second piece, and this is where there starts to be a lot more … well, it's two things tied together and that's where the differentiation starts to really happen, is the lift that it takes to implement.

Frida Leibowitz (24:26):

So, the implementation efforts, and then usually, that is paired with the customization options and how robust, and does it offer business banking and all kinds of other bells and whistles and whatnot. That's where that can get interesting.

Frida Leibowitz (24:43):

And this is where there isn't necessarily … like we don't have one partner. Like, "This one is the best, you should go with this one." And we never come with that approach to conversations. It's usually we just provide, “Here's who we think this is best for, and based on the team that you currently have, the technical resources that you have, the needs you're going to have for your organization in the short term and the long term,” these are the things you might want to consider.

Frida Leibowitz (25:06):

And I think that also the digital account opening providers definitely have each taken a little bit of a niche. They've kind of figured out what they specialized in, and because there are so many options in the market, this is great for credit unions.

Frida Leibowitz (25:18):

So, there's a lot of healthy competition happening right now which means that each one of those companies is working super hard to get very good at one or two things that they do best. And so, I think at this point, for most credit unions, when they're making their decision, it comes down to just one or two that really fit their needs and can be perfect for what they need.

Jim Marous (25:44):

So, that said, let's put you in charge of a medium-sized credit union community bank. What would you be looking for now that you've dug into these from both the customer experience perspective as well as knowing the financial institution and your partnership experience — what would you be looking for, for a digital account opening partner?

Frida Leibowitz (26:09):

Those are great questions. I think for me, I would definitely be looking at one, the user experience. I think that at the end of the day, what your member is going to go through is super important. Like I said, even when you filter off user experience, you're still going to get at least four or five really great options that all have a great user experience.

Frida Leibowitz (26:30):

I think the second one, and this one obviously, I'm a little biased being a fintech, I would look at which of these providers is really going to become a platform that I can leverage to then do other partnerships, how flexible is this going to be and how is it going to help me grow?

Frida Leibowitz (26:48):

Because like I said, in my example of the house, if the credit union is the house, the digital account opening is the plumbing. So, the plumbing is great. You want to get your plumbing, perfect. So, your guests arrive, their experience is great. But you want to make sure that that plumbing can connect, that everything kind of work together.

Frida Leibowitz (27:09):

And so, in the future, when you want to plug things in and you want to actually get the people in, you have a way to do that. And with that, I think the last base, which is of course always important, is pricing structure.

Frida Leibowitz (27:22):

Each one of these digital account opening providers has a different cost structure, and they're really tailored for different things. Sometimes different size credit unions, some of them are better fit if you are growing super aggressively, then you might want to go for more of a flat fee structure. You don’t want to maybe increase your costs exponentially as you’re growing.

Frida Leibowitz (27:43):

Some of them do have the per-application type of costs and that might make sense for other credit unions, who are maybe not growing as fast but are looking for something that they can kind of manage the budget based on their growth goals. So, I think between those three things, that's really what I would use to make my decision.

Jim Marous (28:07):

And you talked about the fact that most bankers see the account opening process as a finish line to their marketing process. Basically, geez, we finally got where we wanted, we had the account opening, but you really view the digital account opening as the beginning point. Is that what you mean when you talked about the ability to integrate with other platforms, with other solutions in the marketplace, or is it beyond that?

Frida Leibowitz (28:31):

That's exactly what I mean, because exactly what you said, this is just the starting point. You just got your plumbing right. That doesn't mean just because you did that, doesn't mean that people are going to come now. You need to then get them in.

Frida Leibowitz (28:43):

And you need a platform, and not just that. I think some of these platforms allow you after the people are already in, to continue to engage them, to know how to target them for additional products or to provide a clear platform where they can then come back for additional products.

Frida Leibowitz (28:58):

And so, I think those things are really critical. You want to know how you're going to be able to plug in both a mechanism for acquisition to start happening, to actually bring people in. And then also, once they're in, what other features are you getting that are helping you maintain the relationships, build the relationships, et cetera.

Jim Marous (29:19):

Let's take a short break here and recognize the sponsors of this podcast.

[Music Playing]

Jim Marous (29:26):

Welcome back to Banking Transformed. It's interesting because when we really look at in many cases, looking at the Gen Z and millennial consumer, these segments expect a different thing from their financial partners.

Jim Marous (29:43):

A lot of times, it's education, financial wellness, empathy more than anything else, simplicity, speed. Sometimes some of the Gen Z and millennials also need that in-person relationship. How are you seeing organizations, because you're really appealing to those segments as much as any — sure there's outliers, there's probably people like me that probably could use your service.

Jim Marous (30:10):

But what did these segments expect, and how are financial institutions right now falling short and meeting the overarching needs of the new-to-banking customer?

Frida Leibowitz (30:25):

Oh, I'm going to say something very controversial, and this has been an interesting thing that I've been exploring lately. Let's zoom in, not just the millennial and Gen Z, but let's talk about the millennial and Gen Z who are really struggling financially right now, and the very disproportionate amount of our generation is struggling right now.

Frida Leibowitz (30:44):

And I think when you're at that struggle movement, you look at the Maslow Hierarchy of Needs or whatever, finding meaning and selling me all these bells and whistles, it's like telling the people to eat cake: “Oh, we're going to care, we have a mission, we care about you, all these things.”

Frida Leibowitz (31:04):

What we have found is when a consumer is struggling and they want to get on this rewards program so they can get the rewards learned, get better, even when we match them with the credit union, we actually do very little explanation in the beginning about what the credit ... like the first thing they want is to just get access to the thing that they need.

Frida Leibowitz (31:23):

They don't want to hear about how amazing and how much the credit union cares about them — frankly, they don't give a flying rat about what your credit union's mission is and how you've served people in your community, they will go.

Frida Leibowitz (31:35):

And that's also why I looked at it, 50% of our user base is going to payday lenders and payday loan alternatives. Do you think they care that these payday loans are super predatory? They don't care. And by the way, of those, 89% are repeated customers.

Frida Leibowitz (31:54):

So, this is not a one-time, “Oh, I slipped,” this is a, “I'm regularly going back to the same horrible financial service because it is providing me something that I desperately need.” And if getting a payday loan is so easy, but going to a credit union and trying to open up a checking account is so difficult, just put those two together.

Frida Leibowitz (32:17):

And so, I think what credit unions need to think about is first just give them a way to just first get in before you start telling them about all this financial wellness.

Frida Leibowitz (32:29):

And then afterwards, I think what we have found is once they're in and once they're kind of getting some relief, some help, then they're very open and willing to hear about the mission, and that's what makes them stay, that's what makes them kind of build a loyalty, that's what makes the brand perceptioning. They now have a better brand perception unlike those payday lenders, obviously the consumers hate those guys.

Frida Leibowitz (32:55):

So, I think it's really you have to think about the hierarchy of needs and first serve the very acute need that this consumer has right now, and then you can drive them towards purpose, towards loyalty, towards understanding why your mission is really important to them and financial wellness tools, et cetera, et cetera.

Jim Marous (33:12):

So, it's interesting, your passion, the passion of your co-founder, the direction of your organization, what you're trying to achieve with Debbie is very aspirational. Obviously, I'm hooked because we've had you on as much as anybody we've had on the show.

Jim Marous (33:31):

When you're talking to a financial institution, everything seems to be just, boy, it hits the spot on what I want to do, who I want to hit; what gets in the way of them saying yes from your perspective? Is there any one or two things that you realize, geez, some institutions aren't ready or whatever it may be. What is the reason why somebody may say no.

Frida Leibowitz (33:57):

This is a good question. Are you referring to them saying no to Debbie or saying no to change on their processes?

Jim Marous (34:04):

It may be the same. I was going to actually separate a digital new account opening platform and Debbie, but probably, because I can't think of any reason to say no to a digital account opening platform, it may be the same, but what are you seeing as the geez, this is something we got to get out of the way early in the conversation because it's going to get in the way if we don't deal with it immediately?

Frida Leibowitz (34:25):

Yeah, absolutely. Great question. And actually, we're going to tie this very nicely into the cost thing. And we released a different report called what is your MAC? What is your member acquisition cost? And we did another study that found that more than half, or close to half of credit union executives don't know what their acquisition cost is per member.

Frida Leibowitz (34:50):

And I cannot tell you how many times we've been in conversations where we ask them what's your budget? How much are you willing to spend to acquire members and to engage them? And they have completely unrealistic expectations.

Frida Leibowitz (35:06):

And actually, this is a good time to announce a very cool new feature that we're building on our website. It's actually already built but we're adding more credit unions to it, where we’ll calculate it back for you.

Frida Leibowitz (35:14):

Because all credit union financials are public, we built a scraping algorithm that will literally scrape your financials and it will tell you how much you are actually paying for new members, and how much you're paying for deposits that you have. And I think that's usually one of the things that we like to get out of the way first because credit unions will come with very aggressive target growth goals for their number of members that they're going to get.

Frida Leibowitz (35:41):

And they are absolutely sure that they're spending so little money because they're stuck back in 20 years ago land when people will just walk around the block and join your credit union, and that's just not realistic anymore. But we did the math, the average credit union is spending $489 to acquire a new member, and some of them are spending more than a thousand dollars to get a new member.

Jim Marous (36:02):

Oh, definitely, definitely. Because they'll either say, “Here's how many accounts we opened against what we paid in direct costs without taking into the indirect costs, but even more importantly, not looking at how many of those customers stayed.”

Jim Marous (36:16):

We used to have a figure at a bank I used to work at where there was a difference between one bank and the other, and that was because one bank got rid of customers very quickly if they weren't active, the other one held them on longer. Well, those metrics that come out to be different, even though the reality is very similar.

Jim Marous (36:33):

And you're right, organizations way underestimate what they pay for a brand-new customer and for one that you actually keep. They talk about numbers that come in the door, and that's also where the metrics get really messed up between digital account opening and in-person account opening because they put different metrics against them even though some of those costs are overarching no matter if you had the branch or didn't. So, it's yeah, very interesting dynamic.

Frida Leibowitz (37:00):

Yeah, for sure. So, I think that, and tying it back to what we were talking about how to improve the funnel and the cost benefit analysis. If you are a credit union paying $489 for a new member, and that is a direct cause of you only accepting, only getting X amount of applications in the door — and if you could only just double, double the submission rate, theoretically you reduce your cost by half.

Frida Leibowitz (37:29):

And how much money is that saved? A lot of money. $200 per account you're saving on acquiring them. What would have to happen to that checking account if it has no overdraft or even if it does, but in a very small amount.

Frida Leibowitz (37:42):

Think about the cost benefit. You're probably going to be saving a lot more money on your acquisition costs, regardless of whether you have a little bit higher fraud losses or whatever you want to call it. And even then, like I said, you can have your floaties on, make sure that you're not giving everybody overdraft accounts and whatnot.

Jim Marous (38:01):

Yeah, it's crazy because you looked at your ratios of people that get actually through the whole system versus those that don't. And you tell them, “I can very easily just, if you can change your perspective a little bit, I can double the number of accounts that get through, which means you're doubling your new account openings at a time when that's one thing you're putting a whole priority on, I can do it without changing your marketing.”

Jim Marous (38:26):

Because what's happening is all these people, as you said, come to the door and then you make them go around to the back, jump the fence, get a new key lock, get a new key code, then you get in and you go, "Well, there's three more doors you have to get through to get to the party. And even then, we're not going to give you any food. We're not going to give you all the benefits," and you just go, "Holy crap."

Jim Marous (38:46):

And these people are wanting to do business with you. As you've referenced, these are people that came to you first and you've made it so difficult and what happens sometimes is they benefit because someone's gone to three other institutions that treat them the same way first, and you just happen to be the point of breaking where they go, "It looks like everybody treats me like this, I'm going to open an account."

Jim Marous (39:12):

So, you may not even be getting people that actually want to do business with you, they've just gotten worn out through other organizations.

Jim Marous (39:20):

So, let's get back to Debbie for a second. What is on the horizon, because you've done very well. What do you see on the horizon? What do you see as being the growth metric, and what's going to be changed in the next 12 months?

Frida Leibowitz (39:35):

Yeah, absolutely. Well, we've got a lot of really fun things on our roadmap, but two things are particularly relevant here. First, this summer we are launching a very cool AI-driven feature that is basically our partner matching system.

Frida Leibowitz (39:52):

We overhauled this now that we have a bunch of credit unions on board and some larger financial institutions as well. We basically are building a smarter algorithm to match folks to the correct financial institution that's going to serve them best.

Frida Leibowitz (40:05):

And what that algorithm could take into account is not just your geography, your credit risk level, things like that, it can also take into account your age, whether or not you have kids, your relationship as well, and really match it with a credit union that can serve you well. We actually have a really nice UI where we show the user almost like a dating app kind of match.

Frida Leibowitz (40:28):

Where we matched you with this as a perfect financial institution and they will get a personalized screen that will show them the services and products that this financial institution is offering that are particularly relevant to them.

Frida Leibowitz (40:39):

So, if they've got young kids and they're worried about kids checking accounts, it will show them that. We will literally show them you have a branch X miles from your house, things that are super personalized to them, and we have a compatibility score.

Frida Leibowitz (40:54):

So, we'll show them how compatible they are, and of course, we don't show them anything below a certain threshold of a compatibility score. I think this is from a user perspective, I think it's going to make a huge difference. It's going to make people kind of feel like there's a lot of reason behind why we are bringing them to credit unions.

Frida Leibowitz (41:11):

And it brings us back to our mission, and my true belief that credit unions are really best positioned to serve these consumers in a way that is really unparalleled by any other type of financial institution.

Frida Leibowitz (41:23):

And I think on the back end of that, what else is interesting is that we're feeding in data about what happens after account opening, and that data about who becomes active with the credit union, who is really engaging with the products, and it starts optimizing the entire algorithm.

Frida Leibowitz (41:37):

So, it looks at you and it says, "Jim has this kind of profile, and in the past people who've had the same profile as Jim performed really well at credit union X, and therefore, we're going to match him into this credit union."

Frida Leibowitz (41:50):

And so, I think that continuous learning model that keeps basically understanding which credit union can best serve which consumer, I think is going to be massive. It's going to be a really, really big value that we can help add to this industry.

Frida Leibowitz (42:06):

And on the second piece, and I think this is something that to be frank, we're very aware of and working to solve, and that is what happens after account opening, which even after we match someone and we get them through the rewards and all these things, we've definitely seen that it is very important to get the ROI, to get the usage, to get people to use the account for more than just getting their Debbie rewards.

Frida Leibowitz (42:28):

And so, we are launching our new reward system also later this summer, and that's really going to be just like credit card points where you can earn multipliers and specific transactions. Users will be able to earn multipliers on transactions with the partner credit unions for partner financial institutions.

Frida Leibowitz (42:47):

So, I think that will also be huge because it will help create a very direct incentive to transact and engage more with these credit unions beyond all the effort that they're putting in to getting these members engaged.

Jim Marous (43:00):

You talk about the engagement, and that's the holy grail. It goes beyond experience, and you already know so much about the customers you're referring to their credit union, that there's a whole lot of engagement capability there going forward.

Jim Marous (43:13):

Frida, it is always fun to talk to you. It's fun to meet in person, fun to meet over the video here when we do a podcast. I really appreciate your time. How do people get either one of your studies referenced? Not only digital account one, but the one about the amount it costs you to open an account, how do they get those reports?

Frida Leibowitz (43:35):

So, you could go to our website, joindebbie.com. We have a partners page and all of our case studies reports, everything is there. You can also access our new tool, measure your MAC, right now it's available for I think the top 100 credit unions, but we are now expanding that to the top 500 to 1,000.

Frida Leibowitz (43:52):

So, if you're in that list or if you are interested in looking at anybody up, you can literally type in any credit union in that list and find out exactly how much they're paying for acquiring new members.

Jim Marous (44:03):

It's kind of interesting too, anybody who's thinking about fixing their new account opening process get the report because you really get quite deep into what the experience is with each of the platforms as you mentioned. Some of them you have relationships with, some of you don't.

[Music Playing]

Jim Marous (44:19):

You did a great job, it was almost like a food rating, a restaurant rating score because it not only said what are the goods and the bads, but oh by the way, you have this cost function that says, is it 1, 2, 3 or 4 dollar signs as far as what it's going to cost you. And I think it's very helpful, it's a good starting point for institutions.

Jim Marous (44:38):

Again, I think you have a great platform and you're reaching an audience that really needs help in managing their finances, and these people are begging for assistance, and hopefully, we can open the door to make it so people don't have to keep on jumping fences and going around the door. So, appreciate your time again, Frida.

Frida Leibowitz (44:57):

Thank you so much for having me.

Jim Marous (45:01):

Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoy what we're doing, we would really enjoy a positive review. Also, check out my recent articles in The Financial Brand and the research we're doing for the Digital Banking Report.

Jim Marous (45:16):

This has been a production of Evergreen Podcasts. A special thank you to our senior producer, Leah Haslage; audio engineer, Chris Fafalios, and video producer, Will Pritts.

Jim Marous (45:27):

If you want to hear more about the Debbie platform and how it can boost engagement by rewarding positive credit behavior, check out our previous discussions with the Debbie founders on the Banking Transformed Podcast.