Turning potential customers into account-holders through a secure and easy-to-use online process has made Andera Inc. a growing presence in the financial marketplace.
Providence-based Andera has 425 clients in 49 states and Washington, D.C., with PNC Bank its largest client. Andera’s roster of banks and credit unions continues to increase.
“We’re growing fast, adding about 40 new banks per quarter,” said Andera CEO Charlie Kroll.
Andera’s account-opening and funding process has made the company Providence Business News’ 2010 winner for Innovation in Information Technology.
“We pioneered the technology to open accounts online. Prior to that, new customers opened accounts in a branch or on paper,” Kroll said. “There’s a lot of complexity in the account-opening process. We made it simple.”
While other companies offer a broad range of online banking services, Kroll said Andera’s narrow focus has built a solid foundation for the firm.
“We’re the only company in the market that exclusively focuses on this online customer acquisition,” said Kroll. “It takes about 10 minutes to open an account. With most of the banks, the account is immediately integrated into their banking system and accessible to the new customer.”
Funds to open the account are transferred from a credit or debit card about two-thirds of the time. For the remaining one-third of applicants, funds are deposited into the new account through an ACH transfer from another financial institution.
Some banks or credit unions follow up with a welcome package and require a signature, but that number is shrinking and most allow the account to go live with an electronic signature, Kroll said.
Andera handles lead generation, analyzes where potential customers might drop out of the process of opening an account, and makes constant improvements to its systems.
Kroll said banks and credits unions are responding to Andera’s initiatives.
“It’s because we’re solving a problem that’s kind of acute for them now,” Kroll said.
With financial institutions looking for ways to add new customers and, at the same time, save money, Andera helps them redirect some of their marketing budget from traditional media to online marketing, which tends to be more focused and efficient, Kroll said.
“Banks generally spend $200 to $500 to acquire a customer,” Kroll said. “We can do it for a lot less than that.”
The focus wasn’t immediate. Kroll launched Andera as a Web-development firm in 2000 while he was a student at Brown University. The focus on helping banks sign up new customers took shape in 2006.
Security, naturally, is foremost.
“We have the highest level of security. We’re regulated by FDIC,” Kroll said.
“We verify identity by looking up credit data and other information available on public records, like driver’s licenses. We present several identity questions that have to be answered correctly, like a choice of addresses and when the person lived there. Or perhaps we ask someone to correctly identify their monthly mortgage payment from several choices.”
Kroll said these are “out of wallet” questions, meaning even if you found someone’s wallet, you’d still not know these specifics unless you are actually the person.
Andera leverages the power of its client network to combat fraud, with all members benefiting if fraudulent activity is identified at any one of the institutions.
Best practices are also shared to boost performance among members of the client network. With Andera providing talent, technology and resources, smaller clients can compete with larger, national institutions to acquire customers.
With 60 Andera employees working to help banks and credit unions use the Web as a tool for sales and growth, Kroll said new incentives are already in motion.
In a pilot program with three banks, Andera handles online marketing, customer acquisition, account opening and analytics.
“We charge on a success basis,” Kroll said. “The bank only pays for the accounts opened.”
If this pilot program for banks and credit unions seems to put all the pressure on Andera, Kroll said it’s all part of risk and opportunity.
“We do the marketing, we pay the marketing costs, we deliver the customers,” Kroll said. “If we fail, we lose money. So far, it’s going great.”
This pilot Integrated Customer Acquisition Program is a new direction built on the success of the account-opening system.
“We’re really pushing the boundaries here,” Kroll said. “We’re going from very focused technology to much broader solutions, where banks can outsource their entire customer acquisition to us.”
Innovation is built into the Andera framework. The company spends one-third of its revenue on research and development. Employees meet regularly to discuss new ideas and Andera involves its customer advisory board in guiding product development.
The company is expanding its technology portfolio to allow clients to acquire loan customers, as well as retail-deposit customers.
Andera partners with other firms that complement its mission, including Digital Insight, Fidelity National Information Services and Yodlee. •
