Measuring the Success of Your Digital Banking Automation Platform

Way back before Covid-19 struck, the digitization of banking services seemed like an inevitable part of a broad-based move to an “internet of everything.” But the public-health crisis — with businesses locked down for months at a time — has highlighted the need to roll out internet and mobile banking that goes beyond deposits, balance inquiries, and bill pay.

Digital-platform spend seen jumping 11% through 2022

In May, PNC Bank chairman Will Demchak told CNBC the bank’s digital usage had been going up “by a percentage point or two” a quarter “for a bunch of years.” Where digital accounted for a quarter of PNC’s revenue in normal times, the proportion of digital sales activity approached 75% “without much volume fall-off” this past April.

In another sign of rising interest in digital banking, telecom AT&T says it’s been in talks since the pandemic started with “banks, wealth managers, insurers, and other financial institutions” about ways to integrate in-house or third-party digitized banking services with cutting-edge communications for customers and staffers alike.

Activity like this bolsters MarketsandMarkets’ prediction that annual spending on digital-banking platforms will go from $3.3 billion in 2018 to $5.7 billion by 2033, an implied compound annual growth rate of 11.2%.

COVID triggered a need for enhanced digital banking

Meanwhile, a recent report by JD Power suggests consumers now favor retailers and banks that support digital-powered no-contact payment, and an April 2020 study by William Mills Agency shows 73% of US adults are using digital-banking services in light of the coronavirus pandemic.

For Dmitry Voronenko, CEO and co-founder of TurnKey Lender, these are signs “consumers and companies are in the midst of a profound behavioral shift that is accelerating digital adoption.” And that’s a shift, he adds, fintechs are eager to support.

To help banks understand how to track the effectiveness of new or improved digital-banking services available to retail customers, we offer the following checklist of key performance indicators.

But first, Voronenko has a warning about generic KPIs. He believes long and overly-specific KPI lists can do more to hinder decision-making than ease it. “Some KPIs are tangential, some are subject to decay or erosion as business priorities evolve, and some are just irrelevant from the start,” says the executive, who has a doctorate in artificial intelligence. “We advise our client firms to focus on KPIs that speak forcefully to their real-world needs.”

How to measure the results of your digital platform

So, with Voronenko’s proviso in mind, we suggest the following KPIs for banks looking to understand what to measure to track the success of a digital-banking platform — and to shape the platform itself.

1. 1. Time to funding

      The longer it takes to get an approved loan funded, the more likely a would-be borrower is to abandon the application. For digital banking operations, this is a solid KPI for consumers used to fast turnarounds from everything from app-summoned cabs to online food pre-orders for pickup.

   2. Completion

      Speaking of abandonment, 40% of consumers have started but decided not to complete an account-opening application. They cite onerous personal questions, lengthy questionnaires, and other sources of friction. Completion rates increase when applications are easy to start and finish online.

   3. Turnaround

      This is a measure of how long it takes for a customer request to be fulfilled. Again, this is important because consumers have grown more impatient. It’s also a clear indication that an effective digital platform must include, or be compatible with, multiple communication channels, phone and email options, as well as online chat, with speedy resolution of customer issues the goal of every such encounter.

   4. Conversion

      Digital technology tends to increase conversion rates. It accomplishes this in part by avoiding process bottlenecks that occur when applications have to pass from the digital realm to the real world — in the form of disparate bank departments. Having to move digital processes in and out of silos — creating more junctures at which digital documents can be mislaid, resulting in wasted new-business opportunities.

   5. Onboarding

      Banks have a bad habit of requiring prospective account holders to meet with a bank officer, typically in person, and fill out most of the required paperwork there and then. With COVID-19, and the rise of a generation happier to open an app than drive to a branch, that approach won’t fly anymore. Where compliance allows, all-digital account sign-ups that are encrypted, secure, and feature ID verification and e-signing capabilities can do a lot to boost onboarding rates. Among other sources of friction for onboarding are poor form design, ambiguous instructions, and anything that forces them to click away from the form they need to complete to become a customer.

   6. Touchpoints

      How will customers get access to your digital services? A company website? An app for mobile devices? Will chatbots come into play? Should they? However the bank decides to configure its multichannel outreach, it’s important not to make customers jump from channel to channel — that there not be too many touchpoints in any sort of sign-up. In this spirit, your chatbot shouldn’t be telling customers to check their email accounts for a link she needs. The chatbot should send the very link.

   7. Net promoters

      Want to encourage your customers to promote you to friends, family and business contacts? Provide them with solid, full-spectrum digital banking services. One bank found that, while digital customers cost 1.5 times more than non-digital customers, the digital crowd generates twice as much income as the non-digital bunch. For Lightico, “the connection between digitization and loyalty couldn’t be clearer.” That’s in line with the consulting firm’s May 2020 finding that 79% of US consumers prefer banks that can provide all-digital processes.

From theory to practice with fintech-delivered AI

In addition to these core KPIs, organizations keen to add or enhance digital-banking capabilities might consider other, arguably less measurable, criteria for selecting a provider. For Bank Innovation, an online publication for bank-based technology officers, the big three things to weigh are:

1. How the vendor relates to regulators
2. How the vendor handles privacy and security issues
3. The vendor’s reputation and overall viability

Pushing past the bare concept of digitally embedded banking capabilities into the realm of reliable functionality is a transition many banks struggle with, according to Voronenko. “We’re in an era of machine learning and artificial intelligence that results in ‘smart’ digitized-banking platforms,” he says. “All that stands between a business that wants to digitize its banking services is a grasp of relevant KPIs, and a sense of what it wants in a fintech partner.”

Interested in improving your digital-banking capabilities?  Reach out to our team and schedule a call today.