Digital channels now carry about 70% of a financial institution’s transaction volume, yet many financial institutions haven’t defined their digital investment returns or how customer engagement affects the business.
Kelley Michalik, Chief Growth Officer at Lumin Digital, addressed that gap on a recent ABA podcast, Digital Banking’s Growth Promise: What the Data Now Tells Us. Her view is that new data points to a larger return than most institutions expect, driven more by growth than by cost savings.
Measuring adoption doesn't go far enough
For years, digital banking had a narrow job: get customers to enroll, move transactions out of higher-cost channels, and make banking more convenient. Institutions measured those things because those were the goals. The role has changed.
If 70% of transaction volume is happening digitally, this isn't just a channel, it's where a significant part of the customer relationship takes place.
KELLEY MICHALIK
Chief Growth Officer, Lumin Digital
At that scale, an adoption rate says little about whether the relationship is healthy. The more useful questions connect engagement to what happens next. Is a highly engaged customer more likely to add a product? Are less-engaged customers more likely to leave? Where do customers run into friction, and which of their needs go unmet?
Answering those questions is hard when customer data sits in separate systems. Lumin clients run on a unified data foundation, so an institution can see how customers use the digital experience and tie that to retention, products per relationship, accounts, and revenue.
The larger return is growth
Measuring efficiency is valuable, but growth matters even more. "I think the industry has sometimes been too quick to equate the ROI of digital banking with cost savings," said Kelley, "when a very large opportunity lies in what digital can do to grow the relationship."
S&P Global Market Intelligence tested that idea in an independent study of six financial institutions that moved to Lumin. The analysts looked at actual results and modeled the economic impact over five years. They found a 145% discounted ROI, with payback in about 11 months. Roughly 75% of the value came from revenue growth.
The underlying numbers show where that growth came from:
11%
rise in products per relationship
36%
increase in consumer account growth
15%
decrease in churn
The shape of the curve is critical. The value did not peak at launch and level off. It kept building through the five-year period, because each year starts from a larger base of customers and relationships than the one before. That is what Lumin calls compounding growth, and it is what moves digital from a place where customers transact to part of the growth strategy.
Mergers put the digital experience on the front line
M&A will continue to be a major market trend, and the digital platform sits close to its biggest risk. Customers may not know what is happening behind the scenes, but they notice right away if they can't log in, don't see the accounts they expect, or find that something they use daily now works differently.
The FI has acquired or combined all of these valuable customer relationships, and the last thing you want is for the conversion itself to put those relationships at risk.
KELLEY MICHALIK
Chief Growth Officer, Lumin Digital
She credits much of the outcome to work done before launch: understanding the different customer populations, getting the data right, and planning what Day One will look like. Lumin has now supported a number of clients through mergers, and she says that preparation makes a meaningful difference.
The conversion is also a starting point. Once everyone is on one platform, the institution has a larger customer base to learn from, more engagement to build, and more of the combined institution's products to introduce. "Getting everyone successfully onto one platform is a major milestone, but it's not the end goal," Kelley said.
A launch date is part of the ROI
All of that value depends on being live. An institution that plans for a nine-month implementation and takes eighteen has given up half a year of better customer experience, new capabilities, and financial return.
Every Lumin client has launched successfully and on time, across different cores and institution sizes, and increasingly alongside mergers or other major changes.
Kelley noted that the practical benefit is predictability. Marketing, training, the contact center, and customer communications can all work toward a date they trust.
It also shifts the conversation after go-live. "The implementation gets you onto the platform. The return comes from what you're able to build from there," she said.
For an institution weighing a platform change, the S&P findings suggest a question worth asking at the start: what will we be measuring in year three, and will our data let us see it? An on-time launch is the starting point for compounding growth.
Kelley put it this way: “That’s ultimately what you want from a platform investment: confidence about when you’ll get there, and a lot more opportunity once you do.”
