First published on Bank Director, April 3, 2026
McKinsey’s Global Banking Annual Review 2025 notes that banks with more advanced digital operating models outperform peers on revenue growth and productivity metrics, particularly in a margin-constrained environment. The question is not what digital costs. It’s what enterprise value it creates — and whether the institution can measure that value accurately.
The visibility problem
Research into profitability practices across financial institutions reveals a gap: Most executives acknowledge the importance of profitability analysis, but many lack confidence in their ability to forecast it effectively.
McKinsey’s report on retail banking profitability argues that banks need deeper “customer balance sheet visibility” including near-real-time, 360-degree views of customer behavior and a governance model that enables dynamic management of deposits and retention. Yet relationship-level profitability — widely considered essential — often goes unmonitored. That is a board-level blind spot.
Engagement as a profit multiplier
Data increasingly shows that higher digital engagement correlates with more valuable customers. According to Lumin Digital’s five-year data, highly engaged digital users tend to hold more products, generate greater payment activity, exhibit stronger retention and cost less to serve.
This engagement effect compounds across three major financial levers:
1. Revenue Expansion
A frictionless digital experience improves onboarding, accelerates activation and increases cross-sell opportunities. Institutions frequently observe:
- Higher product penetration per relationship.
- Increased debit and card utilization.
- Stronger Automated Clearing House (ACH) and money movement activity.
- Improved loan and deposit primacy.
When customers consolidate activity within the institution, marginal spread contribution improves and interchange revenue expands.
Importantly, relationship growth, not simply account growth, drives sustainable net interest income and fee performance.
Directors should track products per relationship, relationship contribution margin and risk-adjusted return on capital — not just adoption.
2. retention and Lifetime Value
Digital reliability and self-service capabilities materially influence retention. Improved user experience, proactive alerts and secure account controls reduce frustration-driven attrition. Lower churn decreases the need to replace lost accounts through marketing spend, preserving acquisition dollars and expanding lifetime value.
Boards should examine attrition rates by engagement tier, not just overall churn. If digitally engaged households demonstrate higher retention, digital is not simply a service expense, it is a customer equity strategy.
3. cost-To-Serve and Operational Efficiency
Digital banking reshapes the expense structure. Expanded self-service reduces contact center volume. Routine transactions migrate from branches to mobile. Vendor-managed infrastructure can reduce internal IT burden and downtime risk.
When reliability improves, downtime hours decline, avoiding lost productivity, reputational risk and remediation costs. These operational effects influence the efficiency ratio and noninterest expense per account.
Boards should request visibility into:
- Cost per transaction by channel.
- Contact center volume per 1,000 accounts.
- Downtime hours and associated financial impact.
- IT run versus build allocation.
Without these measures, digital’s cost savings remain embedded and invisible.
The commercial opportunity
One of the most under-appreciated aspects of digital modernization is its impact on commercial accounts. While consumer accounts often represent the majority of relationships, commercial accounts typically carry higher balances, generate fee income and maintain more stable operating deposits.
Retail deposits may be rate sensitive and tied up in higher-cost instruments such as certificates or promotional money market accounts. By contrast, business operating accounts are often more liquid and less rate dependent, supporting margin stability.
A digital platform that simplifies treasury services, ACH origination, user entitlements and unified access across consumer and business accounts can accelerate commercial growth.
For directors focused on deposit mix and funding cost, that matters.
Measuring what matters
Too often, digital success is measured by app downloads, login frequency or feature releases, but those are activity metrics, not value metrics.
Deloitte notes that leaders often struggle to assess return on investment (ROI) beyond subjective measures, underscoring why boards should push for consistent baselines and financial key performance indicators tied to revenue, retention and cost to serve.
Directors should instead demand:
- Net interest income uplift attributable to engagement.
- Interchange contribution per digitally active household.
- Products per relationship.
- Attrition by engagement level.
- Relationship risk adjusted return on capital.
- Cost to serve by channel.
Institutions must have the analytics infrastructure, including funds transfer pricing and relationship level profitability tools, to calculate these impacts accurately.
The strategic question
Digital banking is no longer optional infrastructure. It is the operating system through which acquisition, activation, expansion and retention occur.
The board’s role is not to minimize digital expense but to ensure digital investment produces measurable enterprise return.
The most important question directors can ask may be, “Are we measuring digital as a technology cost or as a compounding driver of profitability?”
Jason Weinick
Jason Weinick, Solutions Consultant, Analytics & Insights, Lumin Digital
