Data from the 2023 Forbes Advisor U.S. Consumer Banking Statistics study quantifies what we intuitively know to be true; the importance of digital banking as a part of the financial institutions’ offering is on the rise, with 78% of Americans now preferring to do their banking via mobile app. The rise of the neobanks further underscores the trend. For digital-native consumers, now coming of an age where they require sophisticated banking solutions, the digital banking experience will drive their decision with respect to which financial institution (FI) to do business… and their decision to stay. So, too, long-time banking customers who may have been accustomed to visiting brick-and-mortar branch locations for their banking needs had no choice but to become familiar with digital banking during the COVID shutdown.
For such a critical component of the banking experience, how should a financial institution assess the effectiveness of its digital banking initiatives and platform to make strategic decisions for future improvements?
Key performance indicators (KPIs) and outcome-based metrics can be evaluated in three categories:
- Building strong digital relationships with customers
- Optimizing growth and operational efficiency
- Placing value on a disruption-proof platform that can quickly/easily evolve and innovate to serve the financial institution’s and customers’ needs
The sum of these metrics defines a solid business case anchored in increasing revenue and decreasing costs, all in service to the financial institution’s customers.
Build your business case
The metrics you decide to collect, be they descriptive, diagnostic, and/or predictive, are part of a comprehensive business case that will evaluate the digital platform’s return on investment.
The best platforms help to increase revenue with intuitive UX/UI and personalized marketing of the next best actions in the moments that matter.
An efficient and effective platform reduces costs with fewer hours needed by call center and support staff and an always-on platform that builds trust and loyalty.
Building strong digital relationships with customers
Like all relationships, customers on digital platforms expect an experience that is responsive and relevant to their interests. Evidence of a strengthening of digital relationships can be measured in two key ways:
- Customer adoption and engagement
- User experience and usability metrics
Customer adoption and engagement
A strong digital platform will grow customer adoption and engagement over time and stave off attrition. Use the following metrics as measures of strong adoption and engagement. Take special care of significant moments in the FI’s history, including data cleansing efforts and organization transactions, such as acquisitions and divestitures, that can skew data and should be noted as exceptions.
- Volume and percentage of transactions completed on the platform vs. at branch locations: Over time, visits to branch locations should decrease as adoption and features grow on the digital platform.
- Digital registration growth (aka growth rate): the number of users who have registered themselves or were registered by an admin on the platform.
- Digital banking retention or churn data: registered users on the digital banking platform.
- Digital banking adoption percentage (aka digital banking penetration rate): the percentage of customers that are registered on the platform and how quickly this grows post-platform go-live.
- Active user percentage growth rate: registered users who have logged in within the last 30 and 90 days.
- Average session duration: the length of session(s).
- Feature adoption: This can be measured as the percentage of registered digital banking consumers actively using platform features, such as remote deposit capture, quick balance, alerts, bill pay, card controls, statements, credit score checks, and peer-to-peer payment platforms. Where available, this can include the percentage of active digital banking users enrolled in alerts and push notifications and who have created and attained goals such as completing savings goals. Data shows that many features remain popular over a customer’s lifetime, so knowing which features your customers value is critical.
User experience and usability metrics
Effectiveness, efficiency, and ease of use, as well as frustration with the digital platform’s UX/UI, will influence customer satisfaction and either engagement or defection. Measure user experience and usability of the platform with the following metrics:
- Task time/completion time and funnel completion: Measure completion or abandonment percentage at any step in a workflow and how long it takes a user to complete a task.
- Duration metrics: Track the average time users spend on a particular screen, or review how long it takes users to perform a task. Time is a vital indicator of your design’s complexity—these metrics show how efficiently users navigate and operate the product.
- Frustration metrics: These include rage clicks, dead clicks, error clicks, form abandonment, and thrashed cursor.
- Error metrics: Unlike a technical error or bug, these refer to actions users perform on the website or app that don’t lead them to the expected solution—e.g., a user wants to log in but clicks on the ‘sign up’ button instead. Error metrics highlight areas of confusion in the user experience.
- App ratings or “love” percentage and app reviews: Percentage of members who indicate they love the app when prompted for feedback.
Optimizing growth, operational efficiency, and cost savings
Investing in strong digital relationships with customers results in a growing customer base, trust, long-term loyalty, and increasing use of the financial institution’s services. While the digital platform cannot be the sole reason for a financial institution’s success, the best platforms strongly impact growth and operational efficiency.
Growth
- Transaction volume and deposit, asset, and loan growth: Across digital channels, these indicate the adoption and effectiveness of digital banking solutions. Tracking transaction trends (asset, deposit, and loan growth rates) and revenue generated through digital channels provides valuable insights into the financial impact of digital initiatives.
- Ease and effectiveness of marketing to customers: No matter where the customer is in their life stage, the digital platform must provide services that meet those needs e.g., the ease of starting a college savings plan with the addition of children to the family, financial planning for retirement, easy access to a loan or line of credit in an emergency. Engagement in marketing efforts can be viewed through metrics, such as clicks to “Next Best Action,” completing workflows, and feature adoption.
Operational efficiency and cost savings
Reduce the burden on customer support teams: Digital banking contributes to operational efficiency by lessening the burden on the call center, utilizing chat support tools, and reducing branch visits. Assess operational effectiveness and identify areas for improvement with the following metrics:
- Transaction processing times
- Volume of calls to customer service and/or online chats
- Digital channel adoption rates (versus traditional channels)
- Cost per transaction
Security and fraud prevention: With ever-present threats of identity theft and leaks of PII, security and fraud prevention is a top priority in digital banking. These metrics provide insights into the provider’s commitment to safeguarding customer data, preventing fraud, and reducing the burden on the financial institution:
- Fraud detection rates
- Security incidents
- Account takeover attempts
- Customer trust indicators (such as security badge certifications)
Regulatory compliance and risk management: The following metrics provide insights into the platform’s adherence to regulatory standards and risk management practices. Strong compliance and risk management metrics indicate a secure and trustworthy digital banking environment.
- Compliance audit results
- Regulatory violations
- Data breaches
- Risk mitigation metrics
Innovation and disruption-proof technology
Updates to the platform that require significant financial institution testing and downtime are burdensome to the institution and its customers, both in terms of cost and trust. Providers that execute feature updates frequently (even weekly) and perform regular maintenance without friction or disruption reduce call center volume and total impact on FI testing and QA teams. Not to mention, digital banking platforms that do not have service disruptions provide a better user experience, increase trust in the financial institution, and decrease user frustration. Disruption-proof technology with little burden on internal teams allows FI’s to innovate at their own pace and not wait for lengthy development windows or QA timeframes.
Look at metrics such as:
- Frequency of updates
- Total uptime, even during maintenance windows
- Financial institution QA testing burden with each update
- Volume of calls to the call center after an update
- Ease/speed of adding partners, services, and features
Customer satisfaction and net promoter score (NPS)
Customer satisfaction metrics should also be a part of the total of the digital relationship picture. Ideally, the FI collects satisfaction data specific to the digital banking experience. Regular surveys that measure Customer Effort Score (CES) / Member Effort Score (MES) and/or Net Promoter Score (NPS) can be a gauge of customer satisfaction and loyalty. Long-term loyalty metrics, such as NPS, predict the likelihood of a customer recommending the FI’s digital services to others (ambassadors) or defecting. Additionally, take time to audit feedback and note themes.
Looking ahead: Descriptive, diagnostic, and predictive measures
Evaluating digital banking solutions requires a comprehensive approach that considers a range of outcomes across customer experience, engagement, revenue generation, operational efficiency, security, compliance, and risk management. Descriptive analytics will prove out key performance outcomes. Aligning on diagnostic and, ultimately, predictive analytics will help your financial institution plan forward.
