Banks can have dozens of KPIs they use to measure their success. Customer retention, customer penetration, asset quality, and assets under management are just some of the general banking KPIs that are relevant for nearly all banks.
Yet banks that are undergoing a digital transformation benefit from setting KPIs that relate specifically to measuring the success of their customer-facing digital programs.
We have identified nine KPIs that are directly impacted by digitization. Here, we will explore what they refer to, and why they matter so much for modern banks.
Research conducted by Deloitte has found that 40% of consumers have abandoned a bank’s account opening process. When asked why, most of the consumers cited lengthy paperwork and too many personal questions asked.
Account opening is hardly the only bank process that frequently fails to reach completion, though it’s arguably the most significant to a bank’s bottom line. Credit card and loan applications are also frequently abandoned for similar reasons.
Remember that customers that begin a process always have the intention to complete it — otherwise, they wouldn’t have started it to begin with! Customers who are able to fill out and submit their application 100% online are more likely to get to the finish line than those who are bounced to non-digital channels or a physical branch.
2. Time to Funding (TTF)
This is a KPI that’s relevant for digital-focused banks, as well as auto lenders and credit unions. Whether they’re buying a home, a car, or something else, consumers no longer have patience for long loan application processes — and the inevitable waiting period that accompanies these processes.
In fact, a recent Lightico study found that 42% of borrowers who abandoned their car loan applications did so because it took too long to get funded.
Consumers enjoy same-day delivery on Amazon Prime, movies on demand on Netflix, and taxi service through the click of the Uber app. They’ve transferred these expectations for speedy service to every aspect of their lives, and getting their loans approved is no exception.
3. Turnaround Times (TAT)
Turnaround time (TAT) refers to the time it takes for a customer’s request to be fulfilled, which is especially important in an era when customers’ tolerance for lengthy response times keeps plummeting.
To that end, consumers should be able to reach out to their banks from the channel of their choice, especially digital ones, and receive a timely, helpful answer through that same channel.
For example, a customer reaching out with a query on Facebook Messenger shouldn’t be told two days later to call a customer service hotline.
Such quasi-digital measures are useless because they don’t actually reduce turnaround times — even though they have the potential to by expanding customer service beyond traditional hours.
4. Call Handle Times (AHT)
Average handling Time (AHT) measures the average length of a call center agent’s call with a customer.
As any bank call center knows, improving call handling times is crucial for maintaining agent productivity and customer satisfaction. Implementing digital processes can significantly help with attaining these goals.
For example, try examining the typical process of handling calls, and see which aspects can be left to automated recordings.
Banks can also try identifying redundant questions. For instance, a customer can be asked to fill out details in a secure online environment, which are automatically populated into PDFs and inputted into the agent’s CRM. This eliminates the need for agents to ask basic questions, so they can spend more time on problem solving and less on information gathering during the call.
5. Conversion Rates
Adopting digital technology — both on the backend and frontend — can boost banks’ conversion rates. But how?
Sales funnels are notoriously messy, and not all banks are good at keeping track of information such as qualified opportunities, lost opportunities, sales cycle length, and breakdowns by branch, business development officer, and product.
On the backend side, automated, preferably cloud-based systems can help banks avoid the silos that keep such important information obscured. Working on conversion rates is easier when you know what you’re dealing with.
On the frontend side, digitizing customer processes is key to increasing conversion rates. Enabling prospects to easily onboard from a single digital channel without any physical paperwork or in-branch visits eliminates the frustration that so often gets in the way of conversion.
6. Onboarding Rate
Once banking prospects have shown intent to sign up for an account, the last thing banks should do is make that process harder than necessary for them.
Far too many banks still require customers who are interested in opening an account to schedule an appointment, fill out stacks of forms, and manually sign each page of legalese. Customers who simply don’t have the time for this are liable to seek out a true digital-first bank that won’t require them to take time out of their day to fill out mind-numbing forms.
Of course, banks still have compliance requirements to abide by. That’s why allowing bank prospects to onboard via a secure online channel such as a website or smartphone keeps onboarding rates high. There, customers can upload documents, get ID verified, fill out mobile-optimized forms, and sign or type their eSignature.
7. Abandon Rate
Conversely, abandon rates skyrocket when onboarding is cumbersome or time-consuming. According to one study, the financial sector has an overall abandonment rate of almost 76%.
While prospects who arrive at applications clearly want to make a purchase, open an account, or take some other action, they are frequently deterred by unclear form instructions, a confusing application look and feel, and redirection to other channels. Thus, they lose all motivation to continue to process, in many cases going to a competitor that offers easier, faster processes.
8. Customer Touchpoints
Banks that are digitizing often take pride in their new omnichannel offerings. It’s good to give customers options as to where they start their customer journey. But banks sometimes forget that what customers really want — and rarely get — is the ability to start and complete a process from a single channel.
Here is a real-life example of well-intentioned omnichannel gone wrong:
It’s great that customers can interact with their banks through a bevvy of chatbots, messaging apps, and mobile apps. But it does them little good if they’re being bounced from one channel to the next without getting their issue resolved. Many customers who encounter too many touchpoints during their customer journey will simply give up. And their bank will be none the wiser.
That’s why banks should be wary about investing in multiple digital channels unless they’re actually able to fulfill a customer’s request directly from that channel. For example, a customer that messages a bank about signing up for a credit card should get a link to the application form right from that messaging system. They shouldn’t be directed elsewhere.
9. Customer Loyalty (NPS)
Net Promoter Score (NPS) might sound like a nebulous, soft metric for digital banks to focus on, but that couldn’t be farther from the truth. According to a research conducted by Bain & Company, financial services companies who increase their customer retention by 5% see a 25% jump in profits. Increasing customer satisfaction leads to greater loyalty, which has a direct positive impact on banks’ bottom lines.
And in today’s digital world, there’s no surer way to increase customer satisfaction and loyalty than by enabling fully digital, remote customer journeys.
A Singapore-based bank called DBA found that while its digital customers may cost 1.5 times more to serve than non-digital customers, they generate almost twice the income. That’s because they cost less to acquire, take out more loans, invest more, and have higher deposits.
Lightico’s research confirms that customer interest in digital-first banks is at an all-time high. A survey taken in May 2020 found that 79% of American consumers now want more all-digital processes from their banks. The connection between digitization and loyalty couldn’t be clearer.
The Bottom Line: Digital Banks’ Focus Should be on Customer-Related KPIs
Digital-first banks put the customer at the center of everything they do, and they reap the benefits of it in terms of higher conversion rates, shorter turnaround times, and greater agency efficiency. Thus, banks that are in the process of digitizing should keep their focus on metrics that directly relate to acquiring and maintaining customers.
Lightico’s eSignature solution for banks can help financial institutions that are committed to a digital-first strategy overperform when it comes to all these KPIs.
Our platform allows agents to sell to and service banking customers through a secure text-message link sent to customers that opens to a mobile environment. There, customers can upload documents, fill out forms, provide ID, make payments, and add a digital signature.
On average, banks that use our solution see a 33% faster onboarding process, 67% lower abandon rate, and 25% increased conversion rate.