There’s no denying that Covid did to digitalization what no technology evangelist could. For several years prior to 2020, digital banking usage at PNC had increased at the steady rate of about a percentage point every quarter — until it went ballistic during the lockdown. It jumped from the beginning of the year where digital was 25% of our sales to almost 75% of our sales last month without much volume fall-off. We met or forced a massive shift in consumer behavior that on its own might have taken 10 years.
The hunt for digital-banking benchmarks
One measure with broad acceptance is ROI, short for return on investment, which gauges the financial success of a particular investment initiative, comparing its financial return to its financial cost. It’s calculated by dividing the net profit of a project by its total expense.
For some organizations, this measure is too broad because it may “reflect expenses that aren’t consistently impacted by, or substantially supportive to, the project under review,” says Dmitry Voronenko, CEO and co-founder of digital-banking tech maker TurnKey Lender. To skirt this problem, many businesses look to KPIs, or key performance indicators. These are metrics the organization considers vital to achieving its goals, derived from applying ROI calculations to the expense of specific business functions that contribute to (or are impacted by) the project in question. In short, adds Voronenko, “the KPIs of a project are business-specific values that provide a sharper measure of how successful a company is in reaching its strategic objectives rather than ROI alone.”
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What’s the main value of KPIs? For most executives, its value is in supporting (and helping to shape) vital business objectives. It’s also important for managing staff performance and strengthening employee morale. KPIs help executives understand what’s “working” and what isn’t as aid to making strategic and tactical adjustments as needed, potentially shaping factors such as resource allocation and hiring plans .
Examples of KPIs tracked by banks include everything from revenue, expenses and operating profit to findings around sales, profits and assets under management on a per-employee basis.
In fact though, the number of KPIs is virtually limitless — especially for retail banks, which can engender hundreds of key indicators linked to the impact of expenses, investments, cash flows, debt, and customer service. For many bankers struggling to find ways to measure the success of newly popular digital-banking services, the sheer number of considerations may obscure the view.
Success metrics for online banking
To help them out of this predicament, here are 10 KPIs banks can use to help them measure the effectiveness of their digital offerings.
- Functionality. Banking applications should enable anything that can be done in person at a branch. KPIs for apps shed light on what works and doesn’t in online interfaces.
- Activity. Tracking — whether daily, weekly or monthly — how customers use a platform can lead to user-experience improvements and positive word-of-mouth.
- Retention. Of course happily engaged digital-banking customers are also apt to stick around. Your retention rate for digital customers — measured by return business or satisfaction scores from surveys — can tell a tale of engagement over longer periods than measures of activity can usually convey
- Net Promoter Score. Another, arguably wonkier, way to measure long-term growth of your digital-banking operations is an NPS, a way to understand how many of your customers aren’t just happy, but likely to promote services they enjoy to friends and family members. Typically gleaned from surveys, an NPS can help banks understand what it takes to turn customers into active promoters.
- Lead Generation. Do your online banking applications introduce customers of one digital service to up- and cross-selling opportunities? Banks with apps that don’t readily introduce customers to ancillary services may be losing business to other providers.
- Launch and load times. How long does it take your online-banking apps to load at different times of day, especially during peak hours? Ideally, the interval between click and engagement is brief. Online banking customers are notoriously impatient. Unusually, this is a KPI you can measure with a stopwatch.
- Task completion. This is another user-experience metric that measures the rate at which a digital-banking app accomplishes what it’s supposed to for customers. As a KPI, this is a measure of an app’s user-friendliness and ability to deliver.
- Abandonment. This is the flip side of task completion. Slow and unintuitive apps can drive customers away before they’ve finished what they set out to accomplish — apply for a loan, say, or add a new payee. In turn this can create not “net promoters” but active “net detractors.” Just as practically, this KPI can point to services design or technology flaws in need of immediate redress.
- Preference. Understanding how customers feel about online banking as opposed to in-person banking can point the way to more effective communication strategies that take such preferences into account when promoting new or unused services.
- ROI. We’ve already touched on this KPI, but it bears repeating. Anything that sheds light on how expense relates to returns from digital banking will tell a tale of comparative engagement. Here, a relative lack of engagement may hint at customer frustration and a need for better apps, not, as it may be tempting to conclude, a lack of interest in digital banking itself.
“Each KPI should be judged on the merits of the insights it brings,” says TurnKey Lender’s Voronenko. They don’t apply in every digital-banking situation, and your bank or credit union may refer to some that other institutions wouldn’t even consider.”
The overriding point is that KPIs can help banks understand the value of their digital services, according to Voronenko. “And I would add this,” he says. “KPIs have an interesting habit of creating learning cultures grounded in a willingness to test assumptions, challenge norms, and make sure outcomes are net positive for customers, in a pandemic or not.”
Lending business KPI tracking in TurnKey Lender
TurnKey Lender offers integrated end-to-end solutions for crediting and banking processes automation. The system uses machine learning algorithms to collect, process and presents all of the important business performance indicators at a glance in the Reporting workplace. One dashboard lets you get a working understanding of the business’ well-being, analyze the current effectiveness of staff efforts, as well as explore aggregated assets and current portfolio state.
Plus, with the remote work trend being the new normal, it’s critical to be able to clearly see your staff’s performance. The built-in KPI tracking functionality lets you instantly outperform the competitors in terms of quality and accuracy of insights you get about your originators, underwriters, as well as servicing and collateral officers. The evaluation of each employee’s productivity is based on their responsibilities, taking into account numerous relevant factors, and then uses AI to process, cross-reference, and present the data to the lender.
TurnKey Lender’s intelligent SaaS provides you with both a real-time and historical insight into the performance of your lending business. Schedule a personalized demo to see how TurnKey Lender can help your business grow.