Digital business platform provider Avoka has released its second annual State of Digital Sales in Banking study that measures the digital account opening capabilities of the 32 largest banks in North America, Europe and Australia. The report ranks and compares the digital customer acquisition capabilities of the largest banks worldwide, both in breadth and quality of their offering.
New for 2017, Avoka has developed the Digital Sales Readiness Matrix, scoring each bank’s digital capability on two key measures: “Digital Readiness”—the ability to apply for personal banking products with a mobile device; and “Ease of Use”—the ease of use of the digital experience for customers who wish to open a basic deposit account online.
One-third of the banks surveyed have reached the “Digital Promised Land” segment—they have the majority of their personal banking products available for digital account opening, lending applications and onboarding. At the same time, their most prominent personal banking product was scored above average for ease of use. This indicates both aggressive deployment of digital sales capabilities, and some of the knowledge and skill required to deliver an experience meeting customer expectations.
The Australian banking market has been an early adopter of digital technologies and Australian banks scored highest—half of them landed in the Digital Promised Land quadrant, and nearly all were better than average on the user experience measurement.
For more than half of banks, the majority of their personal banking products cannot be applied for online. Avoka concludes that most banks fail to capitalize on their investments in digital marketing and digital channels, resulting in 70%?90% abandonment rates when potential customers try to open an online account. Only 66% of personal banking products were deemed ready for online sales and fewer than 25% of wealth and business banking products were found to have online applications.
There was some improvement in 2017 over 2016 results, but less than 30% of all products can be applied for using digital channels, and still only 43% of personal banking products are enabled for mobile customer acquisition (but up from 31% in 2016).
Some bad news…
Only 1 in 4 business banking products can be applied for online, and mobile accessibility is even lower.
Only 9% of small business accounts can be opened from a mobile device, up from a similarly modest 7% in 2016.
Only 41% of wealth management products are accessible online.
And some good news…
Even the largest institutions can change quickly when they get serious about digital sales readiness. For example, two large US banks showed an improvement of over 30% vs. prior year in the percentage of personal accounts that were ready for mobile sales.
Not a moment too soon. Already three years ago, retail banking executives surveyed by CEB estimated that by 2019 banks will need to make roughly half of all sales using digital capability that did not exist at the time—and is still missing in action today, for the most part. Only 46% of financial services executives surveyed by Deloitte agree or strongly agree that their firms are adequately preparing for digital disruption.
Digital transformation is hard work, and its biggest enabler, according to Darryl West, Group CIO at HSBC, is “driving a cultural shift within the business to make this really work. You have to adopt an agile methodology, a dev-ops mindset, and you need to be able to recruit and retain talented people who understand how to use these new technologies and work in this way.”
Finding new ways for defining and developing products and services is only one dimension of the necessary cultural shift, Keri Gohman told me last year (then Executive Vice President and Head of Small Business Banking at Capital One, she is now President of Xero Americas). Other important mind-shift changes are finding new ways to interact with existing customers and for attracting and retaining new customers. “Customers do not want to be told what your brand is,” said Gohman, “they want to experience it.”
This requires a lot of serious work internally, while the external environment—and the definition of “digital”—continues to change rapidly. Just consider the following new developments:
The rise of virtual banking… “How do I take a brick-and-mortar store, then enable a consumer to be immersed in that environment through VR so they can access different products and services”—Stephane Wyper, senior vice president of new commerce partnerships and commercialization, Mastercard.
Applying machine learning and AI… “The ability to really understand and predict what clients might need leads to the industry achieving a much higher level of client satisfaction value”—Kumar Srivastava, vice president for product and strategy, Bank of New York.
Frighteningly realistic customer service chatbots… Would your banking experience be more satisfying if you could gaze into the eyes of the bank’s customer service chatbot and know it sees you frowning at your overdraft fees? Professor and entrepreneur Mark Sagar thinks so. “The application of the technology is vast but the essence is that it augments, rather than eliminates the need for, face-to-face services,” he says.
Originally published on Forbes.com
