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Key Digital Questions Financial Institutions Should Obsess About

With the impact of COVID-19, banks and financial institutions are forced to accelerate the development and deployment of their digital capabilities as access to remote channels moved from choice to necessity. With that, the speed of continuous adoption is being seen not as an exception but rather the habit.  Almost thirteen months into the pandemic, how are you measuring the effectiveness and success of your digital transformation?  How satisfied would you be with your organization’s response to the following questions?

1. Since adopting your digital strategy, what are you able to understand better about your customer more so than before?

Have you broken down the proverbial product silos to become customer-focused?  Are you looking at ways to engage with your customers on opportunities to cross-sell?  Are you looking at behaviors to ensure that your customer is in the right product?   It is no surprise that companies that have the best results understand their customers and have a strong understanding of their wants and needs.  Realizing what is best for the customer puts things into perspective and helps prioritize next steps.

2. Are you satisfied with the level of automation that you are experiencing in the digital channel and your manual review drivers?

For starters, do you know what your automation levels are and the key causes of manual review?  In our experience, we typically see that the breakdown is being driven by risk tolerance and discomfort from two basic kinds of risks:  (1) authentication fraud prevention (2) credit risk assessment.  Instead of kicking these out for human review and intervention, retain your automation levels by implementing dynamic self-service customer solutions such as having customers link their bank account or going through enhanced ID verification.

3. Do you feel that you are delivering meaningful experiences that are personalized to an individual’s needs and preferences?

Are you targeting customers with highly relevant messaging on their channel of choice with real-time contextual information?  This could be as simple rewarding a good customer with a Starbucks gift card after observing that they are an avid Starbucks customer.  How about using AI Machine Learning or robotic process automation to identify potential problem transactions or errors.  For example, highlighting duplicate transactions as they trigger to alerting a customer that their account is at risk of overdrawing based on current funds and projected withdrawals.

4. Does the friction in your digital channel correspond to the perceived risk level of the transaction / application?

Take a deep dive into your customer journeys and ask if they reflect the proper risk or if it is more of a one size fits all, resulting in customer friction and drop off.  It is perfectly reasonable to start with the happy path but knowing when to divert off the happy path when there’s a heightened risk level, mismatches of information, or a challenge with authentication is acceptable.

5. Have you built the conversion rate muscle? Are you looking at your various conversion rates in your digital channel (Application, Offer, Acceptance, Funded / Activated, & Look-to-Book)?

Good customers won’t go through bad process, bad ones will.  This will drive adverse selection from a credit perspective.  Tracking these conversion rates and A/B testing of workflow and application design will enable you to understand the factors that are causing customers to stray away from finishing.  Do you have solid A/B testing in place to inform what is driving friction and if that friction is appropriate? 

Does anything above strike a chord? Do you feel you’re on the right trajectory? If not, now is the time to course correct.  FICO Advisors are always here to help, reach out to JaimeGuzman@FICO.com.

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