Where should banks begin with digital sales?

We launched this series by establishing that digital sales in traditional banks is broken. In the next chapter, we highlighted the ROI that banks can expect to generate from fixing their digital sales processes.

Now that you’re aware of your weaknesses and the impact on the bottom line, it’s time to take action. Wait any longer, and you’ll fall even further behind the challengers.

So the big question: where should you begin?

In this latest chapter, we break down the steps banks and credit unions can take to improve digital sales, starting with one of the most entrenched sources of inefficiency in the financial services sector.

According to Capgemini, 42% of bank executives believe removing silos is essential to fostering the kind of innovation required to keep up with the challengers.[1]

That applies to digital sales as much as any other business function.

Based on our experience of product implementation and strategy consulting with global financial institutions of all sizes, we’ve come to the conclusion that within a typical financial institution, the digital sales process involves these departments:

• Front office: your customer-facing teams responsible for driving the majority of revenues, usually found in bank branches and call centres, plus marketing and product development.
• Middle office: sitting between the front and back offices, the middle office manages many of the processes which are key to delivering a smooth customer experience, such as risk and compliance.
• Back office: the administrative and support staff who may not directly generate revenue, but provide the services that allow other departments to function effectively.

The problem with the current business model? It leads to siloed thinking.

Each department focuses on its own functions without considering the impact on the overall customer journey.

So here’s the clear solution: financial institutions must break down the silos.

That means bringing together the front, middle and back offices to create a single team with a common goal. After all, customers only see one shopfront. They don’t care how your company is structured, but they won’t hang around if you fail to deliver the kind of customer experience they’ve become accustomed to.

They’ll switch to the challengers instead.

Once you’ve broken down the silos between the departments, the next step is to map out the customer lifecycle: from acquisition to adoption, then retention and finally expansion. Wherever you identify a conversion point in the customer lifecycle, consider it a digital sales touchpoint too.

Now you have a full picture of the digital sales journey. But the job isn’t done there – you have to assess it from the perspective of both the customer and the back office. Test the user experience for yourself, starting with the onboarding process, before moving on to product acquisition. Then match each stage with the corresponding functions in the back office. Note how long they take and which systems are required.

The most important outcome from this exercise is to identify where you’re creating inconvenience for your customers. The acquisition to adoption phase is the obvious place to begin. You want customers to complete the onboarding journey the first time they try, but lowering the drop-off rate requires more than simply replacing an application form.

For instance, customers want to be able to open an account without having to visit a branch. They also want the option to start the registration process on one device and finish it on another.

Once you’ve identified the sources of friction, figure out how to reduce them. Or even better, remove them all together.

The third step is to figure out the ROI of each point of friction by linking them back to your organizational goals. Do this by asking yourself the three questions listed below. As food for thought, we’ve also included some of the highlights from our previous chapter, the ROI of digital sales.

1. Will removing this friction point help me boost revenue?

• According to the Boston Consulting Group, strong digital sales boosts bank revenues by up to 20% per year.
• A seamless onboarding experience increases conversions by 10-15%.[2]

2. Will removing this friction point improve my brand value?

• The Net Promoter Score—which measures the likelihood that someone will recommend a product or service to a friend—among digitally-savvy customers is four times higher than those who stick to traditional channels.[3]

3. Will removing this friction point help me reduce costs?

• Research by McKinsey & Co. shows the cost-per-customer of opening an account drops from $300 to as little as $5 when the process is completed within an app.[4]
• The top 25 US banks could save $11 billion by reducing human interaction with customers.[5]

In our video above, Mayur Vichare, Head of Strategy Consulting at Backbase, shares an anecdote on how one of our clients used these three questions to reduce friction and achieve outstanding time and cost savings on their highest revenue-generating product: mortgages.

Customers are at their most engaged with your brand just after they sign up. That’s the point at which all of your hard work to remove friction should pay off, and you should keep engaging them to move them towards adoption.

However, too often traditional banks drop the ball. They issue a card which the customer doesn’t receive for several days—or even longer, thanks to Covid. Then they go silent. In some cases, weeks or months pass before the next interaction takes place.

Challengers don’t make the same mistake. They start converting immediately. Customers get instant access to bank accounts, transfers and top-ups. They can even load virtual cards onto their mobile devices and spend straight away.

E-commerce firms have mastered the science of customer engagement, and challenger banks haven’t been shy about adopting their best practices.

As you can see in the flowchart below, Amazon barely lets a day go by without updating customers on the progress of their deliveries by text or email.

They’ve managed to turn the burning desire for instant gratification into a positive brand experience.

Of course, banks and credit unions can absolutely offer the same level of customer engagement and instant delight. All it takes is a bit of planning and some automated engagement tools.

Hopefully you now understand the incredible potential of advanced digital sales. You’re probably eager to get started, so here’s a summary of the steps listed above:

Step 1: Break down the silos so every department focuses on improving the customer experience.

Step 2: Map out the customer lifecycle and identify the points of friction.

Step 3: Figure out the ROI on the fiction points to rank your priorities.

Step 4: Engage your customers from the start to accelerate product adoption.

In the next chapter, we'll cover what an ideal digital sales journey should look like for a financial institution.

Read on: How to build the ideal digital sales solution