Jasmeet Bhatia is VP, Decision Science Team Lead at Truist. He has 15 years of experience in the Financial Services industry and has led data science teams’ efforts to leverage advanced analytical techniques to understand customer journeys and build personalized solutions based on unique client needs. He has three patents for ML algorithms to enhance credit underwriting using alternate data. He has been a regular speaker at multiple Data Analytics conferences and the Symposium of Data Science and Analytics organized by the American Statistical Association.
In the aftermath of the pandemic, there was an accelerated push to expand the accessibility of digital banking and develop features that enabled clients to engage with services without the necessity of visiting a branch. Over the past two years, the focus has progressively shifted towards the adoption of artificial intelligence, particularly the significant potential of generative AI to deliver business value. Concurrently, initiatives aimed at engaging clients who have yet to fully embrace digital transformation appear to have been deprioritized.
On one hand, there are digital-only banks without any physical branches (e.g., Ally) or financial technology companies (e.g., Chime) that handle all client interactions digitally. On the other hand, traditional financial institutions (e.g., BOA, Chase, WF) still maintain a significant branch presence and were not built in the tech evolution era to serve all clients’ needs digitally. In the age of AI, where technology is advancing rapidly to create new online tools that could simplify banking , many traditional banks still face challenges in bringing every customer into their digital ecosystem.
Digital User – Client has online banking account setup with their financial institution
Digital Active(Digital Adoption) – Client logged in at least once in the last 90 days via mobile or web application
Digital Engaged – Client is actively leveraging digital channels for financial transactions, interactions, financial planning tools or chatbot.
According to the Q324 report from Bank of America1, 77% of the consumer client base actively logs in digital banking, while the remaining 23% did not sign in even once in the last 90 days. Digital sales, representing sales initiated and/or booked via digital platforms, account for 54% of total sales. This indicates that the remaining 46% of customer needs are fulfilled through in-branch or other face-to-face channels.This data underscores a significant opportunity to enhance these metrics and foster further progress in digital adoption and sales.
Winning digital engagement
The true value of substantial investments in digital transformation is realized when a client is fully engaged through digital platforms, utilizing low-cost channels for their interactions. While numerous key performance indicators (KPIs) exist to assess engagement, no single metric or capability—such as login activity , digital transactions, time spent on mobile applications, digital sales, card deals activation , or usage of planning tools—can independently capture the full scope of engagement. There is a critical need to adopt a holistic approach to measure engagement index and to develop an advanced analytics model capable of scoring it. Once the analytics team has built this model , it should be aligned with business priorities through stakeholder collaboration. Thereafter, this Digital Engagement Index can be deployed to map the digital journey of an individual customer.
Assigning each client the value for this index facilitates the delineation of engagement tiers, thereby designing targeted strategies to augment client interaction. This, in turn, contributes to client’s primacy, wherein the client perceives the institution as their primary financial entity, ultimately fostering an increased share of wallet. Furthermore, downwards fluctuations in the engagement tier may serve as an early indicator of potential client attrition, while heightened engagement could indicate that the client is seeking solutions for emerging financial needs, potentially leading to personalized product offerings in the authenticated marketing space.
How can banks proactively migrate client’s behaviour to digital?
- Analytics – Establishing a baseline for the percentage of monetary transactions or banking interactions conducted through non-digital channels is crucial. Gaining insights into this baseline will inform the prioritization of specific transaction types to target as part of the digital strategy roadmap.
- Social Proofing – Banks continue to serve a diverse demographic, encompassing Baby Boomers, Generation X, Millennials, and Generation Z, each of which exhibits diverse behaviors regarding trust in technology and engagement in online financial transactions. By showcasing examples of other clients who have successfully adopted digital banking capabilities and seamlessly manage their finances, banks can share a motivating force, encouraging others to follow suit.
- Digital Banking Capability – Prior to engaging a client to encourage behavioral change, it is imperative for the financial institution to ensure that the requisite digital banking capabilities are effectively implemented and function seamlessly. During the process of transitioning transactions to digital platforms, it is crucial to avoid creating any negative client experiences.
- Training – It is essential to ensure that frontline employees in branches are adequately equipped to utilize digital banking tools and can effectively communicate to clients how they can conduct transactions through digital channels. This approach not only migrates simple transactions to digital, thereby reducing the time staff spend on routine tasks, but also enables them to engage in more substantive interactions with clients. By freeing up time, employees can proactively reach out to high-value clients to assess any forthcoming financial needs, rather than assisting with basic tasks such as balance inquiries or check deposits.
Digital investments can be partially offset by cost savings achieved through the migration of simpler transactions to lower-cost channels, thereby allowing personnel in branches to focus on in-depth financial interactions that can enhance sales and strengthen customer relationships. In light of the forthcoming regulatory changes in Open Banking, it is essential for banks to prioritize digital adoption, as this will help establish a foundational understanding of clients’ overall financial health across various banking relationships.
1https://newsroom.bankofamerica.com/content/dam/newsroom/docs/2024/Digital%20trends%20fact%20sheet%20Q3_2024.pdf
*Disclaimer: The views expressed in this article are solely those of the author and do not represent the opinions or policies of his employer.