April 6, 2017
Avoka, the company that built Avoka Transact, a cloud-based digital business platform used to accelerate customer acquisition and increase business agility in financial services and other industries, has recently released its second annual report on the State of Digital Sales in Banking. The year 2017’s edition is based on examination of the digital mobile application experience at the top 10–12 banks in each of North America (the US and Canada), Europe (the UK, France, Germany), and Australia.
As emphasized in the report, digital sales serve a critical purpose in the banking customer journey (customer acquisition through deposit accounts, loans, credit cards, and other products). However, most banks are failing to capitalize on the digital sales opportunity with a lack of online and mobile account opening options.
The research aimed to understand the progress the largest banks are making in digital sales, and to evaluate each of the products visible on a bank’s website for digital sales readiness, shows that most banks are failing to capitalize on the digital sales opportunity with a lack of online and mobile account opening options. In fact, according to Avoka’s 2017 Digital Sales Readiness Matrix presented in the report, most banks are struggling to create both a superior online customer experience and offer digital account opening across their broad product line. The silver lining is, however, that there are plenty of opportunities for banks to improve their digital sales capabilities.
Although there was some improvement in taking action on the digital sales opportunity in 2017, <30% of all products can be applied for using digital channels, and less than half (43%) of personal banking products are enabled for mobile customer acquisition. With low interest rates and pressure on revenue, improving digital sales still has the potential to be one of the quickest and easiest ways to boost acquisition rates and increase revenues.
The opportunities are outlined on a more detailed level through the following key findings:
The year 2017’s results indicate a steep increase in digital sales capability on mobile devices. In 2017, 28% of banks’ accounts and loans can be opened via a mobile device, up from 20% in 2016. Europe and Australia led the increase, with North American banks showing only a 6% increase in the number of products that could be applied for from a mobile device.
Explaining the leading position of Australian banks in the highest YoY change on mobile, Don Bergal, the CMO of Avoka, said:
"Being an inherently smaller market than North America and Europe has certainly contributed to Australian banks outpacing their global counterparts in the race for FinTech innovation. But more importantly is that the Australian government has encouraged this innovation through initiatives like Superannuation, as have the banks themselves, while in the US, growth has been hammered by the desire to build applications in-house which can be costly and ultimately, ineffective."
Mobile readiness varies depending on the product type with personal products showing the highest level. In 2017, 43% of personal products are capable of being opened, or applied for, on a mobile device (up from 31% in 2016).
While starting from a lower base, wealth management accounts also showed increases in mobile account opening and loan application readiness in Australia and Europe. North American banks, on the other hand, did not make any progress in this product segment. Moreover, the research indicates that the UK and Australia far outpace the US in offering mobile support for wealth management account openings, which is driven by their governments or new financial offerings.
Overall, business banking and wealth management continue to lag behind in 2017 – less than a quarter of business banking products can be opened digitally, and less than 1 in 10 can be completed from a mobile device, which indicates the inability of banks to capitalize on the lucrative business banking segment. Even for existing customers, adding a cross‐sell capability – to apply for additional credit, for example – would have a significant upside for banks, the report suggests.
While the lack of attention to the small business banking opportunity is consistent worldwide, small business products show the most potential for improvement as small business mobile accounts continue to lag the mobile trend (only 9% of these loans and accounts can be opened from a mobile device).
Although the change comes slowly into the largest institutions, banks that are serious about the investments in digital capabilities witness positive results. Two large US banks, for example, have demonstrated an improvement of over 30% vs. prior year in the percentage of personal accounts that were ready for mobile sales. With a smaller data set of European banks evaluated in both 2016 and 2017, three of the seven banks showed a large gain in the mobile readiness of their personal banking products.
Australian banks stood out in this assessment as well – two of the largest banks in the country made significant strides in their personal account mobile readiness, as the report suggests. However, since the Australian market was initially further ahead, American banks were merely catching up with the industry leaders who were already well established in these capabilities. Overall, mobile readiness continues to be highest in Australia, with the leading banks having mobile capabilities for 75% of their personal banking product account openings.
Save‐and‐Resume, the ability to pick up an application where it was left off, is an essential feature indicating omnichannel account opening and lending application capability. The research found that in 2017, there hasn't been a significant change for omnichannel account opening over the prior year. All three regions assessed indicated a low availability of the feature across all product lines. Australian banks, however, are significantly ahead of the overall average – 31% vs. 22%, – and far ahead of Europe (14%), and North America (20%) in enabling omnichannel account opening.
"We've seen abandonment rates of 85 to 90% for new product applications at banks, which represents a major and unnecessary sales loss. When our software is implemented and banks see how much they lower abandonment rates by implementing something as seemingly minor as a 'save and resume' feature, the impact is really felt," noted Don Bergal.