The biggest banks made a huge leap forward in boosting digital sales capabilities last year, according to a recent report. But W.UP’s experts warn that the overall picture is not so rosy.
Digital transformation in the banking sector has been notoriously slow in several segments, but finally there’s some good news to report. According to Avoka’s latest annual Digital Sales in Banking Report, the largest financial institutions in key markets made great strides in their digital sales capabilities last year, with better digital onboarding experiences, and more products available online and through mobile.
The report takes a close look at the digital offerings of the 50 biggest banks in Europe, North America and Australia. Are they ready to cash in on transforming their customer acquisition into a digital experience? “Banks have acknowledged that no matter how well their digital marketing works if their digital sales efforts don’t match up, customers simply won’t convert. They have accepted that digital account opening capabilities are a must-have, not a nice-to-have,” Avoka chief executive Phil Copeland pointed out.
Banking in the ‘Digital Promised Land’
On average, 51% of banking products can now be applied for online (i.e. opening an account digitally), up from 28% in 2017 and a mere 20% in 2016. Unsurprisingly, growth is the most striking in personal banking, but digital sales capabilities also perked up in wealth management and business banking. Business banking took a massive step forward with a hike of 300% for online sales readiness across the globe.
Mobile also made progress, reducing the gap with online desktop account opening to about 20% from the previous 50%. Personal banking products remain in the lead here, too. “We’ll soon be reaching the limit and the category will be complete with at least basic mobile account opening capability for every product in the leading banks,” Avoka explained. “The differentiation will be on quality of the customer experience and on features like transparent omnichannel capability.”
Digital customer experience also improved to a great deal, according to Avoka’s digital sales readiness matrix, which mapped both the quantity and the quality of the sales experience. Now two thirds of the personal banking products rated are in the upper quadrants, reflecting better quality experiences on the whole. Based on these findings, 42% of the banks surveyed have reached the ‘Digital Promised Land’, meaning that most of their personal banking products are available for digital account opening, lending applications and onboarding.
Australian banks are still leading the way in the digital race, at least among the three key markets examined in the report. However, North American banks showed the largest year-on-year improvement, spearheaded by the US. But progress was somewhat slower in Europe, where “a restrictive regulatory climate caused a slowdown in digital transformation efforts”. Many institutions here fell behind in their digital sales readiness as they zeroed in on preparing for complex new directives in open banking and GDPR.
There is progress but questions remain
So does this mean that banks are finally all set to win the digital war against challengers in financial services like tech giants? Not so fast. The results are certainly promising but treat them with caution, W.UP’s digital banking sales experts warn.
This year’s sharp improvement in digital banking sales capabilities is probably the result of long-running development projects that began years ago. Serious plans to improve digital onboarding features, for example, already emerged three or four years ago, but the first visible results have only started to show recently. In other words, financial institutions tend to be rather sluggish in reacting to new customer expectations and market changes in general, which could make it difficult for them to stay competitive in the future.
The largest banks in key markets in Europe, North America and Australia might have made great strides in digital sales, but the situation is probably quite different when it comes to smaller institutions with lower budgets for digital development. So chances are that the overall preparedness among banks is lower than the survey suggests.
Some areas of digital sales still lack real progress, even among the biggest players. For example, advanced features enabling omnichannel sales, like saving a product application in one sales channel and resuming it through another channel, haven’t become widespread, according to the report. Avoka stresses that a potential new customer will typically not complete the sign-up process if it requires creating a new login and a password before even submitting the application. The lack of save-and-resume features continues to be the no. 1 reason for abandonment.
Ultimate goal: going digital end to end in sales
The biggest banks “have heard the demand from their customers”, but “questions still loom” about the overall digital transformation process. Can the largest institutions transform their entire customer engagement across all product lines, “or is it limited to a marquee demonstration for just a few consumer products?” And the report goes further. Can banks “create a cohesive experience that connects their branches, advisors, and their new digital investment”?
Another key question is whether institutions can go digital end to end in customer journeys. When examining the score of personal banking products available through mobile, Avoka measured quantity by completing only a portion of the account opening process for each personal banking product listed on a bank’s website.
But experts at W.UP believe that the real goal here would be to offer an actual end-to-end digital customer journey, allowing users to open an account and become a customer without having to get up from their armchair. Digital-only banks, like N26 or Monzo, already provide such services but traditional banks are still lagging in this area.
