Survey Shows Only Some Banks Are Near Digital "Promised Land"

Tom Burroughes

27 March 2017

A survey of banks in three regions by Australian firm shows that only one third of them (34 per cent) have reached the minimal state of readiness to handle digital sales of their services and products, with under a quarter of wealth and business banking products available in online form.

While the report shows some progress and cause for encouragement, it also suggests that all the noise around the “digital revolution” in financial services has not so far translated into equal action on the ground.

(Avoka is a business that enables organisations such as banks to acquire clients using modern technology and operates a number of platforms. The firm recently penned a guest article on these topics for this news service; see here.)

The firm’s second annual State of Digital Sales in Banking study measured the digital account opening capabilities of the 32 largest banks in three regions: North America, Europe and Australia. The report ranks and compares the digital sales capabilities of the largest banks worldwide, both in breadth and quality of their offering.

“Most banks are struggling to create both a superior online customer experience and offer digital account opening across their broad product line,” the report said.

There is, however, progress in the use of mobile technology. Some 43 per cent of personal banking products can now be opened on a mobile device, rising from 31 per cent in 2016, the report said.

Banks are still falling short in using the digital sales opportunity to win new business. Fewer than 30 per cent of all products can be sought by digital channels, and 43 per cent of personal banking products are enabled for mobile customer acquisition, suggesting considerable potential to do more.

“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 report said.

The firm has brought out a “Digital Sales Readiness Matrix", which it describes as a proprietary tool to quantify and score each bank’s digital capabilities on two measures: ability to apply for personal banking products with a mobile device, and ease of use of the digital experience for customers who want to open a basic deposit account online. These scores form an X and Y axis to produce a plot on a chart in one of four quadrants. A bank that appears in the upper-right quadrant – scoring highly on both measures – is deemed to have reached the “digital promised land”.

The four categories are digital promised land; “under-achievers”, “digital dreamers” and “legacy lovers”. The latter are in the lowest ranking quadrant, relying on old-fashioned, analogue channels, such as call centres and bank branches in recruiting new clients.

Examining the different regional performance on some of these measures, the report said that in 2017, 28 per cent of banks’ accounts and loans can be opened via a mobile device, up from 20 per cent in 2016. Europe and Australia led the increase, with North American banks showing only a 6 per cent increase in the number of products that could be applied for from a mobile device.