Credit Unions exist to serve members. However, when it comes to the digital experience, credit unions continuously strive hard to find the sweet spot where technology and personal service intersect. Statistics show that Credit Unions are on a slow-moving digital journey in comparison to their traditional banking counterparts.
So, to gain a better understanding of the maturity of the digital services initiatives and better understand how good performance measurement can improve the results, a session was conducted by CULytics in which, Bob Little, Advisor at CULytics with Naveen Jain, CEO at CULytics hosted a discussion on measures that must align with the strategies of the organization.
The agenda of the session was to discuss the maturity of digital services in credit unions, practical examples of digital services performance indicators, and best practices for implementing digital services metrics programs. Here are some key points that are worth reading.
The Impact of Digital Services
Traditionally, the member has to go to the branch to meet the representative for his/her work and take follow-ups for approvals and receiving funds. In the Digital era, it has become very easy to apply online through mobile devices and receives approval and fund instantly. As a credit union, providing a digital experience to members is great from the strategic point of view.
The Modern Member Experience
With the advancement of technology, the new member onboarding has become smooth as things happen digitally – be it for paperwork, deposit details, and feedback among others. Serving members has become tremendously easier as they can opt for self-servicing using chat-bots, online portals, and mobile. Options for assisted servicing are call center, relationship manager, and grievance redress.
Digital Banking Maturity Model
There is a difference in what happens at the front office, mid & back office. When it comes to measuring maturity, it is important to analyze where you were, where you are and where you have to go. Nobody can move manual to digital in a moment; there are stages that require a proper strategy to reach there. The model comprises of thesis:
- Front Office: Here much of the work is done at an advanced level as compared to the Middle and back office. The front office member experience should be as digital as possible.
- Middle Office: Much of the work is done at the basic level here.
- Back Office: Medium level of the maturity model is used at the back office.
With a more sophisticated approach to data and analytics, organizations can adapt to change before it happens. And, working on descriptive, diagnostic, predictive, and prescriptive analytics will help in the optimization of the work.
Unconscious Technology Bias
Believing that the technology is mysterious & a “wonder” and it is better than current options. Also, sometimes, leaders may favor a new technology even if it is unproven. Such kinds of beliefs about new technology can lead to poor decisions. This bias needs to be avoided.
How to Avoid New Technology Biases
These biases can be avoided:
- By focusing on a new technology’s functions, actual performance, and practical relevance
- By knowing the actual needs of the organization
- By knowing the needs of the users
- By including non-experts and everyday users on decision-making teams about new technology as many of the problems that arise with new technology become apparent only when non-experts attempt to use it
An organization needs both strategic and operational goals to ensure that the growth of the organization is as per the expectations. And a good goal focuses on the outcome. Strategic goals are not the tactics used to deliver outcomes –programs, initiatives, or projects. These are qualitative and memorable descriptions of what is required to achieve. They should be short and engaging. KPIs quantify the outcomes you expect to achieve. They are measurable on a sliding scale (e.g. increase from 10 to 25 or reduce from 70 to 55) over a period of time. Activities, on the other hand, are the programs, initiatives, tasks, and projects associated with achieving Objectives. They are usually binary (done or not done). These are the ways to achieve strategic objectives.
To ensure success in achieving goals make sure that goals focus on the outcome. Try to be able to measure progress toward that outcome so it will be easy to know if the plans are performing as expected. Key Performance Indicators (KPIs) can be organization-wide or may focus on departmental goals. KPIs Can Be Developed:
- By putting the right metrics in the right place
- By knowing whether the agreed measures encourage the right behavior
- By knowing what is the success target for the KPI?
Common Performance Metrics for Digital Services
- Active Clients: Evaluate the number of members who use online banking or mobile application regularly over a period of time (daily, weekly, monthly).
- Digital Member Acquisition Cost: Amount spent to acquire a digital member. This is valuable to compare with the costs of acquiring traditional members.
- Digital Member Lifetime Value: Amount of revenue obtained from digital members
- Retention Rate: The retention rate can be measured using parameters such as repeat purchases and satisfaction scores.
- Cross-Sell and Upsell: The percentage of lead generation is another key performance measurement tool. This KPI might be useful in assisting organizations to gauge how effective an in-app lead generation is.
- Goal Abandonment Rate: Measuring the number of tasks that are not completed (and at what step) can help detect underlying issues with digital services.
- Task Completion Rate: This indicator helps to measure the user experience of digital services. Are users achieving their intended tasks? At what rate is that happening?
- Application Launch and Load Time: The time it takes users to launch an application is critical. Members today expect state of the art applications.
- Comparison of the Digital and Other Platforms: The percentage of customers and the number of transactions done online compared to traditional platforms.
- Return on Investment of the Digital Platform: A comparison between the total amount of resources channelled to the platform and the returns realized in the form of upselling and cross-selling and overall cost reduction.
KPIs vs Metrics
Before beginning to track these, it is important to understand the difference between these two. Which one is strategic and which one is important- it is imperative to know.
- A metric is any standard of measurement
- Number of requests logged
- Number of data owners identified
- Percentage of requests resolved within SLA
- A Key Performance Indicator is a quantifiable metric that drives improvement and that links to strategic business outcomes
- A KPI is a metric but a metric is not necessarily a KPI
Proxy metrics are an indirect way of measuring what is required to achieve.
Lagging indicators enables to act after the fact whereas leading indicators help in predicting future behavior and enable proactivity.
Balance Quality and Efficiency
“For every metric, there should be a paired metric that addresses adverse consequences of the first metric”- Andy Grove
So, while trying to change some specific behavior, it might be backed by cost.
Things that should be minimum are:
- People will give up on the process if it is too time-consuming or asks for too much information.
- Minimizing these aspects is key to keeping things simple.
- Features that eliminate manual entry are helpful. For example, enabling autofill fields and pulling any information you’ve already captured are ways to reduce the time the member spends entering data.
-Security & Compliance
- While digital services emphasize convenience and member experience, safety and security cannot lose priority.
- It is important to ensure that the platform has high-end encryption and compliance with regulatory requirements.
- Without the personal touch of interacting with someone, digital services can run the risk of seeming detached.
- Make the process feel less robotic to help drive home the character of the institution.
- For example, instead of a generic message like “Processing payment,” consider one with a little more personality, such as, “We’re working on your payment now.”
- Technology moves fast. One can’t launch a digital banking program and expect it to work, untouched, for years.
- It will be needed to keep up with trends and understand what features can help the organization and its clients.
- Explore how members feel about digital banking and identify areas where there is friction.
- The organization may need to walk a fine line between collecting so much data that the member gets annoyed and not collecting enough to serve them or stay compliant.
- Be upfront with the members about the kind of data to be collected and why it is done. This kind of warning may help them be more patient while inputting data.
Keys to Digital Success
Put someone in charge of digital services and understand the members. Try to connect early and often and develop an omnichannel experience. Collect, measure, and test to establish a strong relationship and earn trust.
Do not forget that it’s all about the outcome and not the actions. Try to avoid watermelon KPIs as they are green on the outside but red inside. For improving performance, Measure Often and Adjust Quickly- Be a Dolphin, not a Whale. Make smaller changes for analyzing and enjoying growth.