Five strategies for driving profit in digital banking

For financial institutions looking to meet account holder expectations while also growing revenue, now is the time to step up their digital game. Why? Digital banking, often done on mobile phones these days, is big business. How big? By 2028, the global digital banking market is estimated to surpass $10.3 trillion.

Unfortunately, digital banking isn’t always considered a strategic area. In fact, some leaders consider the investments required to enhance digital banking as complicated, cumbersome and expensive.

As a result, many institutions are running digital banking experiences on legacy systems, which has not helped them compete with the increasingly nimble megabanks and neobanks. Savvy forward-thinking institutions have poured millions of dollars into developing and shaping the user experience with all the bells and whistles that a digital banking experience should offer.

Today, financial institutions of all sizes need to treat digital banking as a necessary cost of doing business. But it doesn’t have to be viewed as a drain on the bottom line. Digital banking can be a profitable strategic business tool to increase the financial institution’s sales and complement the service concept.

For a digital experience to succeed, user experience has to be king—the platform must be stacked with easy-to-use tools and features. Financial institutions also have to view this opportunity through a marketing lens, instead of solely as a tech play.

Here are five ways to enhance digital banking to deliver user experiences that are relevant, compelling and timely.

Offer vital tools and education: Balance inquiries used to be the hallmark of digital banking, but today’s consumers want insights that go well beyond that. They seek information such as credit scores, upcoming loan payments and past-due payments. Put this information in a highly visible and intuitive area within the digital experience to provide the opportunity for the highest engagement.

Target consumers with relevant messages: When it comes to targeting customers, the main goal is to deliver an experience that feels personalized. Rather than serving all users the same offers and ad experiences as they navigate your website or mobile app, disguise an offer as a personalized insight. An offer targeted at consumers who have recently experienced a credit score increase, for example, could read: “Your credit score has gone up. Great job! Learn more!”

Deepen the brand experience: When it comes to existing account holders, the goal should be to deepen their experience by showing them, in a nonintrusive way, that you truly understand their financial needs. Financial institutions should also aspire to appeal to would-be account holders based on their behaviors when they visit their website. Once a prospect has been identified and cookie-ed, every experience with your brand moving forward should be personalized: from the images on the site to the offers available to them to the ads that are highly visible across the internet.

User experience is king: Whether they’re using a website or a mobile app, consumers are aligned on one key point: A banking platform’s UX and functionality are the top distinguishing factors between an FI that’s “just good enough” and one that’s the ideal FI. With the very nature of the financial relationship evolving around the digital banking experience at its core, FIs should not be neglecting UX. Research further shows that overall satisfaction is directly correlated with modern UX and functionality—more than with customer service phone support, convenient ATM locations or a wide array of new products.

Use data effectively: There are platforms and tech vendors in the market today that will allow you to quickly and efficiently access your core and transaction data. With access to this information, an FI can build highly targeted audiences based on behaviors and product use. Tapping data gives FIs insights into which products each account holder has and where there are opportunities to grow. Data can even help an FI predict a customer’s needs before the customer even reaches out.

Digital banking is mission critical to financial institutions. The banks that do this right will be able to transform the digital banking investment into a profit center, making this platform the primary sales and service channel. Those that do not will be left behind.

Jeff Chen is vice president for product management at Alkami

We explore the current state of mobile banking—including the quest to improve the day-to-day user experience and protect customers from fraud—in the BAI Executive Report, “Building on mobile banking’s success.”