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Online conversion performance: traditional banks vs. fintech startups

  • Posted on September 27, 2016

Fintech Startups

I’ve had an interesting time lately as I talk to clients, partners and colleagues across a massive territory stretching all the way from Brazil to Japan. Some of it is lost in translation literally, but more and more, I am able to piece together what is being said and what is unsaid. One of the biggest opportunities for banks and other FS institutions, seems to be in customer experience optimization, especially for their mobile and internet channels.  Now that probably seems pretty old and dated, but when I throw some statistics at you, you might see things differently.

Recent Avanade research reveals that banks can earn 5X in return and increase revenue by 21% by investing in their CX strategy. How does that work?

Let’s look at a real-world scenario. Bank A has an internet banking platform and website, built with the best possible technology stack, is wonderful looking, wins multiple awards and yet has a woeful conversion ratio (number of promos surfaced to the numbers of CTA –click to actions activated).  This is less than 0.0005% for their highly advertised credit card portfolio. On the other hand, we have Lending Club, a fintech startup with no real physical presence, but a book of business of approximately $20B targeted at US SME customers.  They solely depend on this channel for all their business and have a fantastic conversion from visits to actual deals.

The difference between these two organizations is actually pretty simple. Bank A does not leverage what their customers or prospects are saying or the data from Google Analytics or similar analytics platforms. These platforms provide pretty much the entire user or prospect journey and not only do they provide generic information like how much time they spent, how many pages they viewed etc., they also provide which AdWords were most used for searches and the referral site (did they come through another company-owned site, Google, or a third party consolidator).

All of this information, should theoretically allow traditional banks to optimize their internet and mobile presence and also significantly increase conversions. Right?  Wrong.

One of the banks I recently analyzed had Google analytics revealing that users spend 1.97 minutes on their website and in that time, they view all of 2.3 pages.  Yet low and behold, the bank’s credit card promo-led application process is all of 13 pages long.  And BTW, they have a conversion problem.

Now let’s look at Lending Club.  Within 3 clicks, users get to a page that highlights how much they can get at what interest rate and captures all the information they might need to do an underwriting for their loan. Using the same information as is available to Bank A, Lending Club optimizes the entire customer journey experience to get to an outcome in 3 clicks or 3 pages.

Given this scenario, what would be your view and how would Bank A compete against an agile fintech startup like Lending Club?  You may say, “Oh my God! This is so simple. How can some banks be so stupid?” The reality is that Lending Club and Bank A operate in 2 different environments (both regulatory as well as business wise) and this creates different behaviors. The Bank A’s of the world have a difficult time competing well with fintech startups like Lending Club.  However, they also have massive market share, because banks have huge customer bases with deep pockets and trust in a more traditional institution.  The Lending Clubs of the world don’t.  Banks can optimize their channels if they are able to adopt some of the suggested methods below:

  1. Leverage analytics on user behavior to create an SEO (Search Engine Optimization) strategy that provides the highest benefit for the money invested.
  2. Perform A/B testing. While data provides facts, some “gut feel” also needs to be tested and today’s technology platforms like Digital Marketing and Managed Services (DMMS) are built for this.
  3. Partner with an organization that can assist you on the entire life-cycle – strategy, analytics, creative, personalization, A/B testing, enhancements, and ongoing support.
  4. Optimize analytics and cloud for your mobile and internet channels first. Truly liquid, content orchestrator platforms are emerging, driven by analytics, and are highly automated in terms of configuration and agility.

In summary, more monetization of eyeballs across mobile and internet channels is possible resulting in higher CTA’s and greater revenue at lower cost baselines Twitter [CLICK TO TWEET]. Digital banking technologies are available to help drive this exciting change and allow information-only channels to become agile, prospecting and monetization tools.

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