Measuring the ROI of Digital Banking

By Matt Wilcox

A new study put numbers to ROI of digital banking.

A recently completed study, Quantifying the Value of Digital Engagement, conducted by Fiserv in partnership with Bank of the West, underscores why digital banking should be at the heart of every financial institution’s customer experience, customer retention, and business growth model.

The objective of the study was to quantify the return on digital adoption, and to pinpoint strategies for optimizing digital engagement for a significant positive impact on customer relationships.

Beyond share of wallet.

The study analyzed the activity of 31,000 Bank of the West customers over a two-year period (August 2013 through August 2015) and looked at customer activity before and after they adopted digital services, as compared with 380,000 customers who chose not to adopt digital services during this time. Statistical modeling was used to identify behaviors correlated with and key factors driving revenue growth.

The study showed that, after enrollment, digital banking users returned higher value to the bank than non-digital customers. For starters, attrition dropped from 13.8% for non-digital customers to 8.9% for digital banking customers. Since adding one or more digital services increases share-of-wallet, it would be tempting to pass off the attrition drop as little more than “too much trouble to switch.” But further data from the study showed otherwise:

  • Incremental revenue growth among digital banking customers was 10.7%, six points higher than among non-digitals at 4.5%.
  • The gain was due in part to heightened banking activity, which appeared to typify digital banking users. Revenue, product usage, and longevity showed across-the-board increases.
  • Though increases were most dramatic among highly engaged customers, increases also occurred within groups segmented by minimal, moderate, and high levels of engagement.
  • Average total product holdings increased following digital banking enrollment:
    • Digital banking users adopted an average of 1.1 additional products, whereas non-digital customers added no new products during the same time period.
    • Digital banking users opened more checking and saving accounts than non-digital customers.
  • Digital banking customers were less likely to leave their bank. These customers have access to the enhanced convenience of services such as alerts, mobile photo deposit, online bill pay and mobile photo bill pay, enabling them to stay on top of their finances from almost anywhere.
  •  Both credit transactions and debit transactions increased following digital enrollment,  indicating the importance of account information (i.e. balances) for customers who are making buying decisions about groceries, transportation, and daily other daily purchases, as well as special purchases, and business and vacation travel.


The above results suggest that digital banking customers aren’t sticking around merely because it’s inconvenient to leave. Those who engage with their bank via digital banking, it appears, are simply more engaged.

Not surprisingly, digital banking is most popular with millennials and Gen X-ers, respectively, 18-to-35- and 35-to-55-year-olds. Customers within that age range tended to: use three or more digital products such as mobile banking, bill pay, and person-to-person payments; use a debit card for an average of 25 point-of-sale transactions per month; complete four or more ACH transactions per month; and conduct a significantly higher frequency of offline, online, and mobile transactions every month.


This is not to imply a need to focus on younger markets at the expense of older. Though non-digital customers tend to skew older, older customers tend to have longer tenure with their bank, and still control substantial wealth.

The marketing opportunity.

By now it is commonplace to remind bankers that digital is the wave of the future, an opportunity for banks that seize it and a threat to banks that don’t. The new study begins to put numbers to the claim.

Another recently released Fiserv study, Expectations & Experiences: Consumer Payments, suggests that merely offering a first-rate suite of digital services isn’t enough. Customers must know what services are available, and they must have a level of confidence before daring to try them.

The Expectations & Experiences study found that a number of people don’t use certain digital services simply because they don’t know they exist. Forty-one percent of respondents couldn’t tell you if their financial institution even offers person-to-person payments (P2P). Forty-five percent didn’t understand even the fundamentals of bill pay. It is hardly surprising that customers will not opt in to services they don’t understand, and cannot opt in to services they don’t know exist.

The survey also revealed customers will not opt in to digital services if they don’t know how to use them. This is a vexing situation, since learning to use a service tends to follow enrolling in it. Yet the numbers are significant enough to warrant finding a solution: 15% don’t use e-bills, 14% don’t use bill pay, 20% don’t use mobile banking, and 24% don’t use person-to-person payments—all because they don’t know how to use those services.

Moreover, misconceptions are rampant, and they too deter adoption. To wit, 41% of respondents reported not using online bill pay for fear of being locked into auto-payments, when in fact the service allows for the user to set up, adjust or stop payments as they choose.

On the one hand, these challenges call for apps that are intuitive in design, that customers feel they understand at first glance. On the other, they call for substantive, information-rich marketing. Banks have ample opportunity to communicate with customers via apps, websites, and printed collateral. Now is the time to share accessible, easy-to-digest information about what digital products do (and don’t do), how easy they are to use, and how they will make customers’ lives better.

If you think that has a familiar ring, you’re not wrong. There is nothing new about the importance of showcasing features and at the same time taking care to communicate benefits. Even in a digital age, some things haven’t changed.

Matt Wilcox is SVP of marketing strategy and innovation at Fiserv. Email: [email protected].

Online training in digital, mobile and social media from ABA.