Most people, even within financial institutions and financial technology vendors, think of “digital banking” as technology that enables bank customers manage their accounts online. What most are missing is that, done right, digital banking is the single most effective channel for financial institutions to drive revenue and growth.
“Digital Banking” is a hot term currently, especially in light of the constraints on old-school branch banking that were surfaced during the Covid-19 pandemic. With branches closed or limited, customers have moved to mobile and online channels for as much as they can possibly do. Most banks and credit unions seemed well-positioned prior to the pandemic – almost every financial institution has added an online banking app over the last several years. And they were well-positioned – for everything except growth in deposits, loans, and their customer/member bases.
The two legs of digital banking – customer service and growth
Every bank and credit union has an app or online service that they consider to be their ticket to digital banking. What they really have is a digital customer service app. Nobody who is not already a customer or member gets access to an institution’s online services, so typical digital banking apps only serve current customers/members. Customers can check a balance, remotely deposit a check, transfer funds, and pay bills using the bank’s app. There are some fees to be earned from this activity and having customers do almost all their business online certainly lowers operational costs, but none of it drives growth and revenues in any meaningful way. The typical customer service digital banking app at this point is really just table stakes. Institutions need to have mobile and online access for their customers because that’s the baseline expectation for financial institutions in 2020.
What most financial institutions are still missing is the part of digital banking that delivers new customers, new deposit accounts, and new loans for personal and business customers. In a recent MeridianLink survey about banking technology, we discovered that only 46% of US banks under $25b assets can open a new deposit account for a personal customer via online/mobile channels. Only 25% can offer and close a personal loan online. Only 5% of those banks can open a new business deposit account online and only a truly abysmal 1% can offer and close a business loan online. What those institutions have missed is the other part of digital banking – growing and increasing revenues.
The revenue side of digital banking is where new deposit and loan customers can engage with an institution as easily as current customers can. Where a business customer can open a new deposit account or apply for and close a loan online, without ever going to a branch. It’s not really a complicated business proposition – deposit growth and growing loan assets are the keystones of growth for almost all retail banks and credit unions.
MeridianLink leads the way in digital banking revenue and growth technology
The business proposition for growth via digital banking may be simple, but many financial institutions have a perception that actually implementing the technology is complicated and expensive. It’s not, but the wide range of vendors with partial solutions don’t make it easy for banks. Deposit growth and loan growth are inextricably linked on almost every business level, but vendor solutions that do both well on a single platform are very rare. Digital account opening solutions are available from a number of vendors, but most do not offer a loan origination solution. Loan origination software is available from a range of vendors, from core banking system providers to startup fintechs, but those LOS tools generally do not have a unified platform for digital account opening. Most of the very few vendors who offer both account opening and lending usually do one considerably better than the other and have different user experiences in each environment.
One vendor does everything right – MeridianLink. A single completely modern and robust platform delivers a common user experience for personal and business customers as well as bank staff for both of the two most important components of revenue growth – digital account opening and digital lending.
MeridianLink’s platform drives growth for both new and current customers, by making the processes so simple that they can typically be done in under five minutes. MeridianLink’s intelligent cross-sell engine delivers perfectly tailored offers for additional revenue-generating financial products right at the digital point of sale. For driving growth within an institution’s current customer base, MeridianLink digital account opening and digital lending are available from within the customer service online banking apps from almost every online banking vendor.
Contact us to learn how MeridianLink can drive growth and revenue at your institution. Nobody does it better.