Technology and business decisions need to be in lock-step in banking because the industry is becoming increasingly digital and technology-driven. As a result, banks face intense competition from digital disruptors across the entirety of the value chain, and customers demand more convenient, personalised, and secure digital services.
In this context, technology decisions directly impact banks’ ability to meet customer expectations, drive innovation, and stay ahead of the competition. At the same time, business decisions directly affect the technology infrastructure banks need to support their operations and customer interactions. For example, suppose a bank decides to launch a new digital product or service. In that case, it must ensure its technology infrastructure can support the necessary functionality, scalability, security, and compliance requirements. Similarly, if a bank decides to enter a new market, it must ensure its technology infrastructure can support the necessary operations, payments, and compliance requirements.
In addition, the regulatory environment in banking is becoming increasingly complex, and compliance requirements are becoming more technology-driven. As a result, banks need to ensure that their technology infrastructure can support the necessary compliance requirements, such as data privacy, consumer duty, Open Banking, Basel, KYC, EDD, anti-money laundering, sustainability reporting and cybersecurity. Complete alignment between business strategy and technology decisions also requires that technology effectiveness be measured and monitored be broadened to cover the full spectrum of outcomes that need to be delivered. Here are some suggested KPIs that can help determine if your technology is delivering on your bank strategy:
1. Customer Acquisition and Retention: These metrics measure the ability of your technology to attract and retain customers. It can be measured by the number of new customers acquired through digital channels and the retention rate of existing customers who use your digital platforms
2. Customer Satisfaction: This KPI tracks how satisfied customers are with your digital channels. Using metrics such as Net Promotor Score (NPS), this KPI can be measured by customer feedback, ratings, app store ratings and reviews on social media platforms
3. Cross-selling and Upselling: determines the effectiveness of your digital channels in cross-selling and upselling products and services to customers. It can be monitored by the number of products sold to customers and the average revenue per customer
4. Time to Market: A key metric that highlights the speed at which your technology can launch new products and services. It can be measured by the time it takes to develop and launch new products and services in response to market demands
5. Digital Sales: measures the percentage of sales generated through digital channels. It can be measured by comparing the total sales made through digital channels to the total sales made through other channels
6. Operational Efficiency: This metric measures the efficiency of your digital platforms in reducing costs and improving processes. It can be measured by comparing the cost per transaction, and the time it takes to process transactions through digital channels versus other channels
7. Analytics and Insights: This KPI measures the ability of your technology to provide valuable insights and analytics. It can be measured by the availability of data and the accuracy and relevance of insights provided by your digital platforms
8. Security: This KPI measures the security of your applications and the data they handle. It can be measured by monitoring the number of security incidents, the types of attacks, and the time it takes to detect and respond to security incidents
9. Scalability: This KPI measures the ability of your applications to handle increased usage and traffic. It can be measured by monitoring how your applications respond to increased load and the time it takes to scale up or down.
10. Cost Efficiency: This KPI measures the efficiency of your applications in terms of cost. It can be measured by monitoring the cost per transaction, the cost per user, and the cost of maintaining and upgrading your applications.