In this three part series, Heather Youngo, Business Analyst of Digital Insight discusses how financial institutions, can increase their probability through offerings and customer usage.
Correlation is defined as a mutual relationship or connection between two or more things. Causation is defined as the idea that something can cause another thing to happen or exist. Recently, I and my team at Digital Insight have conducted thorough analysis on correlation and causality amongst different digital banking products and services. To measure causality, customer behavior was analyzed through a before, during, and after time period over the course of two years.
Digital Insight data showed that highly engaged customers that used multiple digital banking services are 51% more profitable than customers who do not actively utilize online or mobile banking.In addition, customers who actively use digital banking services are correlated to having higher account ownership, balances, retention, and debit card purchases when compared to offline bankers. It is evident that those customers using multiple digital banking services become more “profitable” and engaged, when compared to the offline banking segment. The question that remains is, “does online banking cause a more profitable customer?”
After analyzing several hundred thousand banking customers across dozens of financial institutions, We have quantitatively concluded that digital banking does indeed cause a customer to become more profitable to his/her financial institution.
Simply stated, when measured against customers who remained offline (non-digital banking) over two years, those customers who became engaged in digital banking increased their account ownership, total deposit/loan balances, and propensity to open additional accounts more heavily than offline bankers.
Internal study of 86 Digital Insight FI customers, July 2009 through March 2014; claim based on comparison to Digital Insight online versus offline customers. Internal study of 16 Digital Insight FI customers, July 2009 through March 2014; claim based on causal analysis of Digital Insight online and offline customers.
While all of the customers in the analysis maintained an open checking account with their financial institution during that two year period, the customers who eventually adopted online/mobile banking became more engaged with their bank or credit union. Some examples include migrated accounts over from other financial institutions, renewed lines of credit, or reached a point in their financial lifecycle that warranted opening of a retirement account.
So keeping this in mind, it’s interesting to further examine how specific digital banking applications increase engagement and profitability. In the next article in this series, we’ll look at remote deposit capture and loyalty rewards.
About Heather Youngo: Heather is a business analyst with Digital Insight and leads the initiative on generating and maintaining the accuracy of financial institution profitability data. Heather holds a Bachelor of Business Administration degree in marketing from the University of Georgia.
The data used for this article was analyzed by the following Digital Insight team members: Jason Weinick, manager of analytics, Brenda Shimmons, manager of analytics and Russ Tarver, marketing manager.
