7 KPIs Every Digital Bank Should Focus On

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Introduction

Key Performance Indicators (KPIs) serve as crucial tools, allowing banks to measure how effective their digital banking apps are in engaging customers. In this guide, we'll explore seven essential customer success KPIs, complete with straightforward formulas, designed to help banks improve customer engagement, foster loyalty, and reduce churn rates.

1. Feature Adoption Depth

Formula: (Number of features used by a customer per month / Total number of features available) * 100

Feature Adoption Depth measures how users engage with various app features. For instance, if a user regularly utilizes 8 out of 12 available features, the Feature Adoption Depth would be (8 / 12) * 100 = 66.67%. This KPI helps banks understand which features are popular and guide decisions for feature development.

2. Average Time to First Transaction

Formula: (Total time taken by all users to complete their first transaction / Number of users)

This KPI evaluates how efficiently users onboard to the app by calculating the average time taken to complete the first transaction. If three users take 2, 5, and 3 minutes respectively for their first transaction, the Average Time to First Transaction would be (2 + 5 + 3) / 3 = 3.33 minutes. A lower average time indicates smoother onboarding.

3. Turnaround Time (TAT)

Formula: (Total time taken to complete a specific business process / Number of processes completed)

Turnaround Time assesses the efficiency of critical processes, like making payments. For example, if the total time taken to complete 10 payment transactions is 100 minutes, the TAT would be 100 / 10 = 10 minutes per transaction. Lower TAT values imply quicker and more efficient processes.

4. Monthly Active Users (MAUs)

Formula: (Number of unique users who open the app at least once in a 30-day period / Total number of users) * 100

MAUs indicate user engagement over a 30-day period. If there are 5,000 unique users, and 3,500 open the app within that time frame, the MAU would be (3,500 / 5,000) * 100 = 70%. Monitoring MAUs helps banks gauge the app's relevance and value to users over time.

5. Abandon Rate

Formula: ((Number of users who abandon a process / Total number of users who start the process) * 100)

Abandon Rate provides insights into user behavior during transactions. If 100 users start a transaction process, but only 80 complete it, the Abandon Rate would be (20 / 100) * 100 = 20%. This KPI helps identify and address potential friction points in the user journey.

6. Net Promoter Score (NPS)

Formula: (Percentage of Promoters - Percentage of Detractors)

NPS is a measure of customer satisfaction and loyalty. If 60% of customers are Promoters and 20% are Detractors, the NPS would be 60 - 20 = 40. A positive NPS indicates satisfied customers who are likely to recommend the app to others.

7. Retention Rate

Formula: ((Number of unique returning users / Total unique users in a specific period) * 100)

Retention Rate assesses customer loyalty by measuring the percentage of users who return to the app within a given time frame. If there are 2,000 unique returning users out of 2,500 total unique users, the Retention Rate would be (2,000 / 2,500) * 100 = 80%. Higher retention rates signify satisfied and loyal users.

These seven key performance indicators (KPIs) offer a robust framework for assessing app performance. Consistently tracking and responding to these metrics empowers banks to enhance user experiences, cultivate enduring customer relationships, and thrive in today's digitally savvy environment.