Why Online Acquisitions
Acquiring New To Bank (NTB) customers is a key agenda for most Digital Heads at Banks.
Its only logical that online acquisition budgets are getting bigger, given the following:
- Consumers are spending more and more time online. Digital is the best channel to start a dialogue
- Digital channels are tracked exhaustively. You can measure the return on each dollar spent.
- Digital channels allow data to flow at higher speeds. This could translate into better context, targeted products, straight-through-processing, upfront checking of applications etc etc.
- Tablets have provided the ideal form-factor to do an assisted digital sourcing, as has been proven by the success of ICICI Bank
- Regulatory changes are also making it easier to acquire online – Aadhar database, eKYC, wet signatures to go away in some instances etc.
Here are 3 seemingly simple tips for anyone who is doing NTB acquisitions today at a banking set-up.
Choose the right on-boarding product
Many would say, we do not have a choice as each business line would be relying on the support of digital channels. Be as it may, it might be prudent to take a step back and understand the advantages of choosing a particular product for consumer on-boarding vs another.
- Do we reject a lot of applicants for this product. Typically in case of credit cards and most loan products, the rejection rates are high and hence we need to sieve upfront to reduce the cost per lead or cost per account. Are there other products in the portfolio which have lower rejection rates e.g. most liability products may fall in this category
- Does the product start giving me more data and insights about the customer? Can I build strong contexts to pitch the next product. Any payment product would be a good bet as it starts building a lot of relevant data points about the customer.
- Is this being sold or the customer has a well articulated need? Loans should see a higher conversion as against credit cards because the customer has a need. But the scenario may change if the card is free and loaded with offers.
- Is the process straight-through? If not, how many steps are there? The higher the number of steps, lower would be the conversion rates.
- Competition – given that you are not the only bank trying to talk to the customer, the kind of marketing money it takes to interrupt a customer would increase for the segment with higher competition. Back in 2007 the bid rates for Personal Loan keywords moved almost 100% in less than 6 months. Every bank in India was focusing on acquiring Personal Loan customers.
Manage the Drop-out funnel
With all the tools available for tracking, doing A/B testing it is so much easier than before to manage the drop-outs in the acquisition channel. Over the years, industry has also learnt and created a best-practices library. Use it. E.g.
- Acquiring through partners who have data on customers is more efficient and reliable. This is why most banks are exploring SME financing through ecommerce platforms.
- Allow applicants to save applications and continue later. Across channels.
- Build for a true OmniChannel experience. As the customer journey will definitely toggle devices
- Provide for assisted filling of forms. What might sound simple & easy to you may be confusing to others
- Authenticate the communication fields upfront (email, mobile). This allows you to follow-up on leads more proactively.
- There are no permanent rejections – a customer who is not eligible today may be eligible tomm. Except may be those who are already over age :-).
Build data-led acquisition platforms
What has changed significantly in the last decade is the amount of data prospects and customers are generating across various channels and touch-points. The future (if its not already upon us) of digital acquisitions is data-led.
E.g. acquiring SMEs for working capital financing can happen in multiple ways:
- Bidding on search engines for loan keywords
- Putting up banners on B2B portals
- Showing banners to specific SMEs on a B2B portal basis some cuts
- Deep integration with portals to get fresh data about SME’s transaction, reputation, growth trajectory etc.
- And so on.
Its easy to see that as the richness of data improves and also its freshness, the credit decisioning becomes better.
But this is not easy to do. It requires bringing together credit , product and digital teams into a room and understanding clearly the opportunities ahead of us.
Some banks are already working hard to evaluate the new data-points available and calculate their influence on the traditional credit models. Its a matter of time before this becomes the new normal.