Measuring Return on Experience in Business Banking

Emma Schoth

Emma Schoth

April 10, 2023

ROX Business Banking

Over the last three years, lenders were forced to quickly adopt technology to provide an easy online experience for borrowers. Today, many FIs are seeking ways to measure the return on their investment in these solutions. 

Why Lenders Should Consider Measuring Return on Experience

Return on Experience (ROX) is a concept developed by PwC that allows businesses to measure their return from investing in experiences. This concept will become more important for financial institutions as they continue to expand and develop their tech stacks. 

One of lenders’ biggest takeaways from the pandemic is that customer experience is everything. If they aren’t able to provide their customers with the most convenient experience, then someone else will. We’ve observed alternative lenders continuing to gain more traction as they increase their offerings and enable customers to access more products online.

With emerging threats like these, it’s important lenders have an understanding of how their customer experience compares to others, even if they’re not specifically measuring PwC’s version of ROX. 

Three Factors That Impact ROX

There are many factors that affect ROX, however, here are three of which lenders need to be mindful.

  • Employee Experience: To provide an exceptional experience for customers, financial institutions should first focus on their employee experience. Employee experience has a direct impact on customer experience, even if every employee isn’t in direct contact with the customer. PwC highlights three categories that employers are currently focused on to improve employee experience: 1) purpose, brand, and culture, 2) design of the workplace and work, and 3) workplace digitization. Culture is one of the most important qualities that job seekers look for in new employers. It’s important that lenders provide a culture where employees feel supported and empowered to execute meaningful work. To empower employees to be the best they can be, they need adequate resources. In today’s environment, the best resource lenders can provide their employees is technology and education on how to use it. 
  • Meeting the Customer Where They Are: With self-service on the rise, it would be easy for lenders to assume that an online presence is all they need to be successful, but this couldn’t be further from the truth. As lenders adapt to meet changing customer expectations, they will find success in meeting business owners where they are. Some customers will opt for an entirely virtual experience with no additional support required. Others will seek an in person meeting at the branch location to be guided through the lending process. No matter what avenue the customer chooses, it’s important that they have the ability to decide how they interact with their financial institution. 
  • Technology: To compete with tech companies, alternative lenders, and the like, it’s important that banks and credit unions focus on implementing technology that provides customers with a seamless experience. Features customers are looking for in a digital loan application include simple applications, fast decisioning, and efficient closings. 

Why Lenders Can Charge a Premium for Enhancing Their Customer Experience

The opportunity ROX provides isn’t one that lenders can afford to pass up on. Online banking competitors are currently charging much higher interest rates than traditional institutions, and, even with these significantly higher rates, borrowers are still choosing online options because they offer a more convenient experience. These users are able to get funding within minutes—instead of hours or days—with a frictionless experience every time.

Numerated partners have seen this in action. At a past BAI conference, Dollar Bank SVP Dave Weber told us about a customer he came across that took an offer from a lender with a 47 percent APR on a short-term business loan.

Banks and credit unions that should be winning on competitive pricing, are instead losing out to alternative lenders that can provide convenient experiences right in the customer's home. This shift in sales targets is one banks and credit unions can’t afford to ignore. When lenders focus on providing a fast and convenient customer experience, they too can charge a premium for their products and win back lost market share. 

Three Characteristics Lenders Should Look for in Fintech Partnerships to Improve ROX

For financial institutions to achieve this level of digital transformation, they will need to implement technologies that support their goals. Partnering with a fintech is the best step a bank can take to accomplish this. 

Evaluating partners can seem like a cumbersome process, but it doesn’t have to be. Here are some things to consider when seeking fintech partnerships: 

  • Emphasis on Customer Success:  It’s important that fintechs provide their lenders with all the tools they need to be successful using their platform. One of the most impactful ways fintechs can support customers is through efficient implementations. After the platform is implemented, it’s important for institutions to have resources to successfully continue the use of the platform. Helpful resources to look out for include one-on-one customer support and extensive platform training for employees.
  • Efficiency Gains: In today’s environment, borrowers are looking for a solution that is easy and saves time. This is an important factor that should be a top priority for lenders evaluating technology partners. Factors to consider when making this decision include the amount of time borrowers will save using the platform and how the platform will improve the user experience (UX) when applying for loans. The goal when adopting a new platform should be for a customer to be able to complete the entire application quickly, whether they prefer a self-service approach or one that is banker led.
  • Time to Value: In an industry that is constantly evolving, time to value is an extremely important factor to consider when choosing a tech vendor to improve customer experience. With Numerated’s Universal Business Applications, lenders can easily implement in less than 3 months, providing borrowers with a best-in-class experience, faster.   

When it comes to customer experience in 2023, digital transformation should be top of mind for all lenders. Without the ability to implement a digital solution and a method to measure its impact, it will be nearly impossible for financial institutions to remain competitive. 

To learn more about how you can transform your customer experience with Numerated’s digital lending solution, contact us to schedule a demo today.

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Editor's Note: This post was originally published on Aug. 12, 2021. It was updated on April 10, 2023.

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