It’s time for financial services leaders to rethink digital key performance indicators (KPIs) and metrics. As the industry dives deeper into digital transformation, legacy methods of measuring and monitoring digital progress need a refresh. Your digital KPIs need to be an evolving and dynamic tool to guide and support decision-making and not simple checks in the box.
Here are 5 ways your current digtial KPIs may be failing you and your organization:
1. Most digital KPIs are generic.
Don’t just pick KPIs that the organization has historically used. The right KPIs can drive the right business journey, and each firm may have different goals in mind. For instance, some firms seek to digitalize the current business model but essentially remain the same, while other firms strive to pursue new digital business models. Each of these pursuits requires its own unique set of KPIs and metrics to monitor progress and guide the right decisions. Hence, qualify your organization’s ambitions before building the KPIs that will best guide you on your journey.
2. It’s not about how much tech you have, it’s about how you use them.
Don’t simply measure the extent of your firm’s digitalization by the number of investments made to build/buy technology. Technology alone has no business value, nor does it contribute to digital progress. Value is only unlocked when the technology is successfully embedded and adopted in workflows and processes, so use the measure of technology adoption as your guiding metric.
3. Not thinking beyond revenue and cost.
Don’t solely fixate on cost and/or revenue as the potential beneficial business outcome. Your KPI collectively answers the question of “What financial and business benefits can we expect when we successfully attain our digitalization goals?”; of which extends beyond revenue and cost. Customer engagement, risk reduction, and even sustainability goals are all potential beneficial outcomes to associate with your selected KPIs.
4. Don’t over-digitalize, find a “Balance Point”
Don’t over-digitalize. Becoming a digital business does not mean that every aspect of the business model needs to become fully digital. There is an optimum level, and beyond that point, firms will begin to negatively impact the overall customer experience. For example, digitalizing too much or forcing too many customer interactions via digital channels can create negative impacts. Expecting all sales to go through a digital sales channel will upset some customers and provide very little chance for high-touch engagement. FS leaders need to determine the “balance point” at which the amount of digitalization is ideal for customers and employees.
5. Static digital KPIs
Don’t keep your selected KPIs constant indefinitely. KPIs need to be regularly sharpened and tuned to reflect the goals of the business. As customer expectations change and markets shift over time, review the relevance of KPIs by asking the following questions:
- Is what you are measuring still valid?
- Are you no longer even close to your original baseline?
- Strive towards goals, but it’s important to rethink unrealistic ones.
- Is the outcome you were looking for still relevant?
- And is the balance point that you established still the right balance point to help you calibrate your decisions?
Establishing the right KPIs is the stepping-stone for organizations to start their digital business journey, and the first step in the right direction is for FS leaders to shed the old habits and preconceived notions about the role and structure of KPIs in an enterprise. Avoid blindly following the KPIs used by other firms or predecessors. Instead, create KPIs that align with your ambitions, focus on tech adoption, go beyond revenue/cost, have a “balance-point” and are constantly sharpened and tuned.