Kpis of A Digital Bank
Kpis of A Digital Bank
Kpis of A Digital Bank
ESSENTIAL
KPIs OF A Start
DIGITAL BANK
Also useful in "Digital-First Banks"
@evansmunyuki
Written By Evans Munyuki
Award-Winning Chief Digital Officer
www.munyuki.com
EXECUTIVE
SUMMARY
with the top 9 KPIs
(including the killer KPI)
for those short on time,
SET TO
2,000
1,500
SOAR
1,000
500
0
2021 2030
i
from $47.4 billion in 2021 to $2.05 trillion in 2030 .
There is a growing demand for digital banks,
digital-first banks, and digital banking services.
THROUGH
DIGITAL
PLATFORMS
instead of physical branches.
Evans Munyuki
www.munyuki.com
The KPIs that apply to a specific
digital bank vary based on its
BUSINESS
MODEL, GOALS,
& STRATEGY.
So, while general guidance is given here, you need
to select the best KPIs per your business model.
Evans Munyuki
www.munyuki.com
The Business Model Canvas Outlines It All
and it lays the foundation for us
Key Key Value Customer Customer
Partners Activities Propositions Relationships Segments
Key Channels
Resources
Cost Revenue
Structure Streams
Evans Munyuki
www.munyuki.com
What is a KPI? A KPI or Key
Performance Indicator is a
measurable value that
helps individuals or
organizations to
EVALUATE THE
SUCCESS OF
THE ACTIONS
or projects they undertook to achieve
specific business goals or objectives.
Evans Munyuki
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Using KPIs helps individuals and
organizations to
MEASURE, F CUS,
IMPROVE, AND
COMMUNICATE
PERFORMANCE,
leading to better decision-making and
the achievement of desired outcomes.
Evans Munyuki
www.munyuki.com
DIGITAL BANKS
DIFFER FROM
TRADITIONAL
BANKS
and they require a very different mindset.
Evans Munyuki
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KPIs are crucial for
digital banks as they
enable the bank to
measure and
monitor their real-
time performance,
leading to data-
driven decisions that
can improve the
bank's operations,
customer experience,
and financial performance.
Nubank* $45b
Revolut $33b
Chime $25b
WeBank
$21b
Kaokao-Bank
$19b
Robinhood $10b
SoFi
$10b
Tinkoff
$9b
N26 $9b
Note: * - valuation at time of initial public offering (Dec 9, 2021.
Source: Simon-Kucher & Partners, "The Future of Neobanking: How can
K Bank
$7b Neobanks unlock profitable growth?" May 7, 2022
insiderintelligence.com
0 10 20 30 40 50
Evans Munyuki
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In Q3 2022, Nubank generated
revenues of $1.31 billion, and posted net
profits of $7.8 million. Here are 4 telling KPI's
in Nubanks profitable results in that quarter:
Evans Munyuki
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They acquire customers
through online
channels like social
media, search engines,
and digital advertising,
and have lower cost
structures than
traditional banks due to
their lack of physical
branches.
Evans Munyuki
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Digital banks require a different
approach to income generation, with
revenue models such as subscription
models and API monetization.
Evans Munyuki
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They have a
noteworthy embrace
and prioritization of
differentiators like UI &
UX Design, Data & AI-
driven personalization,
Tech Stack, API
sandboxes, Developer
Portals, API economy,
Cloud, Deployment
Methods, and
Algorithms as drivers
of competitive
advantage.
Evans Munyuki
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Speed and Agility:
Evans Munyuki
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Marketplace Banks
A marketplace bank is a
type of digital bank that
offers financial
services and
products from
third-party
providers in
addition to its
own services.
Examples:
Evans Munyuki
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Non-Banks
A Non-Bank is an
entity that provides
financial services
but is not regulated
as a bank.
Examples of services by
Non-Banks: streamlined
loans, payment services,
or mortgages.
However, Non-Banks don’t
simultaneously accept deposits or
offer checking and savings accounts.
Some of the nonbanks like Monese
operate on an EMI license.***
Examples:
Evans Munyuki
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Challenger Banks
A challenger bank is a
type of digital bank
that
aims to disrupt
or "challenge"
traditional
banking by
offering
innovative
products,
services, and
experiences.
Examples:
Evans Munyuki
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NeoBanks
A neobank is typically
a pure-play digital bank.
It may or may not hold its own
banking license.
Neobanks typically
have a narrow range
of services, and often
have no branches.
Examples:
Evans Munyuki
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New Banks
A new bank is
a financial institution that is
newly established and has
a digital-first approach.
New banks may have
physical branches or
may offer services
online-only.
Examples:
Evans Munyuki
www.munyuki.com
"Challenger banks",
"neobanks", and "new
banks" are terms that are
often used interchangeably
to refer to digital banks that
operate online and offer
innovative financial
products.
Evans Munyuki
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A "digital-first bank" is a financial
institution that is fresh built or
reinvents itself to
PRIORITIZE
DIGITAL
as the primary
means of interacting
with customers and
delivering products
and services.
Evans Munyuki
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Digital-first banks
OFTEN DO NOT
HAVE
PHYSICAL
BRANCHES
or they may have a very limited
number of branches unlike traditional banks.
Evans Munyuki
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The Top 9 Essential
KPIs of a Digital
Bank
Straight Feature
Launch & Through Adoption
Load Times Processing
(STP) Rate
Depth (FAD)
Evans Munyuki
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Straight Through
Processing is a measure of
how well a process flows
from start to finish without
manual intervention.
It is an important indicator of operational efficiency
and customer satisfaction for digital banks.
STP
Rate
= ( Total number of transactions) )
# of transactions processed without manual intervention x 100
FAD = 20%
AVERAGE
TIME TO FIRST
TRANSACTION
Evans Munyuki
www.munyuki.com
The Average Time to First
Transaction (ATFT) KPI measures
the length of time
between when a customer
signs up for a digital bank
and when they make their
first transaction.
It can be how long it takes, or how
many sessions it takes.
The goal of this KPI is to reduce the
time (or number of sessions) it takes
for customers to start using the
digital bank's services, which can lead
to increased engagement and retention.
Evans Munyuki
www.munyuki.com
This is a crucial KPI for a digital
bank because it forces a digital bank
to focus on providing a seamless,
simple and user-friendly onboarding
experience that engages, guides, and
nudges customers to easily start and
successfully finish their first
transaction fast!
By measuring the ATFT, digital banks
can identify potential bottlenecks in
their onboarding AND transacting
processes, and take actions to
improve customer experience, refine the
user interface, improve straight through
processing, make it easy to use, and
increase engagement.
Evans Munyuki
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Additionally, this KPI incentivizes banks to
create targeted marketing campaigns that
encourage new users to start Transacting.
The Average Time to First Transaction (ATFT)
KPI is golden because it requires excellence,
simplicity, & seamlessness in core digital-
bank customer-self-serve tasks: ie
download , install , register , open a
bank account , KYC , deposit money
into the account , and transact .
Evans Munyuki
www.munyuki.com
Revolut, Monzo and Starling are case
studies of Digital Banks and FinTech apps
whose onboarding flows were designed to
prompt and guide users to make their
initial transaction very quickly.
Evans Munyuki
www.munyuki.com
Revolut earned
a 5-star rating
on the "11:FS
Pulse" digital
platform for its
onboarding
process.
It received 5
stars for its
usability, 5
stars for its
utility, and 5
out of 5 stars
for visual
design!
Evans Munyuki
www.munyuki.com
11:FS Pulse showcases the top-rated user
journeys of digital banks & fintechs.
As a builder of digital
banks, over the years, I
have found 11:FS Pulse to
be an essential resource for
building great experiences.
It allows people to learn
from the best-in-class user
journeys and to see them
live in action without the
need to open bank
accounts with hundreds of
digital banks in tens of
countries (an impossible
task).
The onboarding
processes of the
companies are so
good, enabling a
good ATFT.
Evans Munyuki
www.munyuki.com
Monzo
Monzo is still the
best challenger bank
out there with a very
good onboarding
experience and
setting up of joint
accounts.
Evans Munyuki
www.munyuki.com
Nude
Best in class
onboarding
Easy
Stylish
Video Carousel
Easy KYC process
Fun graphics
User-friendly
interface
Evans Munyuki
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Kraken
Onboarding in a few
minutes
Guides users
through verification
Colorful graphics
One question per
page onboarding
process
Delightful
confirmation screen
Verification
completed within a
minute
Evans Munyuki
www.munyuki.com
Chip
Smooth Onboarding
Guides users through
a simple KYC process
One question per
page onboarding
process
Vibrant unique
graphics
Fresh, modern feel
Guides users through
quick informed
decisions
Evans Munyuki
www.munyuki.com
Sezzle has achieved a significant
milestone as the first dedicated Buy Now
Pay Later (BNPL) service to generate a
profit!
Their payment section is
user-friendly and so easy
to navigate, making for a
seamless shopping
experience.
This function is
particularly
noteworthy and helps
distinguish Sezzle from
other BNPL services.
Evans Munyuki
www.munyuki.com
Several metrics are used to measure
user engagement in a digital bank:
1. Monthly Active Users (MAU),
2. Daily Active Users (DAU),
3. Time spent on the app (or site) - the amount
of time customers spend on the digital
bank's mobile application. It helps to
understand how engaged users are with the
platform.
4. Frequency of transactions - the number of
transactions conducted by a customer
within a specific time period.
5. Conversion Rate - This KPI measures the
percentage of users who complete a desired
action, such as opening an account, applying
for a loan, or making a transaction. It
provides insight into how effective the digital
platform is in converting users into
customers.
6. Net Promoter Score (NPS)
7. Pages Per Session - This KPI measures the
number of pages users view per session on
the bank's digital platform. It provides
insight into how engaged users are with the
content on the platform.
Evans Munyuki
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ACTIVE
USERS
Evans Munyuki
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The Active Users KPI measures
the number of customers who
have used a bank's app at least
once within a specific time
period, such as a daily, weekly, or
monthly.
A potential benchmark for this KPI is to aim for at
least 50% of app installs to result in active users.
The Monthly Active Users (MAU) KPI
measures the number of unique users
who engage with the bank's digital
platform at least once in a given month.
MAU = Number of unique users who engaged with the
digital bank's platform or services at least once during a
given month
Evans Munyuki
www.munyuki.com
ABANDONMENT
RATE
Evans Munyuki
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High Abandonment Rates can
indicate issues with the customer
journey or problems with the
digital bank's user experience,
marketing, or customer acquisition
strategies.
Allowing customers to complete a
transaction in as few steps as possible
can help reduce the abandonment rate and
increase conversion.
( )
Customer
# of users at the end of the period x 100
Retention =
# of users at the beginning of the period
Rate
Evans Munyuki
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TU RN A RO U ND
TIM E (TA T)
Evans Munyuki
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For example, a digital bank may set a
goal to respond to all customer
inquiries within 24 hours of receiving
them.
Evans Munyuki
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Another example:
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By providing a fast and
efficient account
opening process,
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It includes any time the customer
spends waiting for their request to be
fulfilled, such as the time it takes for a
support ticket to be resolved. Or the
delays that are created when a
request goes back and forth between
one bank department and the other.
Evans Munyuki
www.munyuki.com
Net Promoter Score (NPS)
The Net Promoter Score KPI measures
customer satisfaction and loyalty. It is a
widely used metric to understand how
likely customers are to recommend the
bank to others.
The NPS is calculated by
asking customers to rate how
likely they are to recommend
the bank to others on a scale
of 0 to 10, with 0 being "not at
all likely" and 10 being
"extremely likely."
Example:
“On a scale from 0-10, with zero being "not at all
likely" and ten being extremely likely," how likely
are you to recommend our digital banking
services?”
Evans Munyuki
www.munyuki.com
CSAT - CUSTOMER
SATISFACTION
CSAT (Customer Satisfaction Score) is a
KPI used by digital banks to measure
how satisfied customers are with
their products, services, and overall
experience.
The CSAT KPI is typically measured through customer
surveys, which can be sent out after specific
transactions or interactions with the bank, or on a
regular basis. Both are recommended.
Example:
“On a scale from 1-10, with one being least satisfied
and ten being very satisfied, how satisfied are you
with our digital banking services?”
Evans Munyuki
www.munyuki.com
Digital makes
it very easy to
collect this
customer
feedback in
real time.
Higher customer
satisfaction indicates a
more user-friendly and
efficient process and
digital bank.
LET'S DIVE
DEEPER!
I have more context, case
studies, "the Vital Dozen KPIs,"
and the "Superset" of KPIs to
help you
crush it in
digital banking!
"The Vital Dozen" Essential KPIs of a
Digital Bank
App
Customer Customer
Downloads
Acquisition Churn Rate
Installs, &
Cost (CAC) (CCR)
Ratings
Non-Interest
Average Customer
Income (NII) &
Revenue Per Lifetime Value
Net Interest
User (ARPU) (CLV)
Margin (NIM)
Evans Munyuki
www.munyuki.com
APP INSTALLS
The App Installs KPI
measures the number of
times the digital bank's
mobile app has been
installed on a device.
A good approach for this KPI is to track the
percentage of downloads that result in
actual installs.
Evans Munyuki
www.munyuki.com
APP RATINGS
AND REVIEWS
Evans Munyuki
www.munyuki.com
The App Ratings and Reviews tell you
how satisfied customers are with your
mobile app.
positive (4 or 5 stars).
Evans Munyuki
www.munyuki.com
Banks With Interesting App Store Ratings
APP STORE
BANK # OF VOTES
RATING
Chime 580 K
SoFi 219 K
Revolut 33 K
Nubank 9.9 K
Tinkoff 4.6 K
Evans Munyuki
www.munyuki.com
CUSTOMER
ACQUISITION
COST (CAC)
Evans Munyuki
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The Customer Acquisition
Cost (CAC) KPI measures
the cost of acquiring a new
customer.
Total Sales and Marketing Costs
CAC =
Number of New Customers Acquired
ImprovingUser
Improving UserExperience:
Experience:
I am a lover of Seth Godin's
book, "Purple Cow." Aim to
create a purple cow! i.e.
Creating a remarkable
product with a remarkable user
experience is the first priority!
Evans Munyuki
www.munyuki.com
CUSTOMER
CHURN
RATE (CCR)
Evans Munyuki
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The Customer Churn Rate KPI
measures the rate at which
customers are closing their accounts
or stopping the use of the bank's
services.
It is an essential KPI for digital banks as it
provides insights into customer satisfaction and
loyalty, and helps the bank identify areas for
improvement in its services and customer support.
Evans Munyuki
www.munyuki.com
GROWTH IN
NEW USERS
The growth in
new users KPI
is a measure of
how successful
the bank is at
attracting and
acquiring new This KPI is critical for digital
customers over banks, as their success
largely depends on their
a certain ability to grow their
period of time. customer base.
Evans Munyuki
www.munyuki.com
Total # of new customer accounts:
This is the most straightforward way to
measure the growth in new users KPI.
It simply involves counting the total number of new
customer accounts opened during a specific period.
Evans Munyuki
www.munyuki.com
CONVERSION
RATE
Evans Munyuki
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The Conversion Rate KPI measures
the percentage of users who take a
desired action, such as opening a
new account, applying for a loan
after being presented with an offer,
or completing the sign-up process
from beginning to end.
Evans Munyuki
www.munyuki.com
The Conversion
Rate KPI helps
the bank
evaluate the
effectiveness of
its marketing
and user
experience
strategies in
driving new
account
openings and
identifying
areas for
improvement.
Evans Munyuki
www.munyuki.com
ve rsion
Con
Tim e
The Conversion Time KPI measures the
amount of time it takes for a customer
to convert from being a prospect to
becoming an actual customer.
Evans Munyuki
www.munyuki.com
AVERAGE
REVENUE PER
USER (ARPU).
The Average Revenue Per User
(ARPU) KPI measures the amount of
revenue generated per user on
average.
Total Revenue
ARPU =
Number of Active Users
Evans Munyuki
www.munyuki.com
NON-INTEREST
INCOME (NII)
Evans Munyuki
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The Non-Interest
Income (NII) KPI
measures the total
income generated
by a bank that is not
related to interest income.
Evans Munyuki
www.munyuki.com
API Monetization: Digital banks and
financial institutions offer APIs (Application
Programming Interfaces) to third-party
developers, allowing them to access their
banking infrastructure and services.
These APIs can be monetized in various
ways, such as charging a fee for access,
taking a percentage of revenue generated
by the third-party application, or charging
for premium features.
Evans Munyuki
www.munyuki.com
Interchange fees: Digital banks can earn
revenue from interchange fees, which are
paid by merchants to banks for processing
transactions made with debit or credit
cards.
Foreign exchange fees:
Digital banks can earn
revenue from foreign
exchange fees, which are
charged for transactions made
in foreign currencies.
Asset management fees: Some digital
banks offer investment products, such as
mutual funds or exchange-traded funds
(ETFs), and earn fees based on the assets
under management.
Evans Munyuki
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Marketplace And Ecosystem Revenue Streams
Marketplace and ecosystem revenue streams
are an important part of the non-interest
income of many digital banks. These revenue
streams typically involve offering a
marketplace of third-party products or
services within the digital bank's platform.
Here are a few examples:
Evans Munyuki
www.munyuki.com
Advertising revenue:
Digital banks can earn
advertising revenue
by displaying ads for
third-party products
or services within
their platform.
For example, a digital bank might display
targeted ads for investment or insurance products.
Evans Munyuki
www.munyuki.com
Transaction fees: Digital banks can
earn transaction fees by facilitating
transactions within their platform.
Evans Munyuki
www.munyuki.com
Digital Banks may use a
variety of KPIs to measure
Non-Interest Income,
depending on their specific
business model and fee
structure.
Evans Munyuki
www.munyuki.com
CUSTOMER
LIFETIME
VALUE (CLV)
Evans Munyuki
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Customer Lifetime Value (CLV) KPI is
used in digital banks and traditional
banks to
Evans Munyuki
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CLV is calculated by estimating the
total revenue that a customer will
generate for the bank over their entire
lifetime, and then subtracting the cost
of acquiring and serving that
customer.
Evans Munyuki
www.munyuki.com
For example, let's say a digital bank
estimates that a new customer will
generate $10,000 in revenue over the
course of their lifetime with the bank.
Evans Munyuki
www.munyuki.com
Digital banks can use CLV to make strategic
decisions about customer acquisition and
retention. For example, if a bank
determines that its CLV is higher for
customers who open multiple accounts or
use multiple products, it may invest more
in cross-selling and upselling to existing
customers.
Evans Munyuki
www.munyuki.com
Customer Complaints
The Customer Complaints KPI measures
the number of complaints that customers
have made about the bank's products or
services.
TECH
SC ALABILITY
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System Response Time
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ERROR RATE
This KPI measures the percentage of
transactions that require manual
intervention due to errors.
Evans Munyuki
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A lower error rate indicates a
more reliable and accurate process.
Evans Munyuki
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CYBER
SECURITY
METRICS
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MEAN TIME TO DETECT (MTTD) &
MEAN TIME TO RESPOND (MTTR)
MTTD measures the time taken by a digital bank to
detect a security breach, while MTTR measures the
time taken to respond and mitigate the breach.
Evans Munyuki
www.munyuki.com
FRAUD RATE
The fraud rate KPI is
used to measure the %
of fraudulent
transactions or activities.
It is used to determine
the effectiveness of fraud
prevention measures,
such as fraud detection
systems, employee
training programs, and
customer awareness
interventions by the
digital bank (in its digital
customer experience).
Evans Munyuki
www.munyuki.com
PHISHING RATE
The Phishing Rate KPI measures the
percentage of customers who fall victim
to phishing attacks, which is a common
tactic used by cybercriminals to steal
personal information.
Evans Munyuki
www.munyuki.com
COMPLIANCE
Compliance with
regulations and laws is
crucial for digital banks
to maintain trust with
their customers,
regulators, and other
stakeholders. To ensure
that they are complying
with relevant laws and
regulations, digital banks
should use key
performance indicators
(KPIs) to
measure their performance. Here are three KPIs that
digital banks should consider using:
Evans Munyuki
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Regulatory Compliance Score:
Evans Munyuki
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Incident Response Time:
This KPI measures the time it
takes for a digital bank to
respond to and resolve
compliance-related incidents,
such as data breaches,
customer complaints, and
audit findings.
Customer
Partner
Lifetime
Engagement
Value (CLV)
Transaction Product
Volume Adoption
Evans Munyuki
www.munyuki.com
Next, I have in store for you
the "SUPERSET"
of essential KPIs
for
A
DIGITAL
BANK.
You will find it in the newly published
second edition on Amazon, along with
additional content.
Evans Munyuki
www.munyuki.com
Thank you for reading this whitepaper.
Evans Munyuki
Award-Winning Chief Digital Officer
www.munyuki.com
[email protected]
linkedin.com/in/evansmunyuki
https://www.insiderintelligence.com/content/nubank-profit-signals-end-
growth-at-all-costs-neobanks
https://unboxedtechnology.com/blog/advantages-and-disadvantages-of-
performance-
indicators/#:~:text=The%20Disadvantages%20of%20Performance%20Indicat
ors&text=One%20con%20of%20KPIs%20is,team%20transformations%20in%
20a%20day.
https://www.upshot.ai/blog/7-essential-customer-success-kpis-to-track-in-
banking-apps/
https://www.fisglobal.com/en/insights/what-we-know/2021/october/10-
metrics-and-kpis-every-financial-institution-should-track
https://e-cens.com/essential-digital-banking-kpis/
*** - https://sdk.finance/what-is-digital-banking/
**** - https://ejbmr.org/index.php/ejbmr/article/download/38/28
iv - https://www.investopedia.com/terms/c/costoffunds.asp
https://www.investopedia.com/ask/answers/040815/what-level-return-equity-
common-company-banking-sector.asp
https://www.turnkey-lender.com/blog/10-vital-kpis-for-measuring-the-value-
of-your-digital-banking-operations/
https://www.pendo.io/pendo-blog/measuring-digital-banking-efforts-with-
product-analytics/
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