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Return on Experience (ROX): Is it Worth the Consideration?


By Brian Ruhe, SVP, Business Development

Strategic initiatives being considered by a community bank or credit union are evaluated, rightfully so, by Return on Investment (ROI). Whether a major technology investment, core conversion, marketing campaign, investment in a fintech platform, or even a change in mindset within risk management, this type of ROI metric analysis has been a focus for community lenders for years. While ROI is a vital part of the overall analysis, might there be some other ‘experience metrics’ worth considering that can complement the ROI evaluation? How important is the measurement of customer and employee experience at your banking institution?

Return on Experience (ROX) is a metric that can be applied across many different business models but is not typically as embraced as it could be. Within the banking industry, ROX is a more comprehensive approach to measuring, understanding, and increasing the value of investment into strategic initiatives impacting the experience of customers, employees, and leadership. When looking at the big picture, ROX is about mapping out the experiences that lead to improvements in brand recognition, operational efficiency, and bottom-line gains.

Read: Does your CPI Program Meet your Customer Experience Goals

I recently came across an article from J.R. & Associates that does an excellent job of outlining the comparison of ROI and ROX, with strong explanation and analysis throughout. This detailed analysis can be complex, no doubt, but it is worth the understanding. “ROX incorporates the value of the intangibles, which are more difficult to measure,” per the article. What should not get lost in the evaluation of a new strategic initiative at a financial institution is the experience factor, of not only the customer but also the banking teams. Check out the article from J. R. & Associates for a more detailed analysis of “ROX calculation in practice”. 

Can this ROX analysis play a role in the evaluation of ‘blanket portfolio protections’ for a community lender? The key is in the intangible analysis of the experience ‘calculation’ that must accompany the change in mindset for a bank or credit union when considering such an initiative. Blanket insurance policies will eliminate insurance tracking and eliminate force-placed insurance. From a risk mitigation aspect, blanket programs focus on clear protection against uninsured loss without any of the tracking efforts. But from a customer/member experience perspective, there might be more to consider with such a monumental transition away from an old-school tracking model. ROX certainly has importance in the evaluation of many different strategic initiatives at a bank or credit union – perhaps even a greater value than is currently being considered today. Is it worth the consideration?


Click here to learn more about Blanket Protection for Lenders


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