The banking industry is at an inflection point. Growing compliance costs, capital requirements, a public trust deficit, the proliferation of social media and other technologies combined with a new generation of empowered consumers with unprecedented expectations for transparency and convenience are just some of the factors pressuring profitability. As banks scramble to adapt, nimble disruptive new competitors are further threatening brand equity and market share.
One area of opportunity for building differentiation and revenue is multichannel integration. While not a novel concept, it is one whose potential is underleveraged. While many customers are currently utilizing numerous channels, only a handful of banks are delivering a cohesive multichannel experience. According to PwC’s recent Global Banking CIO survey, only 19% of respondents have integrated online, mobile, and social platforms. In fact, the current state could be described as multiple-channel at best, with mobile, online, branch, ATM and call center patched together rather than intertwined to deliver seamless continuity through every customer touch point.
Given the obvious relationship and profitability upside, why is multichannel integration yet to reach critical mass? Our client experience and research have identified two key hurdles - mindsets and systems.
Traditionally, product and channel strategy is filtered through the lens of corporate rather than customer objectives and the two are not always congruent. Customers tend to focus on outcomes. Are they investing wisely for their children’s education? Are they getting the most interest on their savings? They view banks as a conduit to get them from point A to point B quickly and cost-effectively. However, many current organizational models are hindered from delivering on this premise by internal silos, legacy systems, metrics considerations, etc. Consequently, the end result is often a complex web of fragmented channels and products that could be hard to navigate and not necessarily responsive to how customers buy and use, when consumers are hungry for streamlined simplicity.
However, the pace of change is likely to accelerate for a number of reasons. For one, the Consumer Financial Protection Bureau (CFPB) is placing a heightened onus on banks to curb high pressure or unfair sales tactics. Perhaps even more importantly, customer experience has emerged as a definitive differentiator and benchmark for long-term growth and survival.
This means that financial institutions may need to rethink how the customer experience bar is set and measured. Minimizing errors and offering channel options is a baseline. With today’s premium on personalization, “one size fits most” no longer moves the needle. Customers want to feel that their bank understands their unique nuances and tailors the relationship accordingly. The true competitive advantage and ROI reside in getting beneath the skin of the customer with holistic segmentation that considers a range of behavioral and attitudinal drivers outside just financial habits. Banks need to foster an empathetic culture that empowers the front line to do what is necessary to address a client’s needs within the boundaries and spirit of the law. This type of customer-centricity is the cornerstone for the ideal state where transactions are replaced by interactions and products/channels evolve into solutions. Simply put, this means awareness of a customer in every stage of the financial and transaction lifecycle across multiple interfaces. For example, if a deposit appears online, it should trigger other channels – bill pay reminders, investments, etc. or a branch should be able to seamlessly pick up where the call center left off on an issue.
The underpinning for an effective multi-channel strategy is a real-time, 360 degree, single view of the customer. Unfortunately, this type of connectivity is challenging to achieve when most banks systems run on batch architecture. Transforming to a real-time transaction environment requires empowering the IT function to transition from systems developer/deployer/maintainer for disparate product groups to a systems integrator with a focus on enterprise-wide initiatives. This is a significant undertaking that involves assessing a number of factors like whether core banking applications are extensible enough to quickly share real-time information with partners or new systems, if the bank’s infrastructure can be available 24/7 – even if the core banking platform is down for maintenance and how the layers of security risks would be handled.
Moving the Ball Forward on Multichannel
While many banks have a multichannel strategy, few have the resources and systems to fully execute against it. As banks continue to invest in technology and other capabilities that will enable them to move toward a true multichannel environment, the following are a few suggested considerations for enhancing customer experience:
-- Dedicate a team member to oversee customer experience
-- Build enterprise assets to support a single customer management approach, including voice of the customer, customer journey mapping and interaction management
-- Simplify the customer interface, reduce your number of products and consolidate operations
-- Build more holistic profiles of customer needs and interactions
-- Deepen cross channel analytics capabilities to include current channels and emerging capabilities like speech analytics
Dean Nicolacakis is Principal in the Banking and Capital Markets Practice at PwC