Imagine this scenario: Your customer starts her mortgage application process online and finishes it at the branch or by phone with a customer service representative -- without starting over.
Channel convergence -- enabling customers to select their preferred channel mix and providing a seamless experience regardless of entry point -- has now become a "must have" for two reasons.
First, fueled by their ability to transact business with retailers and other non-bank players where and when they like, consumers expect no less from their banks. Not meeting those high expectations is a recipe for losing retail business.
Second, margins are being squeezed by the regulatory wave to the point where banks can no longer afford to delay making fundamental changes that can enable more sales to customers.
Thanks to technology, channels are proliferating and becoming more powerful. Customer expectations about what they were able to do on the internet five years ago bear little comparison to what they expect today. Only 13 percent of U.S. bank customers age 55 and older said they preferred online banking over other channels in 2007. By August last year it had risen to 56 percent, according to the American Bankers Association.
Much the same is true of mobile. Consumers expect services such as location-detection, multiple apps and integrated messaging. Being able to view their balance is unlikely to fire their imagination if a competitor has launched a mobile deposit solution.
To inspire trust and loyalty, banks need to respond with new ways of providing service that align with growing customer expectations. This means not simply making individual channels better, but making them work better together.
What Convergence Means in Banking Now
Channel convergence means giving customers access to the services they want on any device. It means providing the same comprehensive customer information to both bank staff and customers through any channel. And rather than simply having access to transactional data, customers want to see the real-time progress or status of their mortgage applications and other activities.
Closely aligning channels has long been an aspiration for many banks. And Accenture research on high-performing banks has demonstrated that institutions can be twice as profitable and engender greater customer loyalty with a converged channel strategy. But making it a reality means overcoming a considerable obstacle: legacy IT systems (including aging core banking platforms) and siloed channels.
With this unwieldy structure, new product launch cycles can take months instead of days. And, importantly, the ability to configure product "bundles" -- and thereby generate new revenues -- is suffocated. The net result is frustrated customers, high costs and an inability to respond to fast changing business requirements. Conversely, with a converged channel approach, information and processes become standardized and common to all channels, so that activities such as account opening and loan processing become more predictable.
Realizing the Potential for Cross-Selling
This approach helps improve customers' experience -- which facilitates cross-selling. Our experience has shown it can lead to cross-selling ratios of up to five products per customer, compared to averages below two for traditional, siloed banking. It also helps banks influence customers’ use of specific channels -- maximizing the use of lower-cost, self-service online and mobile channels for low value and routine account administration, while driving higher value traffic to branches.
At one bank, for instance, customers can start a purchase through one channel and close it from another. More than 70 percent of product offerings can be purchased -- and 20 percent of sales are completed -- online. The bank also embraces social platforms as a new source of business intelligence and to deliver products and services.
At banks that have transformed their cores, branches maintain their role as the center of high value-added customer interactions, with a strong focus on sales and more profitable services to maximize employee productivity. Administrative tasks are shifted to central back offices, and multiple branch formats and layouts are utilized to address customer needs.
Core modernization can also help banks use channels to become more customer-centric. Banks with strong customer-centric models see sales campaign success rates improve by 50 - 200 percent and customer attrition fall by up to 5 percent.
Consumer behavior is changing in fundamental ways. Customers expect to be able to transact business with their banks where, when and how it best suits their needs. Banks that fail to heed this message risk losing their competitive edge.
Nigel Smith is managing director of Accenture Banking Distribution & Marketing Services in North America; Fiaz Sindhu is an executive with Accenture Core Banking Services.