November 03, 2009

Doing more with less. These days, that's the norm. And delivery channels are no exception.

In today's business climate, keeping customers happy is more important than ever. And thanks to the explosion of the Internet and now mobile devices, banks must be much more creative in meeting customers' expectations across all touch points. This even includes the branch, whose death has been much exaggerated.

But with today's economic realities, forget about doing "big bang" channel projects, says Marc DeCastro, a research manager in the consumer banking and credit area for Financial Insights. According to DeCastro, piecemeal is the way to go today. "Budgets are strained, and everyone is trying to do more with less," he notes, echoing the market's current mantra.

Although reduced spending has had an impact on channel innovation, DeCastro adds, innovation doesn't necessarily mean inventing new technologies to improve the customer experience. "Go back and address things like usability with your current platforms," he advises. "Focus on one channel and drive where you want to be. Large transformational-type projects are not happening much now."

Smarter use of existing channel resources is a key trend, agrees Christopher Kay, managing director with New York-based Citi's ($1.8 trillion in assets) Innovation Growth Ventures unit. "In times of tight budgets, banks are changing their channel strategies. In general, they're looking for lighter ways to service customers and to grow. The opportunity as banks thin out their infrastructures is to create a more robust experience for customers," he says.

A major part of reimagining channels requires redesigning processes, according to Matthew Cohn, a partner with New York-based Capco. "Most of the institutions we see are focused at the top level on differentiating through their delivery channel strategy," he relates. "They're seeking more efficiencies and operational excellence -- doing more with less. This means process redesign and using your existing technologies to improve customer interactions. You must provide a multichannel experience."

Greasing the Friction

The top challenge facing banks as they seek to optimize the customer experience across every channel is the disconnect between back- and front-end technologies, notes Sandeep Vishnu, a partner at Capco. "There is a fundamental tension between the front-end technology and the back-end technology to support cross-channel initiatives," he contends. "Consumers want multichannel. The back-end effort to support this is nontrivial."

Adds Cohn, "Institutions have masked this [friction] to provide a seamless front end to customers."

To alleviate banks' channel-related pain, the technology must be integrated, says Bruce Livesay, CIO with Memphis-based First Horizon National Corp. ($26.5 billion in assets), who suggests a flexible architecture is key. "You need integrated technologies and common services for simple things like availability calculations, a system of record for customer data," he explains. "Companies that have invested in core systems with a lot of silos will be at a disadvantage."

Although banks have been talking about integrating channels for years, according to W.A. Proctor, SVP of product strategies for Norcross, Ga.-based S1, they finally are taking action. "Back in the late '90s when we talked about multichannel integration, banks were really just implementing point solutions," he says. "Now you still need point solutions, but you are also ingraining all those delivery channels into the back end. There has been a real pickup in this. You're now able to support all your delivery channels with middleware and tie that in real time to the back end. Banks aren't just looking for a teller solution. It's more a question of how a solution can provide this integrated view across delivery channels to service customers."

First Horizon, for example, is working on expanding its online banking offering, which is powered by Sybase's Financial Fusion online banking engine. But the bank's Livesay says the branch is still crucial to First Horizon's operations. As such, the bank's goal is to create a seamless experience across both channels. "We're leveraging our enterprise shared services layer here," explains Livesay. "We're doing a lot of work on our integration layer so people see the same information on any channel."

But there also are some simple things banks can do to provide customers with a more unified experience across channels, argues Marley Gray, industry technology strategist for banking with Redmond, Wash.-based Microsoft. More banks need to realize the importance of providing a consistent look and feel across channels, he says. "You want to provide a consistent feel online, in the branch, on mobile. This means color schemes, logo, basic features and functions. ... And this isn't just for the benefit of the customers, but the banks' employees too."