Getting Omnichannel Right in Banking
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Multichannel describes the customer's ability to transact business across many different channels or touchpoints (e.g., phone, online/digital, physical branch, etc.). This concept is fairly commonplace in the banking world. Bank systems have evolved to capture all transaction data in a single database, allowing banks to build "customer-centric" views. These traditional banking channels have more or less remained siloed over the years.
Omnichannel, by contrast, describes a more "customer experience-centric" approach to customer relationship management where customers who switch between digital and physical channels maintain a consistent and unified experience.
Depiction of a multichannel vs. omnichannel approach to customer experience in banking.
Research from McKinsey shows that banks with an omnichannel strategy perform better overall. Customers using three or more channels to engage their bank held on average seven products, while customers using two or fewer channels seldom held more than five products. Other research supports the idea that omnichannel experiences help businesses forge deeper relationships with customers.
Yet very few banks have cracked the code for delivering omnichannel experiences that meet consumers' ever more sophisticated end-user expectations—despite the fact that doing so would allow them to target a larger share of their customers' minds and wallets.
Getting omnichannel right is not easy.
- Cost: First, nearly all banks have monolithic mainframe systems that support disparate processes. Hence, it is costly to modernize core banking systems to deliver seamless "real time" experiences on the front end.
- Design/Agile Skills Gap: Second, defining which omnichannel experiences will provide true value to banking customers requires "design thinking" and "customer journey mapping" skill sets not commonly held by your typical bank IT staff. Simply put, banks may not have the personnel to make the required changes.
- Competition from Online-only Banks: Add to the mix the urgent business imperative to keep smaller and more agile online-only banks (e.g., Ally, ING Orange) and online retailers (e.g., Alibaba, Tencent) at bay, and we might forgive traditional banks for being unsure about where to begin the omnichannel journey. These online competitors can offer customers "virtual mall" experiences through auxiliary services (such as payments through Alipay, WeChat Pay) that traditional banks have been slow to embrace.
The threat from online competitors is further exacerbated by a mandate like the Payment Services Directive (PSD2) (open banking in the U.K.), which requires banks to expose system of record data about branch locations and products before transaction data. Such mandates will promote even more competition from Fintechs.
To accelerate the implementation of successful omnichannel initiatives, banks must embrace several key technology and customer experience enablers. They should also be willing to learn from other industries, like Retail, where omnichannel success is more established.
- Technology Accelerator: Access to a state-of-the-art lab environment that allows for the quick prototyping and testing of a broad array of technologies, products and solutions is one key enabler that will help banks get omnichannel right. Such labs can accelerate a bank's time to market by more than 50% as their internal Information Security processes only need to validate production-ready solutions (as opposed to spinning cycles to validate each and every proposed technology).
- Design & Agile Practices: Integrating design thinking practices into software development is another enabler that will help banks achieve omnichannel success. Design thinking will help bank staff ideate the right customer experience scenarios, while adopting an agile approach to prototype and test these scenarios will lead to more impactful results.
- Microservices: As a third enabler, banks should use the concept of microservices to break down their monolithic processes into smaller components that enable their technology stacks to evolve more rapidly. Adoption will allow banks to develop API and microservices-based application architectures that easily integrate with legacy backend systems and emerging Fintech solutions, putting banks in a better position to compete.
Best practices and lessons learned from other industries can be instrumental in helping banks understand how omnichannel experiences can transform their own industry.
Transforming the branch experience for bank customers would be a huge first step toward achieving impactful omnichannel success.
For example, we helped transform a large home retailer's in-store experience in two ways. First, we used an infrastructure upgrade opportunity to design a smart app for store associates that incorporated features like way finding and store traffic analysis—making it easier for customers to navigate the store. Simultaneously, we redesigned their customer app to enable an elegant curbside pickup experience that reduced customer wait times by interfacing with APIs and SDKs from vendors like Phunware, Service Now and AppDynamics.
We also helped a well-known rental car company re-imagine the car rental experience by developing a tablet application to streamline pickup. As a result, the company's customers can now make reservations, check-ins and return visits without ever having to wait in line.
Similarly, banks should consider ways to untether their service reps from traditional branch counters so they can address customer needs without being tied to a physical location.
Getting omnichannel right means delivering on customers' expectation of seamless integration between online devices and physical engagement touchpoints. Adopting an API-driven approach that exposes data to applications on a need-to-know basis is a great way to do just that.
A global agricultural company's business, product and customer data were spread across many disparate sources. The company was having issues managing and analyzing the overwhelming amounts of data (around three million events of customer data alone per day on average).
We stepped in with a solution that gave the company a programmatic way to use the data to help sales individuals direct their selling efforts. We created a data lake through an event streaming platform called Kafka. We then used APIs and a microservices application architecture to consume these events, ultimately giving the customer a mechanism to effectively separate the core systems from data.
Banks should consider a similar approach to separating core technology systems from data. This will not only put them in a better position to enable seamless device integration across channels but allow them to deal more effectively with mandates such as PSD2. It will also put banks in a better position to protect market share from the nimbler and more innovative Fintechs.
The Internet of Things (IoT) — the ubiquitous move to integrate devices and sensors with software and analytics— is driving change across nearly all industries. Banks should take notice and adopt IOT to achieve an enhanced omnichannel experience for customers that can also drive revenue growth.
As an example of IOT in action, we built an "IoT Platform" solution that connects critical data from devices and remote sensors in unstable environments over any available IP-based network—whether it's satellite, cellular or Wi-Fi. This IoT ability has transformed the ability of the U.S. military, security and law enforcement organizations to seamlessly and effectively deal with real time security threats in venues like sport stadiums, concert halls and crowded markets.
Banks should look for innovative ways to incorporate IOT technology and real-time analytics to leverage their inherent advantages: a large and mostly loyal customer base, and a large physical branch footprint. By enhancing the customer experience with smart sensor technology and predictive analytics, banks can expect greater retention and an increase in cross-sell opportunities.
Cracking the omnichannel experience code isn't easy, especially for traditionally complex and slow-moving institutions like banks. But by taking best practices from other industries and leveraging some key technology and customer experience enablers, banks can take meaningful steps toward becoming more "customer experience-centric."
For help with getting omnichannel right, connect with me. As demonstrated above, we have experience across industries in helping businesses design and execute transformative customer experiences.