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Omnichannel: To infinity! And beyond!

Well, someday. Bankers hope to take it beyond cost reduction to SALES

Bank tech trends can make your head spin. So each week longtime Tech Exchange Editor John Ginovsky does his best to “make sense of it all.” Bank tech trends can make your head spin. So each week longtime Tech Exchange Editor John Ginovsky does his best to “make sense of it all.”

Everybody agrees there is a difference between multichannel banking and omnichannel banking. Or, at least, there is supposed to be.

Multichannel banking was a great leap forward from the days when the only channel was the increasingly expensive branch. ATMs, call centers, interactive voice response systems, and even online banking all caught on—first because customers embraced them, and second, they lowered transactional costs for banks.

The theory evolved to the point where brick-and-mortar branches would shift primarily to being sales centers—places where customers would come in, kick the tires of new products and services, and chat face-to-face with bank salespeople. Some banks went so far as to refer to their branches as “stores.”

Then along came mobile and everything changed. In fact, it started to change with online banking, but mobile, represented by smartphones and tablets, really altered the landscape. People found they could buy things easily and securely over digitally connected devices. Cyber retail thrived, with Amazon being the poster child.

Bank customers, particularly the younger and upwardly mobile ones who grew up dealing with screens that dealt right back at them, have come to expect that their retail banks would follow suit—that is, engage them as thoroughly as any other retail store does.

Thus was born omnichannel banking. It’s not either/or, it’s all the channels, all the time, for everything. And easy. Don’t forget easy.

Banks realize this and want to embrace it as much as they’ve embraced all the prior channel developments—but it seems they are not quite there yet.

Omni-intentions, but old-style realization

Celent issued a report late last year that indicates most banks say one thing, but have yet to deliver on it.

“Digital banking channel development and omnichannel delivery are statistically tied with customer analytics in being considered the most important technologies in delivering revenue growth,” says Bob Meara, Celent analyst, in a subsequent blog referencing the report. “What may come as a surprise is how far most banks have to go in terms of actually delivering what they say is important.”

Meara uses mobile banking as an example. Of the banks Celent surveyed, 44% strongly agreed that  their strategic basis for offering mobile banking was as a way to attract new customers and upsell customers. However, very few actually make that possible on their mobile channel: mortgages, 8%; credit or prepaid cards, 10%; auto loans, 11%; personal lines of credit, 8%; student loans, 1%; and investments, 2%.

“Customer engagement and upselling customers through the mobile channel? That’s a tall order for most banks when historic mobile channel development investment has been all about migrating low-value transactions. Even if consumers would be disposed to enroll in products or services on their device (a reasonably fast-growing trend) precious few banks even offer that ability,” Meara says.

Banks’ “secret” is out

Meara, by far, is not the only one who’s made this observation. Here are some others, culled from statements made in the last few months:

Ameyo, which provides business relationship system:

“Most companies like Amazon have been providing the right kind of purchasing suggestions, irrespective of the device that the customer is using. This has made the customers expect the same from banks as well. Omnichannel banking is the only thing that will help customers have a consistent experience over all devices, be it a mobile phone, tablet, or a PC.”

Monitise, a global mobile money specialist:

“Focusing on an omnichannel strategy will bring important benefits to banks: enabling them to use their financial and IT resources more efficiently, building comprehensive customer data, and forming enhanced interactions that continue over different channels. Most importantly, an intelligent omnichannel strategy will be a powerful weapon for banks to forge tighter bonds with consumers in an increasingly competitive landscape.”

Avoka, which enables digital transactions:

“If there is one thing we hear more than anything from our customers it is that omnichannel transactions that remove friction from the customer experience, will be a core focus across all of their global sales initiatives for 2015. While digital engagement and mobile strategies have been important over the last few years, financial services organizations now understand that frictionless experiences across all channels are the key to acquiring customers.”

Financial Managers Society:

“The most significant change in financial services will be the shift in digital banking strategy from a self-service delivery channel to a full-service delivery channel and a shift from using mobile as a cost reduction tool to a way to expand share of wallet and become central to a consumer’s financial life.”

Great idea. Now, how to execute?

All right, already. So, how does a bank go about doing all this?

The easy answer is to say that it’s not easy.

However, FIS, in a recent white paper, takes a stab at how to develop a realistic approach to omnichannel banking.

In summary, FIS says any approach must begin and end with the customer as the primary focus—beginning by analyzing customer data, and ending with providing customers with what they really want.

That said, FIS describes several steps to go from here to there:

1. Conduct a customer assessment, both of the current customer base and future customer growth.

2. Conduct a technology assessment.

3. Develop a current state analysis of needs and functionalities.

4. Develop a future state analysis, of desired functionalities to meet customer needs.

5. Rank the desired new capabilities.

6. Identify gaps to be filled with the omnichannel plan.

7. Factor in the required budget, new product plans, business plans, and the bank’s overall strategy.

8. Identify the required staff, processes, and technology needed for the transformation.

“The bank should seek product innovation that improves the customer experience by adding new capability and integrating existing technology to achieve an omnichannel experience … This customer focus also lays the foundation for promoting a sales culture within the branch staff,” FIS says.

And there it is: sales.

That’s where omnichannel is supposed to go.

Sources used for this article include:

How Is The Omni-Channel Reality Affecting The Banking Industry?

Top Priorities For The Financial Services Industry In 2015

Top 10 Banking Trends For 2015

The Quest For Omnichannel Continues

Developing A Realistic Approach To Omnichannel Banking

Omnichannel Banking: A Consumer-First, Not Bank-First, Experience

John Ginovsky

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at [email protected]

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