Banks continue to face challenges when driving customer sales and acquisition via digital channels, according to a new global retail banking study by Misys and Efma. Ultimately, the research indicates, digital will only deliver satisfactorily for banks when the entire service chain has been improved.
“The real issue here is core banking—banks which focus only on digital to achieve customer centricity will have a beautiful shop window, with outdated stock,” says Mark Yamin-Ali, Retail Banking Solution lead, Misys. “Customer-centricity must be from channels to the core. And only with core modernization can banks reap the full benefits of digital innovation.”
Sizzle, but where’s payoff?
What leads the executive to this conclusion begins with the poor results seen by surveyed banks thus far.
Most banks (87%) perform less than 10% of sales via digital, the survey indicated. And for one in five banks, this figure falls to less than 1% of sales.
In addition, only 12% of customer acquisition is conducted via digital channels, proving banks are failing to fully exploit online and mobile to engage customers. Forty percent of new customer acquisition is still conducted via the branch, according to the research.
Barriers block better performance
Globally, banks forecast that sales via digital channels will jump from 13% on average today up to 75% in three years’ time. However, banks must overcome barriers to customer-driven sales to achieve this significant migration to digital channels. Thirty-nine percent of banks cite culture and 26% blame technology barriers on their failure to achieve greater digital sales.
“The ambitious plans to drive the majority of sales via digital channels are unachievable in the current technology environment,” says Vincent Bastid, CEO, Efma. “Banks must develop a strategic link between digital channels and their ability to support customer experiences that—crucially—result in sales outcomes. Those banks that flourish will be customer-focused institutions, founded on core software and systems that can deliver better customer experiences as well as increase sales, all via an omnichannel approach.”
Core banking systems are the No. 1 technology challenge, with 61% stating they are a barrier to optimizing sales performance. Indeed, a third of banks view core systems as incapable of meeting the demands of the sales process, with 12% referring to their banks’ core system as “highly incapable.”
Examining the business impact of technology issues facing sales teams, slow time-to-market with new products and services is causing the most pain. Banks are also frustrated by an inability to create customer-driven, personal products and services.
“Banks can leverage new technologies in more sophisticated ways that not only enhance customer-relevant interactions but also drive bottom line impact,” says Misys’ Mark Yamin-Ali.
In spite of the lack of progress achieved, 48% of respondents believe “customer centricity” is an overused term. Moreover, 75% state that banks have not concentrated efforts on improving customer services in recent years and remain focused on sales-specific activities.
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