Omni-channel banking is the seamless banking experience that a customer experiences when he interacts with the bank through various channels such as mobile, internet, retail, etc. Wells Forgo bank in the US,has reported some amazing success using omni-channel – increase in purchase rate by 1.9 times, increase in customer retention by 20ppt and increased cross-selling per house-hold by 6 products among others.
Pillars of Omni-Channel
Omni-channel banking will lead to banks that are very different from what we know of banks as today. Most industry experts agree that the banks are very likely to evolve in 4 areas as Branch, Mobile, Social and Video. We have given a snap-shot of how banks will use these platforms in the coming years.
Branches: There will be a surge in the number of physical touch points offered by the banks. Banks will invest in creating newer formats of branches such as:
Virtual Banking – These are banks that provide all banking facilities online. Customers can meet their investment managers through video calls over the internet to manage their funds.Sabadell United Bank in Florida, USA, has come up with a fully virtual bank – virtualbank.com.
Specialty branches- These are special branches that would cater to all the needs of a particular customer segment. They handle most needs of the customer from investments to safe-keeping, SBI Kohinoor is a very good implementation of a specialty branch.
Banking pods – These are the next generation ATM machines that will enable customers to experience not only ATM transactions such as withdrawal, balance enquiry, etc but will also provide complex services such as opening accounts, ordering cheque books and interacting with bank employees through the ATM.
Agent branches – This is a franchise-like model of banking where an organization such as a post office, convenience store or retailer offers financial services on behalf of the bank.
Mobile: It is estimated that over a trillion dollars’ worth of transactions will happen through mobiles in 2017. Banks are gearing up for this challenge by providing payment solutions through various platforms such as Apps and SMS banking. NFC’s are expected to take off in 2015 along with other emerging technologies such as low range bluetooth services and MST. Pingit, the Barclays app, for mobile banking in the UK has been successful.
Social: The Capgemini payments report estimates that close to 10% of the banking transactions would happen through the social media. Some of the banking facilities that the banks offer through social media are transfer of funds, group expenses, P2P payments between friends, e-commerce, etc. Banks also use Social media for Customer Awareness, Customer Insight, Product/Process Development, Lead Generation and Sales, Customer Service and Brand Development. ICICI pockets has been a pioneer in the social banking space.
Video: This can be a game changer for the banks as it can bring down the costs of banking significantly. Customers can talk to the bank staff through video conferencing using Video kiosks or ATM machines.This will also enable banks to provide high quality service to customers who are in remote locations.Bank of America is partnering with CISCO to install video conferencing facilities in 500 of its branches to provide expert advice to their customers.
Challenges in Omni-channel Implementation:
Though Omni-channel promises a lot of promise, there are some challenges in its implementation.
Analytics is very likely to be the trump card for banks in this mode of banking. The success of analytics projects in the banking domain has been around 40%-50%,the banks are hopeful of deriving good results in the near future as they have large datasets of contextual customer data.
But, data integration is a challenge for the banks in itself. A bank on an average runs a few hundred to a thousand software applications. Experts agree that the complexity of data integration grows geometrically as the number of applications increase and this is what makes data integration a challenge.
Banks store very sensitive information and when there is aggregation of data it makes it more lucrative for the hackers to target these systems. In the past year JP Morgan compromised over 76 million household accounts making it one of largest online intrusions. To keep their data safe is going to be on top of the bank’s priority list.
As discussed earlier, with the customer interacting with the bank using various devices, the customer should receive consistent service across all mediums. Great care has to be taken to ensure the branding elements such as symbols, codes, fonts, colors, terms and units of measurement consistent across channels to make it easier for the user to use the banking solutions across platforms.
In the next decade we will see banks that are totally different from what we know as banks today, we would see newer versions of the branch ranging from banking pods to specialty banks.
The percentage of cashless transactions will increase in comparison to cash based transactions – new payment methods such as mobile banking, e-wallets and NFC’s will help in reducing the number of cash-based transactions.
Analytics and mobile will play a major role in the growth of banks. Banks that can predict the customer needs and suggest relevant products at relevant time will have an edge over other banks.
About the Author
Anand Krishnan, Associate Consultant, Maveric-Systems is a core banking consultant working with Maveric-Systems with over 4 years of experience in requirements elicitation, requirements design and product development. His primary areas of interest are payments, channels and emerging technologies such as mobile and cloud.
Prior to joining Maveric-Systems he obtained his Masters in Business Administration from Great Lakes Institute of Management