Redefining the banking experience through omnichannel

By Polys Hadjikyriacos | 20 July 2017

It is an irreversible global trend that people’ lifestyles are increasingly dominated by digital channels. Across the entire spectrum of everyday services, from social, to professional, to consumer, banks are making the conscious decision to digitise both the consumer-facing and internal aspects of their businesses in order to compete in a demanding marketplace.

Banks had made the commitment to offer many of their consumer-facing services online years ago, but much of the rationale behind this focused on cost savings for the banks. Today it is customers who are demanding the ease and convenience of access to their accounts and banking products 24 hours a day from any location, with other leading retail apps their guiding light. 

Banking customers expect their experience to be seamless and smooth, with emerging fintechs and challenger banks ready to meet this demand, but the pressure is on traditional financial services.

The move to omnichannel banking

The consequence of the squeeze on banks to both cut costs and meet customer expectations has now evolved beyond offering services online. The expectation on banks is to fully offer an in-person branch service across all digital channels, including mobile.

Definitions of omnichannel express the importance of offering a recognisable, identical service across multiple channels, but simple replication of product offering across channels doesn’t go far enough in realising the potential omnichannel affords.

True omnichannel banking is achieved when customers can intertwine their bank interactions across multiple channels effortlessly i.e. transactions can be started on one channel, stored, and subsequently completed in another channel. This includes customers being able to pre-stage transactions prior to going to a bank or being able to request a specific note denomination from a specific branch and ATM. The omnichannel engine should be able to increase the ROI of all channels, even being able to offer corporate functionality utilising ATMs (i.e. building beneficiaries in a digital channel and use them in the ATM). In this way true omnichannel banking is the real bridge between physical and digital banking.

A commitment from a bank to embrace the omnichannel philosophy must include this interoperability factor in addition to offering a uniform customer experience.

The digital lifestyle

Consumer preference is no longer being driven by Baby Boomers or Generation X. It is Millennials, a digitally native demographic of consumer, who have overtaken other groups as the trendsetting collective that retailers and service providers are intent on targeting.

Digitally native customers will form the backbone of the of banking consumers in the near future, if they do not already, and their habits are also being adapted by older generations who are becoming frustrated with the substandard user experience of brick-and-mortar branch banking.

This new generation of channel agnostic, digitally-minded customers have high demands from financial institutions. Meeting these demands in the long-term will be dependant of the capabilities of each bank’s omnichannel offering. Key differentiators between omnichannel solutions that will determine success or failure in this area include:

a) A more personalised user experience: Banking customers can access information regarding their payments and accounts through a mobile interface that is tailored to their personal preferences. Customers can prioritise their accounts, dashboards, and menus, and use widgets to build a product that reflects the manner in which they wish to interact with their bank.

b) A broad range of business capabilities: The optimal omnichannel solution is able to deploy all functionalities of a bank’s back-end services to all digital channels, across retail, corporate, and investment banking. The omnichannel product is capable of delivering all banking services including all types of transfers and payments, Trade Finance, credit facilities management, cash management, wealth management, investment management and control over account access.

c) Central management of all banking channels: In addition to replicating every available service throughout the suite of digital banking channels, a successful omnichannel banking solution also interlinks each channel through one central Administration module. System access throughout the system is centrally controlled, and data generated across the system is centrally collated and logged. One benefit of this is a 360 visibility of the customer; a single customer profile encompassing data from all channels (physical and digital ones) means that banks can better analyse customer activity. The bank should be able to apply its security policy centrally to all channels.

d) Money management: Customers are always searching for a full view of the activity taking place in their accounts. This is one area that fintechs and challenger banks seek to capitalise on their competitive over traditional financial services, but with the appropriate omnichannel banking systems implemented these traditional financial services can offer the same money management functionalities. Budgeting tools, where account holders can monitor their expenditure against a budget, and goals management, where transactions can be scheduled to ensure monthly savings towards a declared goal, are two examples such services.

e) Profile benchmarks: Banking customers have the ability to compare costs they are being charged against the average of other customers in the system. This functionality holds value to customers in areas such as the insurance market.

f) Direct marketing engagement: The omnichannel banking system is more capable of analysing customer behaviour and preferences, giving banks the ability to market to their customers individually rather than in customer segments. Targeted advertising is of benefit to the bank, but is also of benefit to the customer, who will only be offered products which their account usage data suggests is of interest.

g) Remote onboarding and KYC compliance: An omnichannel banking system doesn’t only benefit existing bank customers, it also opens new avenues for the bank to onboard new clients. In an omnichannel banking platform, new customers can open bank accounts, including KYC regulation compliance using a mobile device to take a photo of an ID document and a corroborating selfie, via online banking or and mobile banking. Credit checks can also be conducted on mobile applications through third party credit scoring providers. With the decline of high street branches the digital frontier will be an increasingly important battleground for new client acquisitions, banks that do not perform well in this arena will struggle to attract the digital generation.

h) Customer enquiries: The digitalisation of banking away from the traditional branches has created the need for customer enquiries once reserved for branch employees to be satisfied online. AI chatbots and social media managers replying to customers via networks are two avenues through which customers can engage with their banking through omnichannel.

i) Digital tooling: An omnichannel solution must not be a mere presentation layer masking a rudimentary digital banking offering. Every element of a core banking system is made available in a true omnichannel banking solution, including accesses related to specific roles in the bank. Omnichannel solutions should be able to offer tooling facilities that allows enhancing the solution by creating workflows, processes and business logic, providing a uniform customer experience combining banking products, services and channels.

Disruptive fintechs

Disruptive fintech companies are more agile and have the ability to be more innovative than traditional banking services, and with PSD2 on the horizon fintechs and challenger banks will be able to leverage banking services and further enhance their offerings and compete.

It is therefore imperative that traditional banks develop digital strategies to accommodate and collaborate with fintech companies that are building a new banking ecosystem. Banks’ need to provide openness through the API-fication processes, which will enable them to continue playing the main role in the new environment. The new omnichannel banking engine should be able to support and enable financial institutions to build this new dynamic ecosystem.

The true aim

Building a digital omnichannel strategy for a bank is not just about launching a mobile banking app or rolling out a marketing campaign. The true success in building a digital omnichannel bank is in the ability to have the right intention for the customer, and building internal capabilities that can help to deliver the right digital experience across all channels – ensuring the transformation is embraced both internally and externally.