Everything you need to know about omni-channel banking

By David Beach | 7 September 2017

Omni-channel banking must meet the ever more demanding space of digital consumer finance, but what is it? And how is it different from multi-channel banking? 


What is multi-channel banking?

For much of the digital financial services boom, multi-channel banking was the buzzword.

It was the first foray into the digital space for consumer finance. It meant that customers could use multiple channels to access their accounts and make payments in branch, at cash points, to call centres and on their digital devices. The opening of these new channels was designed to reduce operational costs for the bank. The trouble was, there was little coordination between the channels. For instance, whilst researching ISAs on your preferred bank’s website you would let out a sigh of exasperation as you ran into the dreaded ‘you’ll have to contact us by phone’ wall. Multi-channel meant there were more touch points but they were separate and managed as distinct data siloes.

Transitioning between the multi and omni: a matter of semantics?

The important distinction between the multi and omni-channel approach to retail banking is that omni is all encompassing. Whilst multi-channel banking - the norm for many years now - sought to fulfil customer needs as quickly and efficiently as possible by routing them down the easiest (and cheapest) channel, omni-channel spells the first attempt at aligning all channels into one seamless experience - from transaction to interaction. 

What is omni-channel banking?

Omni-channel takes banking beyond the customer’s expectation of fulfilling needs, and instead both predicts their behaviours and provides a seamless experience across all platforms. This model fits into a wider trend of customer behaviour analytics, championed by the likes of Amazon, Facebook and Google.

This Internet of Things, including its geolocation function, provides a fuller profile of the customer and their day-to-day shopping and financial habits. The result is more individualised advertising, as these global digital firms use the customers’ data to offer products and services tailored to the customer’s needs in the same way an advert for a product searched for on Amazon will appear ten minutes later when the customer logs in to Facebook. Or how Netflix can email a list of immediately eye-catching and up and coming films, tailored to the customer, based on their watching habits. The fact that the Netflix database knows the customer must choose whether to renew their subscription in a couple of days is neither here nor there; fuller engagement equals more business.

Omni-channel banking attempts to do much the same. We’ve broken omnichannel banking down into three key features.

1. From transaction to interaction

Financial service providers must divert their attention and funds to customer interaction. Learning how the customer interacts with their channels is a valuable asset. Underpinned by advances in machine learning, a record of customer interactions opens the door for bank marketers to make more accurate pitches to the customer or client, providing them with a product or service that will genuinely help them thereby increasing customer satisfaction, loyalty and repeat business. More and more, banks need to realise that their most valuable asset is the store of customer interaction data they have ripe for harvest.

2. From bank-centric to customer-centric

Challenger retail banks seem to have one thing in common, they operate on a customer-centric philosophy. With a host of sophisticated technologies, challenger banks can provide a unique and fulfilling customer experience so that, in many services, they’re leaving traditional banks behind.

Customer behaviour suggests a massive shift in retail banking priorities. Let’s not forget that traditional branch banks used to have a special, personal relationship with many of their customers. Bank managers were the face of the bank, they were a part of important financial decisions and understood the customer from an intimate angle. The take-up of digital only banks, particularly by Millennials, indicates that this is no longer a priority for the future generations of banking customers; the desire to access services anywhere, at any time, supersedes the desire to have a personal relationship with a human representing the bank.  

3. From service-oriented architecture to Big Data

The first two features present us with a twofold problem. Firstly, how to access that data, and secondly how to process that data once obtained. The answer lies in shifting from service-oriented architecture (SOA), which was used to standardise multiple channels for easier integration, towards Big Data that allows for the analysis and management of a diverse range of data. Put simply, SOA enabled banks to analyse individual data pockets that built a fragmented view of the customer, whereas Big Data allows for a fuller, 360 degree view, able to criss-cross and analyse the different data pockets and channels. This is the technology behind omni-channel banking that will enable banks to provide a smoother, more efficient and ultimately more satisfying customer experience.

The future of omni-channel banking

Omni-channel banking is more than front end, customer-pleasing aesthetics. It’s an approach that requires a complete change in direction for legacy banks and a need to transition (as described above). More often than not legacy banks are held back by ailing legacy infrastructure that is ill equipped for changing times. Indeed, meaning many legacy banks are now at the proverbial crossroads. All roads lead to omni-channel banking, the question is how to implement it and build a platform capable of evolving as and when omnichannel 2.0 becomes available. Do legacy banks continue adding Innovation Officers to the C-Suite to drive future growth in-house? Or do they look to acquire and collaborate with emerging start-ups with fresh ideas, massive potential but limited funds and virtually no customer trust? With PSD2 looming on the horizon, banks need to do something now more than ever.

The numerous partnerships between legacy banks and accelerators as well as the interest generated around Swift’s Sibos conference suggests they are wholly embracing omni-channel banking and that it is here to stay.