Banks must shift their focus onto individual customers
Financial institutions have been trying to keep up with the ever-changing digital landscape and customer expectations. With retailers at the forefront of creating seamless customer experiences - at every ‘point of contact’ - banks’ distribution channel strategies have a lot of to live up to.
Financial firms have tried to address this challenge though an omnichannel approach (also known as multichannel or cross-channel). Yet, despite its name, ‘omni’ is typically limited to digital channels and, to some extent, the branch. Most omnichannel efforts do not include call centers, ATMs (automated teller machines) or IVR (interactive voice response). Nor do they integrate social media, marketing or other sales and customer service capabilities.
Opti-channel is the latest buzzword for attempting to solve the ‘channel problem’. It aims to determine the ideal channel that a customer prefers for specific activities. Using customer information, banks can predict what is optimal for each individual. This information, combined with location-based services, artificial intelligence input (which is rapidly gaining traction) and real-time data, should make determining ‘the optimal’ pretty straight forward, in theory.
The reality is not so simple. A customer-centric approach is not new. There are great success stories in other industries, but banks are yet to catch up. We all know why. Legacy systems that impede real-time processing, siloed structures (across business lines, products, services, capabilities, etc.), lack of centralized ownership of the customer relationship, and poor use of customer data, are just some of the reasons.
Despite the known challenges with implementing channel-focused initiatives, the underlying issue is largely a matter of perspective. The answer lies not in how banks can orchestrate and synchronize their products, services, or capabilities across multiple customer touch-points. Instead, it is about how well they understand their customers, anticipate their needs, and tailor individual value-add experiences based on those parameters. It’s not an inside-out perspective, but rather outside-in. And that’s the point: The customer is still on the outside, invited to interact with a ‘menu of services’ that the bank has developed and continues to fine-tune. Yet, most customers today, spurred by innovation in other industries, expect products and services designed to suit them and evolve with their needs.
In the spirit of putting the customer at the center of any solution to the challenges described, the following actions will ensure a strong foundation for success.
1. Gain a better overall understanding of customers - macro-view
- Increasingly sophisticated segmentation, beyond what’s traditionally been used by banks (e.g. relative to age, income, and so on)
- New techniques and filters to understand behavioral segmentation
- Iterative persona development through ethnographic research, focus groups, customer observations and interviews as well as analysis of spending behavior, growth trends, and macro-data
2. Understand customer needs, preferences, and priorities - micro-view
- In-depth analysis of customer situations
- Use of artificial intelligence and data modeling to better anticipate individual needs and present products and services that are relevant to those needs
- Customer journeys and process flows with clear interaction points along the customer lifecycle to ensure journeys cover all applicable components
- Sophisticated algorithms to analyze data, identify trends and determine priorities
3. Close the gap between marketing and sales - 360o-view
- Better measurement of the effectiveness of marketing campaigns and targeted offers, continuously adapted based on #2 above, while expanding digital footprint and presentment options (such as email, digital device, etc)
- Tracking results and engaging in an ongoing dialogue between sales, marketing, product, channel, and technology owners, to constantly improve all facets of customer interaction
4. Expedite delivery and produce relevant results
- Departure from the traditional system development lifecycle (SDLC) that takes months to just get past the requirements phase
- Strong leadership support and commitment to prompt delivery from all stakeholders
- Most importantly, prioritization of outcomes that are relevant to customers, within reasonable timeframes, i.e. tomorrow’s solutions delivered today
Capco has helped many banks address their channel and customer experience strategies. In the process, we have built tools and accelerators that increase speed to market, reduce implementation risks and allow banks to tailor solutions that align with strategic goals and market realities.
The Customer Interaction Matrix (CIM), is our opti-channel accelerator. It maps all types of customer interactions (e.g. deposits, payments, disputes, account changes) against all possible interaction points (e.g. online, mobile, branch, phone, ATM) and then determines the optimal channel based on persona characteristics. CIM can help identify gaps, prioritize directions, and customize products and services to specific customer demographics. The matrix incorporates hundreds of processes and sub-processes and can be tailored to the requirements of any financial institution.
There is no silver bullet when it comes to solving banks’ increasingly-complex channel and customer experience challenges. First, banks’ perspectives must change from a siloed, bankimg-centric, channel-driven standpoint to one that zooms in on individual customers. With the right focus, a structured approach, appropriate tools, and disciplined execution, banks can ultimately compete in today’s customer-optimized marketplace.
To find out more about opti-channel, Customer Interaction Matrix and our credentials in this space, contact Adrian Ungureanu.