Banks around the world have for several years been trying to improve both the customer experience and develop an integrated, single view of the client’s product holdings across multiple channels. Banking Automation Bulletin has had the opportunity to speak to Vincenzo Fiore, CEO of Auriga, Italy’s leading supplier of multichannel software.
Bank Automation Bulletin (B): What is the status of multichannel banking today?
Vincenzo Fiore (VF): The banking industry has had a long-term fascination with the lure of multichannel banking. Given this longevity it is hardly surprising that this term has become overused and can mean a variety of different things. The generally accepted definition is that a true multichannel banking service provides consumers with easy and consistent access to a rich set of banking services. In addition, consumers will be able to start a service on one channel and switch to another channel to complete the transaction, all the while having a clear and full view of their entire banking relationship. Finextra and other market observers have recently coined a new term for this level of sophistication: ‘Omni-channel banking’.
However, the simple truth is that very few banks have attained the level of service integration represented by the Omni-channel definition. Back in my sales training days we spent considerable time discussing the difference between features and benefits and the critical importance of establishing a clear linkage between the two. Herein lies one of the great unsolved challenges in multichannel banking: the features of multichannel banking may sound compelling, but quantified evidence of the benefits is not publicly shared. Understandably the banks that are excelling in this area are not sharing the extent of their successes. Those planning to start are sometimes finding the business case too onerous to make.
TowerGroup recently published a sobering perspective based on recent surveys of the major US banks. The research suggests that investing in a consistent customer experience across all channels may not deliver sufficient return on the investment. The findings cite a growing interest among leading US banks to focus their channel investments onspecific experience goals and then guide consumers to the channel that best serves the consumer’s needs.
It is clear that the debates and evolution of multichannel banking services are set to continue for a long time to come. From Auriga’s perspective, multichannel banking is not a destination, it is an evolving and unifying state of mind that increasingly places the customer at the heart of a bank’s service delivery strategy.
B: What are the obstacles to this type of seamless multichannel banking today?
VF: Any banker involved in service delivery will readily confirm that effective customer acquisition strategies and improving the profitability of every customer relationship are of the utmost importance. However, they will also tell you that the unrelenting and escalating costs of regulatory compliance are sucking the life out of their infrastructure investment funding.
Not surprisingly, many banks prefer more benefits-centric definitions of multichannel banking, definitions that they can directly measure and tie back to the fundamentals of their customer acquisition and retention strategies. There is no question that there are some exciting investments being made, particularly in the areas of mobile as a cross-channel enabler and branch transformation, but these investments are often driven by a mantra of “what is affordable and enough for now” rather than fully exploiting the maximum potential of the most advanced technologies.
There is well-documented evidence that the adoption of digital services is primarily governed by two things: the sophistication of the consumer and the complexity of the products themselves. The unavoidable conclusion of these findings is that simplistic decisions about Branch versus Self-Service are fundamentally flawed and unhelpful. At some point every consumer will expect access to a mixture of face-to-face services delivered through the traditional branch environment and automated self-service options depending on their personal comfort and product needs.
However, it is important to remember that the delivery of multichannel banking is not a social obligation, it is a revenue generating strategy aimed at optimising the profitability of every customer relationship. The stark reality is that the most affluent of a bank’s customers typically constitute less than 20% of the overall customer population. Consequently it is not surprising that many banks favour a simplified strategy of highly personalised services for the most affluent and highly automated services for the mass market.
As a leading vendor of multichannel banking solutions, Auriga recognises the thinking behind these coarse-grained strategies, even if we disagree with them. The challenge this reality poses to vendors is to reduce the cost of personalised banking services so that more consumers can enjoy the benefits of a bank anytime, pay anyone and buy anything experience. It is a challenge that we gladly accept.
B: What innovation can we expect from multichannel banking?
VF: Multichannel banking is a spectrum strategy — there is no single blueprint for success, only the increasing suite of possibilities resulting from a continual stream of innovative technologies and creative thinking by leading banks. The winners will be those banks that can find cheaper and more effective ways to grow their brand and attract new customers while retaining their loyalty and growing the profitability of their existing consumer relationships.
Auriga is actively engaged in a number of innovative multichannel banking projects, some of which are pushing the boundaries of traditional thinking, others that are more focused on driving down costs. Some of the more exciting changes include the following:
· The ATM channel has a number of unique characteristics, however, compared to online and mobile banking channels, the ATM has the disadvantage of high costs of hardware. The more savvy banks are increasingly delivering revenue-generating services through the ATM channel to help offset hardware and maintenance costs. In addition, there is a growing trend to separate the buying process for the hardware from the procurement of software for greater cost advantage. The advent of vendor-agnostic, multivendor ATM software is a key facilitator of this important cost saving trend. We know first-hand that this strategy works because our leading customers tell us that their ATM hardware costs are now among the lowest in Europe.
· Mobile banking is another area being reinvented, particularly with the advent of the mobile wallet and the threats posed by new entrants. Thanks to the accelerating adoption of smartphones, ultimately mobile wallets will evolve into dynamic marketplaces in their own right — highly personalised commerce gateways. Judging by the projects in which we are involved, this reality is closer than many people seem to realise.
· And lastly, the use of dynamic video conferencing is something that I anticipate will become more widespread. As noted earlier, consumers have different levels of comfort with respect to using online channels. These comfort levels are strongly influenced by the complexity of the product involved — specifically, how many steps are required to investigate the product, make the purchasing decision, complete the purchase and access the post-sales support.
Providing click-through access to video conferencing with trained advisors and support assistants is thus becoming a popular service. However, the telling factor will be the availability of competent bank staff armed with a full visibility of the customer’s account status and history, including the context leading up to the requested video conference. The cost of establishing the video link is trivial compared with the costs of providing the appropriate levels of help and guidance. However, the reputational risk of neglecting this latter investment category can be grave indeed. It is a classic reminder that even the best technology is only an enabler; there is no substitute for human talent.