Omnichannel banking is centered around a consistent, flexible 24/7 service delivery, using all available customer-facing applications and channels to optimize customer convenience, reduce costs and ultimately maximize profitability. Many banks are embracing these digital channels in a bid to unlock new revenue streams and improve customer engagement.
The march of tech competitors
Banks are under pressure from technology giants such as Apple, Google, Amazon who have made it clear they want to exploit their strong and trusted consumer relationships in this sector.
Apple has Apple Pay, for example, a contact payment technology that features on the latest iPhones and the Apple watch. Google has followed with Android Pay, a mobile wallet that stores all a consumer’s card details, including debit, credit and loyalty cards. Amazon is focusing on its one-click Pay with Amazon app and plans to embed payments into its customer relationship management system. Consumers can use the payment service on other e-commerce sites. Orange has gone a step further and announced it is to create a new bank next year with French insurer Groupama to target a new generation of consumers using mobile technology.
To keep the fintech invaders at bay, banks are being forced out of their comfort zones and are looking to exploit new channels. To do this banks have recognized that they need to transform using omnichannel and digitization. A survey by Oracle Financial Services Global Business Unit found that 95% of banks identified developing digitized, omnichannel customer engagement capabilities as essential to future success.
Some banks have already stormed into a lead. The Development of Singapore bank (DBS), recently named world’s best digital bank by Euromoney magazine, has rebuilt its core banking system and IT architecture as part of its digital transformation strategy, enabling it to be faster at developing new apps, products and services. Digital has been pushed to all corners of the bank, from corporate to consumer banking. The bank’s digital plans are ongoing at it is now looking to further migrate to cloud-based technology.
One of the key elements of a winning omnichannel strategy is communicating a strong, easy recognizable brand across every touchpoint. This is an area that the fintech players see as one of their strong points. Consumers aren’t too interested in what goes on in the machine room in terms of analytics and integration, they just want a unified and seamless experience between all channels. If customers don’t get the service or the deal they want, then they are more prepared than ever to switch banks. In March this year, a record number of UK consumers switched their bank accounts, according to Bacs, which shows how rife competition.
Understanding customer expectations
With customers expecting a consistent service across all channels, streamlining customer interaction processes needs to be at the very core of a bank’s digital transformation strategies.
From the consumer perspective, omnichannel banking gives them access to a host of financial services across a variety of channels, letting them tap into the most convenient one. In the UK, banking by smartphone and tablet, for example, has become the main way customers manage their finances, as mobile banking overtakes branches and the internet as the most popular way to bank. But many will go through several changes in device when managing their finances on an almost daily basis. The BBA, the leading trade association for the UK banking sector, forecasts that customers will use their smart devices to manage their current account 2.3 billion times more than the internet, branch or telephone banking.
Data siphoned from omnichannels is a valuable commodity. Banks can analyze the data from the various channels to build up a detailed image of each customer’s behavior and preferences to provide a targeted and personalized service, similar to the way Amazon targets consumers with relevant purchasing suggestions. Banks must now leverage this data to communicate with customers in a bid to engage them and sell in relevant financial products.
Banks are here to stay
The big question is how big a disruptive force will fintech companies be to traditional banking? No one is quite sure yet, but banks that do not start implementing a successful omnichannel strategy as part of their digital transformation now will almost certainly lose customers and face revenue loss.
Aside from the likes of Google and Apple, new digital banks like Mondo and GoBank are threatening the status quo of traditional banking. Built specifically for online and mobile services, they have flexibility and inherent economies of scale. But banks still have a large, loyal customer base, a proven secure infrastructure and years of financial and regulatory expertise on their side. They will, however, need to move away from legacy systems and invest in technological innovation to keep this competitive advantage.
A vital factor in traditional banking’s digital transformation will be this ability to adapt to a changing market and new competitors. To retain and grow their customer base they will have to respond to techno-savvy consumers with insight-driven personalized experiences and exploit digital tools to deliver new customer offering such as peer-to-peer lending.
Whilst traditional banks look to a more collaborative culture, focused on a omnichannel customer experience, analytics and agile technologies, consumers will benefit from more choice and greater security as competition in the financial services space hots up.
Learn more about how Orange is helping banks and other financial services firms with their digital transformation.
Jan has been writing about technology for over 22 years for magazines and web sites including ComputerActive, IQ magazine and Signum. She has been a business correspondent on ComputerWorld in Sydney and covered the channel for Ziff-Davis in New York.