Why Omnichannel stays stubbornly on banking’s radar

Written by Piotr Skrabski, General Manager and Mateusz Grys, Customer Success Expert at LiveBank.

Omnichannel. A word we’ve heard repeatedly in banking circles that still has a lot of clout. Its place, at the crossroads of “mobile-first”, “digitalisation”, and “customer-centricity”, makes it easy to see why it still has relevance. Besides this, “omnichannel banking” holds out a great deal of promise for both banks and their customers. This is why we chose to continue the investigation of the topic here.

We hope that this article serves as a good starting point for those looking to build a business case for improving the banking customer experience through omnichannel. We look at the types of results you can expect to see and share examples from banks that have taken the plunge and implemented their omnichannel strategy.

Importance of Omnichannel in Retail Banking – Introduction

It’s firmly on the radar 

Omnichannel delivery is a close second to mobile channel development (88% to 93%) in what banks and credit unions say is their most important retail banking technology priorities. 

Who’s radar? 

It is usually the people who are in charge of digital transformation or omnichannel department and enhancing customer service. These individuals may be referred to as Chief Customer Officers, Head of Omnichannel, Chief Transformation Officers or equivalent. Yet more advocacy is steadily rising in other places. As the links between customer experience and profit generation become more clearly understood, those concerned primarily with financial performance realise they could be “leaving money on the table”, and so they become advocates for customer experience improvements, which in turn leads to increased support for omnichannel.  

What’s driving these thoughts? 

Here are some of the factors that explain why we continue to dedicate brain-space to omnichannel banking. 

• Customers want it
  They demand convenience and simplicity, irrespective of the kind of electronic devices or physical channels they use. They want to have full control over both the time and place of their banking and may switch devices to one preferred for the task in hand.
• Case-based communication
  Here, the customer is the centre of communication, with full access to conversation history and context. Advisors want to have a complete view of the previous interactions so they can include them all in a specific case or issue, along with the corresponding statuses and required actions. 
• Detailes insights
  Using data to make offers that are timely and relevant. Part of a bigger shift towards customer-centricity and finding better ways to keep a finger on the pulse of buying behaviour, preferences and the choices of individual customers. 
• Customers value experiences 
  Studies show the lifetime profitability of a satisfied customer willing to actively recommend the bank to his or her friends is five to eight times greater than one who had a negative perception.
• Gaining competitive advantage 
  Apple and Amazon are a clear demonstration that customer experience can be a competitive advantage and that real value resides not only in the products and services a company provides. 
• Boosting sales 
  Omnichannel banking improves customer experience, increases satisfaction and this results in an increase in product sales. We hear that the transition from multichannel to omnichannel increases the probability of customer satisfaction by 1.6x and increases the probability of sales growth by 2x. 
• Staying relevant 
  Lastly, the fear that retail banks might be viewed as an irrelevance by younger consumers who’ve grown up with mobile devices in their hands and can’t see the point of travelling to a branch. 
• Hybrid communication:
  Using artificial intelligence chatbots helps improve cost efficiency in answering routine customer questions. Chatbots also assist consumers by redirecting them to human agents, to get a response to complex requests. 

These observations point to a sizeable win-win for banks and their customers, making omnichannel an even harder subject to push aside. 

Now, let’s look at the benefits and outcomes achieved by banks in the wake of rolling out an omnichannel strategy. 

The benefits it is safe to expect 

Banks that recognise the potential for omnichannel capabilities to increase revenues, enhance customer experience and reduce operating costs, still experience hesitancy in the lead up to their choice to adopt. From our own experience, and research we’ve done, here are some of the benefits you can safely anticipate: 

• You can start offering customers the channels they prefer and use habitually, saving them time and greatly increasing ease of access. They can move their conversation from messaging and social to securely authenticated channels when needed. 
• The omnichannel approach improves the ease of use of many customer interactions. The click-to-call feature on one bank’s mobile app demonstrates how an omnichannel strategy can enhance the customer’s experience. Customers can use the click-to-call feature to bypass the contact centre’s identification and verification system. 
• Get to know your customer in greater detail, provide a more personalised experience and develop a longer-lasting, trusted connection. 
• Greater overall customer satisfaction. “The transition from multichannel to omnichannel increases the probability of customer satisfaction by 1.6x”, according to Forrester. 
• Improved conversion rates at key moments such as account opening. The customer can start an enquiry when the intent is there, perhaps via smartphone on the way to work, start the application process, then pause and follow up later that day on another device, where they have easier access to the documentation required. Without the need to start over again. This also reduces churn, especially amongst your newest customers. 
• A higher number of financial products purchased by customers of banks with higher levels of digital engagement. In short, higher engagement builds trust, which in turn increases the share of the customer’s wallet. 
• Increase in lifetime value from satisfied customers when compared to those with a negative perception. 

We hope the points above have helped you understand the benefits you may safely expect from adopting an omnichannel strategy in banking. We recommend you partner with an implementation specialist, to ensure you capture as many of the benefits noted above as possible. 

Is there a wrong time? 

Let’s take time out for a reality check… 

It seems as if it’s the perfect time to embrace omnichannel, but surely it can’t be right for every single bank, whatever the circumstances? Of course, there are times you should consider other avenues of action instead. Here are some signs that you might need to look elsewhere or practise patience. 

• It’s probably not the right time when you cannot take onboard the organisational structure and cultural changes that accompany an omnichannel implementation. These changes may just seem overly costly and time-consuming, even though the benefits will be far greater at a later stage. 
• It’s probably not the right time when you see no way of dividing the transition work into manageable pieces. Do you find it hard to separate out your customer journeys, so you can support them one-by-one, in the new omnichannel way? You may even want to divide the larger journeys into a series of individual steps, mortgages for example. 
• It’s probably not the right time when you haven’t found a suitable technical partner for your omnichannel project. There’s the cost associated with implementation projects stretching out longer than necessary. Also, a problematic or rushed implementation can create a major new pain point for customers. One study reveals the highest number of US banking customers said, “make omnichannel work so we don’t have to resupply the same information when switching channels”¹. Ouch! 

In short, adoption could be overkill for your bank or it may just not be the right time. If that’s so, what can you do instead? Here’s a suggestion:  

Concentrate on optimising a single platform, mobile most likely, rather than spreading resources across a number of channels. By doing this, you’ll be in a good position to undertake a full omnichannel implementation at a later date. 

Look forward to these outcomes

If you’ve already seen the advantages but want to know more about outcomes from omnichannel implementation in banking, here’s a selection of the achievements we’ve heard of: 

• One European bank that implemented changes at scale saw consistent sales growth of as much as 20 per cent over two to three years, suggesting that the benefits of optimising omnichannel capabilities are ongoing and significant.² 
• As customers migrate to digital channels, banks are realising cost savings by reducing their physical footprint (in Italy and Spain the number of branches has fallen by more than 40 per cent from its peak in the 2000s). In these cases, face to face interaction was used for the more complex products, such as mortgages, whereas simpler products and everyday functions have been moved online.³ 
• A bank based in Asia-Pacific is achieving a 43% conversion rate on follow-ups of abandoned personal loan applications.⁴  
• One bank from the Asia-Pacific region now conducts 40 per cent of its advisory meetings with affluent and mass market clients through remote channels and has, as a result, achieved significant productivity gains.⁵ 
• Omnichannel engagement leads to higher levels of product use. At one bank, credit card customers who interacted with the bank through multiple channels were almost two times more likely to use their card than customers who did not interact through any channel and 50 per cent more likely to use their card than those who interact through one channel.⁶ 
• Global banks that offer authenticated click-to-call from their mobile or online platforms have a “speed to answer” that is twice as fast and have reduced call abandon rates by 1.2 times.⁷ 
• The 60 per cent of U.S. banks that offer web chat have 1.4 times higher digital sales and 13 per cent fewer inbound service calls than the 40 per cent that do not offer web functionality.⁸ 
• A top-performing global bank based in the Asia-Pacific region follows up on more than 50 per cent of abandoned personal loan applications and is achieving a 43 per cent conversion rate from those follow-ups.⁹ 
• In 2015, banks with above-average growth in digital adoption saw the proportion of branch cash and check deposits shrink at more than twice the rate of those with lower digital adoption, freeing up branch resources to focus on higher-value activities.¹⁰ 

Conclusion 

We hope this article has helped you reflect on what, realistically, you can expect from your omnichannel strategy rollout. Whatever course of action you’ve selected, we hope you can now look forward to it with a greater sense of reassurance and clarity. 

And lastly, a reminder: Omnichannel transformation requires partnership. We recommend you find a suitable implementation specialist, to ensure you capture as many of the benefits mentioned above as possible. 

Want to discuss more about this topic? Schedule a meeting.

Bibliography:

¹The Financial Brand, Fixing Banking’s Pain Points Takes More Than Digital Bells & Whistles, https://thefinancialbrand.com/74095/bai-digital-banking-marketing-omnichannel-cx/
²McKinsey & Company, The balancing act: Omnichannel excellence in retail banking, https://mckinsey.com/industries/financial-services/our-insights/the-balancing-act-omnichannel-excellence-in-retail-banking
³Ibidem.
⁴McKinsey & Company, Retail Banking Insights Report, https://mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/The%20winning%20formula%20for%20omnichannel%20banking%20in%20North%20America/The-winning-formula-for-omnichannel-banking-in-North-America.ashx
⁵McKinsey & Company, The balancing act: Omnichannel excellence in retail banking, https://mckinsey.com/industries/financial-services/our-insights/the-balancing-act-omnichannel-excellence-in-retail-banking
⁶McKinsey & Company, Retail Banking Insights Report, https://mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/The%20winning%20formula%20for%20omnichannel%20banking%20in%20North%20America/The-winning-formula-for-omnichannel-banking-in-North-America.ashx
⁷Ibidem.
⁸Ibidem.
⁹Ibidem. 
¹⁰Ibidem.