August 2017
Banking on the Omni-channel

Banks and financial institutions across the world are being challenged to adapt and innovate, moving beyond the traditional ways of doing business. Changing customer behaviours gained from interactions with e-commerce and technology giants such as Amazon, Google and Facebook set the standard and bleed into other sectors including banking and finance.


Importantly for banks and financial service institutions (FSIs), consumer trends drive commercial banking trends, so they do not require a crystal ball to predict imminent change. As those expectations become the norm, and part of customers’ everyday interaction with their financial provider, eventually, the more traditional business banking market will need to embrace those changes, or be left behind.


Exasperating the situation, and adding to bank jitters is the influx of fintech firms, and non-bank market entrants such as Square, Stripe, TransferWise and Apple Pay who are capturing significant market share in areas such as point-of-sale transactions, online payments, and cross-border payments. Additionally, that fragmentation and increased competition is being encouraged by governments who are in the process of regulating for open data initiative in the UK, Europe and Australia, while startup banks are being fostered in the latter.


The small business segment is easily the most neglected by large banks, bundled as a retail customer, although their needs are drastically different, and as such make a soft target for small, nimble competitors.


Highlighting the demise of the small business / bank relationship, is recent research from East & Partners which found that in Australia, 1 in 10 small businesses do not want to interact with their bank at all, while a majority prefer to conduct their banking online. Further to this, around half of all Australian small businesses say their business banking experience has fallen short of their personal banking experience, compared to 90 percent of CFOs and treasurers at large Corporates and Institutional enterprises who report their business banking experience has met or exceeded their personal.


With businesses expecting consistent service across all channels, banks need to increase diminishing service and satisfaction levels. Using the omni-channel approach, they will benefit from capturing detailed customer insights, and a clear idea of how best to allocate budgets.


By delivering and exceeding on expectations, banks can reduce customer churn, which is becoming simpler as a result of government regulations, provide a seamless experience over any device, and highlight opportunities within the bank for other products and services.


Unlike multichannel banking, which opened choices and encouraged customers to use the best option, omni-channel banking focuses on providing a seamless customer experience that delivers focussed advice, products and service. For the banks, it is an opportunity to really understand the customer, streamline systems and focus attention on the most profitable.


From a business customer’s perspective, omni-channel banking will offer access to financial services across a variety of channels and introduces more consistent interactions with their financial service providers across a variety of touch points. For the bank, the information and data gathered will be invaluable in building a clear profile of customer segments, preferences and habits. The penetration in mobile technology, smartphones and tablets will open more opportunities, and reveal as yet untapped services.


Tailored offerings based on previous purchases, recommendations, new product integration (including internet of things, voice activation, virtual reality) same day on-boarding should all be features and products banks are currently developing to ensure a full omni-channel experience for the consumers and business clients alike.


Where do banks need to focus and prioritise?


  1. Develop Smarter strategies that combine digital and physical channels into a continuous experience


  1. Analysing both their customer base, and wider market: Banks can use the data tailor offerings to address the priorities of smaller segments via the incorporation and integration of customer feedback.


  1. Innovate, test and adapt: Challengers to banks’ business models can quickly change direction, and pivot a product or service offering based on client and market feedback. To compete, banks will need to deliver (and fail) on products at a much faster pace.


While banks, and FSIs are moving in the right direction, either by developing the necessary infrastructure and business processes in-house, or by partnering with and acquiring smaller competitors, business units continue to be siloed, stifling their customers’ experience.


Financial service providers must consider how to integrate all touch-points to deliver value through a consistent customer experience. The channel by which customers chose to engage with their financial provider is not as important as that customer’s holistic experience. As such the entire business must be on board in the transformation process, led by the C-suite.


To find out whether your bank is delivering a consistent omni-channel experience to the business market, get in touch with East & Partners.


To read previous Research Notes published by East & Partners, click here.

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