Omnichannel banking: What it is, why it is needed, and how it can be achieved?

Over the years, digital technology has disrupted several industries. However, its foray and disruption in the banking sector has caused a massive transformation in the way consumers do banking.

Nowadays, basic transactions in banks are speedily migrating from the physical to the digital channels. Even the big names like Apple, Google, Amazon, and Facebook are showing greater interest in the banking sector.

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A majority of banks have adopted the omnichannel approach at the core of their strategies. It’s because banks have understood that ease, innovation, simplicity, and accessibility of platforms provided by FinTech companies can influence the customer behaviours quite strongly.

Apart from that, it’s also the fact that most of the customers are now exclusively using digital channels like mobile banking and internet banking.

Customer’s expectations for banking services have drastically changed due to the experiences offered by the online banks.

Big names like Google, Apple, Facebook, and Amazon have set new standards which includes enhanced personalization, unlimited availability, unprecedented quality, unlimited availability, and innovation. These companies offer these dimensions that are provided exclusively via digital channels.

What is omnichannel banking?

In simple words, omnichannel is offering the same set of services to the customer across all the channels whether they are digital or offline. In terms of banking, it means that the users can avail all the banking operations from a website, mobile app, bank’s branch, a call centre, or any other available channel.

This was a simple definition. However, there’s more to it. A true omnichannel banking platform comes with real-time data synchronisation across all the channels. For example, the users can begin the onboarding process on one channel and can finish it on another without providing the same data all over again.

Moreover, omnichannel banking comes with several implications for back-office operations. An omnichannel platform can play a crucial role in improving marketing performance, boosting customer retention rate, and simplifying onboarding processes.

Why use omnichannel in retail banking?

Many studies show the significance of digital channels; however, almost 50% of the customers want branch services as well.

Other data suggests that around 60 percent of active banking users utilize digital channels. According to the 2017 survey, around 80% of all the customer touchpoints occur on digital. Whereas, on the other side, the digital channels only constituents 25% of the sales.

These data go on to prove that although the digital channels have transformed banking in many ways, still most of the sales whether via a telephone or in the branch requires human interaction.

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Apart from this, it’s also observed that the customers’ appetite for digital interaction depends on the product. For example, customers are less willing to make transactions via digital channels when it comes to the complex products like mortgages and investments.

Apart from the product, the enthusiasm for digital transactions also varies as per the market. For example, in Southern Europe, customers are less inclined towards using digital channels when it comes to complex products like investments.

However, it’s also seen that the customers of Southern European retail banking are less eager to use the online or mobile option even for the simpler products.

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All these data indicates that banks must come up with a robust combination of personal and digital interactions that can match the preferences and the demand of the local markets.

Many banks have already started working on it as they have ramped up their investments in remote platforms and digitization that can complement the traditional channels.

However, it’s also true that many banks have yet not made the transition from multiple channels to omnichannel. And this has resulted in lower sales productivity.

How can banks make that leap to become a true omnichannel platform?

If banks want to jump to become a true omnichannel distribution platform, then they must develop the below there capabilities:

  • Advanced analytics
  • Marketing personalization across various channels
  • Motivated sales force

Now, let’s have a look at them one by one.

Advanced analytics for more useful targeting

Banks can leverage advanced analytics by applying them on the data which is generated by digital banking and customer transactions.

This can drastically increase the effectiveness of omnichannel sales. With the help of analytics, banks can get crucial insights on customer behaviours that can help them to tailor and target their offerings more precisely. Analytics can increase the sales productivity by as high as 40 percent.

Banks can also identify high-potential and high-value customers that cause a disproportionate share of revenue by using data-mining techniques on customers’ online behaviour and spending patterns.

Customer behaviour analysis not only helps the banks to optimize their lead generation but it also enables them to focus on the right customers at the right time.

Recent advancements in analytics like nonlinear machine learning algorithms can rapidly improve the customer targeting and models’ prediction power after combining with the granular data.

Many banks were able to triple their commercial campaign conversion rates after they upgraded their models and integrated high-frequency variables and triggers derived from real-time behaviours to the traditional static customer profiles.

Banks must also understand that advanced analytics deliver their best only if their data management capabilities are at a high level. They must be able to access the possible highest number of resources.

After that they must analyse the data effectively. Many European banks have also started leveraging internet data which is a rich source for insights.

Marketing personalization across various channels

Banks can leverage digital marketing techniques for a significant uplift. They can measure time spent on particular subjects, track customer click across web pages, and use this data in their analytics engines. They can do personalized messaging based on the data obtained.

The customers’ behaviour online clearly indicates the interest in a particular service or product. Banks that possess top-notch digital capabilities can cash on these signals to make the quick and right offer.

To support and execute these strategies properly, banks must coordinate across the channels. Lack of coordination might result in losing customers.

Direct channels in sales such as text messages, mobile banking notifications, emails, etc. don’t often evoke an immediate response from the customers. They always require a human intervention that can finalize the deal.

For example, a bank saw an increase of around 30% in sales when there was a timely human response as compared to total digital journey.

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Banks can maximize the channel efficiency by achieving balanced collaboration between humans and machines. Banks can achieve this balance by analysing the transaction data which includes where and when the purchases were made.

Motivated and equipped sales team

Banks must pay equal attention to the human side of omnichannel model as it is as important as the digital side. Banks must use sales tools to respond to their customer’s needs. However, banks must also personalize their digital touchpoints.

They must ensure that the customer needs and digital behaviours triggered by analytics are quickly conveyed to the relationship manager. This enables banks to apply personalized insights.

Banks can also make human interventions successful by providing the appropriate sales network capabilities. Many banks are investing in digital training platforms which consist of highly specific learning objects in thousands. Their aim is to offer support which is continuous, engaging, and focused.

Another important aspect of motivating sales teams is complete alignment of incentives with the customer’s needs. This reduces the risks involved with mis-selling. Additionally, the performance management should also be continuous and ongoing.

Banks must come up with KPIs that are aligned to the customer needs. Moreover, they must be simple, measureable, actionable, and should be appropriately rewarded.

Conclusion

FinTech services are putting enormous pressures on banks to go digital. Banks are also responding to it offering their customers with digital banking solutions. However, customers don’t want a digital channel for many of the banking services and products.

This gives the rise to the demand of a seamless omnichannel banking platform where a user can start onboarding a service from a digital channel and then can switch to a non-digital channel or the vice-versa seamlessly without losing their progress.

Nowadays, omnichannel sales have become imperative for all the retail banks. Their customers might not know this phenomenon at all; however, they do feel its absence when it is lacking.

Creating a robust omnichannel banking platform is surely the next step for banks to offer top-notch customer experience to their users. In coming years, we might see retail banks ramping up their omnichannel infrastructure to compete with the FinTech enterprises.

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2020-09-28T14:16:47+00:00
Product manager of Digipay.guru, one of the leading digital wallet solution. He is a visionary leader whose flamboyant management style has given profitable results for the company. He believes in the mantra of giving 100% to his work.

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