Article

Kresten Bergsøe
Kresten Bergsøe 12 January 2017
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Financial Customers Are Omnichannel - but Is the Financial Industry?

Banking as we know it is about to change. The financial industry is challenged on multiple levels by a swarm of startups in the fintech sector that threaten to disrupt the industry.

Banking as we know it is about to change. The financial industry is challenged on multiple levels by a swarm of startups in the fintech sector that threaten to disrupt the industry. In Q3 2016 alone, fintech received 2.4 billion USD in funding. On top of this tech giants like Google, Facebook, Amazon, Baidu, Alibaba are all launching financial retail offerings targeting the banks customer base.

To achieve a relevant and truly integrated customer experience, banks need the ability to interact intelligently with their consumers in real time across all channels (web, ATM, apps, call center, email etc). It requires omnichannel personalization technology and organizational capabilities to master it.

How well prepared are the banks?

Venture investments in fintech are outspending the existing financial industry many times when it come to reinventing the financial services in the digital age. What the existing industry could have as a stronghold is its century old established customer relationships. However the relationship building in the financial industry is seeing a massive transition from a local branch, manual and people based customer contact toward a remote digital interaction driven by marketing automation systems. Traditional customer facing bank managers are fired or abandoning ship in dramatic numbers.

This development makes sense in terms of bringing down costs for the financial industry, but it also makes the customer interactions more programmed and without the human touch, customers have come to expect. For this strategy to pay off - the customer interactions have to be very well orchestrated and relevant to the customers. In most cases today - they are not.

To achieve a relevant and truly integrated customer experience, banks need the ability to interact intelligently with their consumers in real time across all channels (web, ATM, apps, call center, email etc). It requires omnichannel personalization technology and organizational capabilities to master it.

The banking software company Auriga recently researched the main trends in the adoption of omnichannel marketing systems in the banking sector.

Main findings:

  • 77% of banking delivery channels (ATMs, kiosks, branches, mobile, PC, Internet) are still managed through so-called “siloed systems”, i.e. vertical silo systems.
  • 37% of banks use omnichannel marketing systems that allow central management of customer relationships and integrated contact with clients through diverse channels. The channels most used by these banks are mobile, Internet and ATMs/kiosks, often managed in omnichannel mode and integrated with CRM.
  • 0% of interviewed banks send messages and personalized offers to their customers on ATMs/kiosks while 35% are unable to do it to because of outdated software. 86% said that they would like to be able to do this in the future.
  • 26% of the banks interviewed use ATMs/kiosks to convey surveys or interactive campaigns to gather customers’ opinions, while 32% are unable to do so because of outdated software.
  • 64% of banks say Internet banking is their preferred channel for one-to-one marketing but just 18% offer customers the possibility of personalizing the interface (e.g. of online banking, ATMs or mobiles).

61% of the banks, say they are not satisfied with their marketing system and recognize how important and necessary it is to have a solution to manage customer relations centrally. 70% of them told the survey that they are planning to change their systems. Banks consider integration with CRM, omnichannel capability, easy creation and planning of campaigns, and detailed reports about the campaigns’ success as the most important aspects of a marketing system. However given the typical implementation time in the industry and organizational learning curve for this kind of systems - it is going take years before the banks will be able to deliver on the promise of a true cross channel customer experience.

The research found that many banks are able to put out promotional messages on all or even most of the channels that their customers use. But achieving an integrated marketing approach, however, is quite different. It means having a technology stack for managing all channels, including marketing activities. An omnichannel marketing approach also means gathering data on customers’ choices, preferences and reactions.

There remains a long way to go before banks can claim to be delivering a truly integrated customer experience

Whilst most operate over multiple channels and offer a wide range of services, few have deployed a true omnichannel strategy. The banks that adopt technology which enables a orchestrated streamlined customer experience across all channels enjoy the benefit of being able to engage with each client on topics pertinent to them, irrespective of which channel is being used.

But banks does not have a history of customer experience design or demand generation so the odds are stacked against the old in favor of the startups. The startups are native digital and extremely focused on customer experience and demand generation. The tech giants also have a customer reach that no existing bank could ever dream of - the combination of the two - is potentially lethal.

However, don’t expect banks to disappear, but do expect a new system to evolve that may include some banks, but will also include new operators who are truly digital.

Maybe it is the Google’s, Baidu’s, Alibaba’s and Facebook’s; or maybe it is the Prosper’s, Lending Club’s, Zopa’s and SoFi’s. Nobody knows yet, but it could likely be a mix where banks are part of a new value system that incorporates digital currencies, financial inclusion, micropayments and peer-to-peer exchange, because that is what the networked age needs. 

Fast adoption of omnichannel technology, mastering customer dialogue automation, obsessive focus on the customer journey and partnering with the fintech startups seems the likely road for those who survive.

McKinsey just published a article outlining the financial impact of the digital distruption of the financial sector. Check it out here: http://www.mckinsey.com/industries/financial-services/our-insights/a-brave-new-world-for-global-banking?cid=other-eml-alt-mip-mck-oth-1701

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