Omni-channel banking begins with an outside-in approach

I read a great paper by PwC last year, about a subject close to our hearts here at Backbase: omni-channel banking. There was a time when this sometimes overused term was simply about making everything work across multiple devices and platforms. It is, but omni-channel more accurately defines the bigger picture that goes beyond what customers can see.

I’d like to use this blog post to echo what the PwC paper says about being truly omni-channel, and share the five biggest obstacles PwC believes prevents banks “from making omni-channel work”. In no particular order, they are:

  • Organisational and operational silos.
  • Product-centric (instead of customer-centric) cultures.
  • Customer advocates either don’t exist, or they have no power.
  • Immature “customer listening” skills.
  • Cumbersome product development processes.

By listing the obstacles that prevent banks from making omni-channel work, we’re already highlighting that things have moved on from simply adding makeup to a front-end. Being truly omni-channel means so much more than having a stylish front-end. Everything has to work seamlessly, and with the customer always at the core of the process.

Many banks have risen to the challenge, but customer expectations are constantly shifting. All of the best banks re-evaluate their customer experience constantly, to ensure a smooth journey across their portfolio, whether it’s checking accounts, savings, lending or enterprise banking. Yet, many are still bogged down by the apparent challenges of customer-centricity. What generally happens is that banks become blinded by their own sense of self; they think about their products before they think about their customers.

The statistics

The PwC paper mentions a 2014 survey by Forrester, where 41% of financial services professionals selected omni-channel banking as a top five priority. We put our own survey together here at Backbase in 2015, and found that 25% of respondents consider silos to be one of the biggest roadblocks towards improving customer experience. It’s clear that many financial institutions want to get ahead and make a success of digital banking, but find outdated business practises and processes get in the way. However, many FIs don’t even see the roadblocks, because they’re not thinking of what we call the outside-in approach, but rather inside-out (bank first, customers second).

I think it’s often this approach to tackling a digital banking roadmap that makes it so easy for omni-channel to be seen as a ‘bolt-on’, or something that makes you look like a digital bank rather than act like one. Yet, the reality is that it’s not as daunting as you may think. Digital banking isn’t all about having a fancy mobile app – it’s actually more about having a mobile app that works well and is simple to use. It’s about having smarter ATMs, better branch experiences, exceptional call centres and a website that makes banking seem so easy. It’s about speedy payments and money transfers, and … well, I could get carried away.

Suffice to say, it’s disappointing to still see so many FIs caught up in the hype of digital banking rather than the reality. And the reality is that you need to make a solid, strong commitment to changing outdated operational processes if you want to remain in the race, and you need to recognise that you can only achieve success in your endeavours by putting yourself in your customers’ shoes. It’s that cliche about creating the ‘desire pathway’: see where people walk before you build the path.

Ready for change

What the PwC paper accurately reflects, I believe, is that change is inevitable, and change is happening whether you like it or not. It’s about a cultural shift, and “learning to iterate quickly, and adapting to what works”.

In my BankNXT article about the cultural approach to change, I argued that change is indeed inevitable, and that, “Structure should be scrutinised, personnel should be assessed, and strategy should be pulled apart and put under the microscope. Not doing so will have consequences on your bottom line, on your business longevity, on your reputation, and on the people that work for you.”

This is how important it is. And many FIs recognise this in spades, as the Backbase survey points out:

  • ‘What does your bank see as the biggest benefit of digitization?’ and the responses varied, from reducing costs (18%) to generating revenue (24%).
  • The largest percentage of respondents said that they would become more customer-centric (40%).
  • Many startups have succeeded by taking a more customer-centric approach.

While I don’t necessarily agree with Chris Skinner’s summation of the term ‘omni-channel’ in this post from May 2015, I do agree with the core of his message: “We now need to rebuild this for the digital distribution of data in a globalised network, and the problem is that you cannot rebuild this from the front-end. You have to start rebuilding this from the core.”

Yet, it’s not all about the core frameworks. It’s also about having the right mindset, and having an outside-in mentality to doing business. And you have to have good leadership, great management and a people culture that’s leaning in one direction. This is what big banks find so hard to achieve, and why lean startups chip away at their products and services. Yet, it’s not impossible, and the more we put customers at the forefront of our thinking, the more achievable everything will be.

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