Omni-channel banking
The digital transformation roadmap

The financial services market is going through many changes. New challengers have appeared and are looking for a slice of the market. In addition, customers are more demanding and more informed, expecting convenience and simplicity when it comes to financial services, particularly online and via mobile devices. People love digital services such as Netflix, Amazon, and Uber because they’re easy to use and deliver great customer experiences. They deliver 10 times more convenience and better customer experiences than the status quo, and are therefore winning the market. It’s only a matter of time before the 10-times-better bank is founded, a thought that’s on the radar of every banker.

This brings us to this report by Backbase and Efma – Omni-channel banking: The digital transformation roadmap – which outlines the journey of creating the 10-times-better bank, providing a detailed analysis of how banks can begin their digital journey.

 

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New competitors in banking: The disrupters

New competitors in banking: The disrupters

 

 

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“Neobanks, startups and tech companies are a threat to financial companies, but they’re not the biggest. The biggest threat is ourselves. Banks are not spending enough time innovating. We are making ourselves irrelevant to tech-savvy customers.”

Typically, industry disruption occurs faster than anyone anticipates.

Let’s use Uber as an example. Was the taxi market ready for disruption? Perhaps it was, but nobody was arguing for it as strongly as those who are now chanting for disruption to financial services. Uber is booming, and rumour has it that it’s moving into banking. Yet, the current ‘Uber of banking’, Lending Club, is getting even stronger. Lending Club went IPO in December 2014, opening with a 56% increase in share price, giving it a $9bn valuation, ‘lifting the company’s market value higher than all but 13 US banks’.[1]

Fintech companies in 2014 raised nearly $3bn, more than tripling the $930m invested globally in fintech in 2008, and it’s growing for a reason. They see opportunities to win from existing players, especially from traditional banks. This is because the new players can do digital 10 times better than the status quo.

This is a widely used image that brilliantly captures the disruptive climate of banking, where new fintech companies are taking business from traditional banks.

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Customer key experience: The key ingredients

Customer experience: The key ingredients

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Customer loyalty and retention, two of the most important considerations in measuring business success, are created by combining superior digital experiences and human interaction.

Banks need to improve customer experience, and digital channels have remained their best opportunity to achieve this. Many FIs know this, but still find it difficult to seize the opportunity.

These survey results show that traditional banks encounter many roadblocks, with lengthy project timelines and multi-year IT projects cited as common issues. Having too many silos doesn’t help, nor does the maintenance of legacy applications, and the high costs of long, difficult projects. These hinder the journey to digital transformation.

Postponing the digital transformation journey is no longer an option, and FIs know it. 56% of survey respondents agree that a superior digital experience and human interaction are major factors for customer retention, and that these are important areas to focus on when nurturing customer loyalty and retention rates.

The perfect onboarding process — It's already out there

The perfect onboarding process — It’s already out there

Onboarding can actually be done on a smartphone in a matter of 60 seconds. The traditional concept of onboarding is both outdated and unnecessary. In fact hand-written forms and drawn-out processes are no longer viable if a bank truly wants to win new customers.

With an omni-channel orchestration platform in place,
banks can easily process applications that are started on one device and finished on another. For both bank and customer the process is seamless and uncomplicated as the platform unifies all of the bank’s channels. A new customer might, for example, begin an application for a current account on a mobile device and finish it on their desktop computer, or in one of the bank’s branches. The customer will pick up an application at the point they left it and CSRs should be able to see what stage they are at and if any help is needed. A central server that connects to each channel orchestrates the entire process, saving time, eliminating the need to duplicate information, and creating a positive customer experience.6

At the back-end, all digital applications can be processed quickly, as banks don’t need a human operative to tran-scribe a handwritten form. Instead, data flows straight into the system, where a number of checks can be carried out. The checks verify identity, as well as whether the applicant qualifies for a particular product or service. These checks are done immediately, so the risk of losing the new customer drops substantially. Rather than stalling the process to facilitate approvals, the system lets users sign up and become a customer right away.

 

Go holistic

Pursue an omni-channel delivery model

 

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Even if omni-channel is a buzzword or not, the fact is that customers are using multiple devices and multiple channels to accomplish a task over time, and this is especially true when purchasing new products and services. The customer expects the same experience on every device and on every channel, and they expect to be able to perform a seamless handover between devices and channels.

For example, with Netflix, we can start watching a movie on our way to work, on a tablet. We can pick up where we left off at any time and on any other device, seamlessly. On the same experience level, why couldn’t we start to fill out an online loan application on a smartphone, and then later on pick up from where we left off at home on a desktop computer?

To make this possible, banks have to move the flexible customer experience layer that runs independently from the main stack. Banks should have flexible APIs for their main processes and core systems, and an orchestration layer in between to ensure handover and session persistency. This is key for creating a seamless switch between devices.

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