Most banks still operate in channel silos despite vast amounts of research that show this structure leads to lost revenue, undue credit risk and widespread inefficiency. Now, the changing habits and demands of customers should provide banks with yet another incentive to break down these concrete walls before they lose more ground to rivals.
The industry is in a transformative period in which branches will no longer be the sole, dominant sales and service delivery channel. Yet they will remain an important part of the banking landscape for branding, as well as to serve key customer needs such as onboarding, dispute resolution and advice.
But despite this shift in the focus of customer interactions, banks aren’t taking advantage of the emerging cross-channel experience.
An emerging “3D” sales model (distributed, direct and digital) should coordinate a single experience with a sophisticated and seamless choreography that serves customers in whichever way they want to interact with the bank.
The checking account is particularly ripe for a 3D strategy, especially as a growing number of consumers migrate toward digital account openings.
DIGITAL AND DIRECT CHANNELS GIVE BRANCHES A RUN FOR THEIR MONEY
There’s little doubt that digital sales of checking accounts are growing dramatically. (See Figure 1). More than one-third of consumers who have recently opened check accounts started the process online and, of those, nearly three-quarters finished the process that way, according to a Novantas survey of more than 8,500 consumers.
Call centers also are an important alternative to branches. Although it may seem counterintuitive, an increase in digital sales may generate significant growth for the call center because more complex digital sales often require some human intervention via chat, phone or email.
It is increasingly clear that these channels can be much more effective in generating sales if they work in tandem. As one senior bank executive recently told Novantas, “Just because you open an account online doesn’t mean you don’t ever want to talk to a human.”
IF OTHERS CAN DO IT, WHY NOT BANKS?
Retailers are already putting the 3D philosophy to work. Amazon and Wal-Mart mesh the real and virtual worlds with integration of delivery and returns, in-store pick-up and, in Amazon’s case, the launch of new physical locations that are stocked based on local digital profiles of customers.
Consider Rocket Mortgage. Quicken Loans, which launched Rocket in 2015, described it as “the cleanest, easiest, and quickest mortgage application ever created, complete with e-signature.” The bank followed up with the catchphrase, “Push Button. Get Mortgage.” The message resonated with consumers, who viewed the whole mortgage-application process as a major pain point.
The experience is stellar, but not only because of the digital application technology. It also relies on a seamless blend of chat, email, phone and digital that makes it an excellent — and human — experience. As a result, Quicken now leads the industry in originations, growing 5% last year while competitors faced declining originations.
And if they can do it, why not banks?
CHECKING IN TRANSITION
The checking account is a natural fit for the multi-faced solution that Novantas calls 3D Channel Choreography. Although many banks have upgraded digital-account openings with better identification verification and funding options, they are finding that the quality of these account openings lags those that take place in the branch. Fewer checking accounts that are opened digitally have direct deposit and online bill pay. As a result, attrition is higher for these accounts.
Banks will find that offering channel choice is critical when a customer runs into an issue during the digital account-opening process. But many banks don’t, contributing to significant drop-off rates between start and finish.
For example, chat and phone numbers are nowhere to be found on one leading bank’s website as the customer navigates the digital account-opening process. And that is par for the course. In a recent informal survey of the account-opening process for several leading banks, Novantas found that 28% had no chat option, 43% made the phone number difficult to find and 55% provided no option to make a branch appointment.
Is it any wonder that potential customers just give up?
Signing up for an account is one thing. Engaging and actively using an account is a completely separate challenge that can benefit from a multi-channel onboarding process. Personal outreach can be critical at this stage to both personalize the relationship and to determine any barriers to completing the onboarding process. One best practice is to have a live agent reach out via chat to see if there are any questions after the customer opens the account, but before leaving the website.
The chat agent can then provide a warm hand-off to a live phone call to give customers some hand-holding during the process of establishing direct deposit and bill pay.
STUMBLING BLOCKS ABOUND
While the shift described above is starting to become clear, the execution is anything but easy. There are multiple stumbling blocks to implementing even minor shifts in channel activities or technology capabilities on the sales side. The good news is that establishing “channel choreography” can help ease the stumbling blocks of organizational difficulties, technology challenges and operational issues.
The organizational difficulties are clear. Most banks have separate management structures for digital, phone and branches. Each manager tends to optimize for their own channel at the expense of the broader multi-channel outcome. Investment and other decisions are clunky for cross-channel initiatives, resulting in confusion and challenges with execution.
As for technology, management is typically excited about the potential for new whiz-bang solutions, but then hands off the nuts and bolts of user interface and customer experience decisions to a lower level. The result can be too many design compromises created by junior teams when a strong voice representing the end-user experience is required. Additionally, agile buzzwords are often thrown around, but true agile practices are not always put in use. For example, a rapid launch with ongoing improvements may be sacrificed for the sake of a perfect launch later. The resulting project may take too long, be over budget and have disappointing results.
The final set of stumbling blocks relates to operational issues. First and foremost, the ultimate customer experience must be defined. This is more than just a technology issue. It’s about the choreography across the entire multi-channel process — both human and digital. But laying out the process on paper is not enough. Even when cross-channel processes are laid out in detail in an operating manual or by channel administration, they may be ignored. This often happens as a result of incomplete change-management efforts that neglect some critical factor, such as leadership engagement, training or incentives.
For example, many account maintenance activities can now be completed outside of the branch. Branch staff could interact with the customer to show them how to do it in these other channels, but they often fall back to their manual systems unless the bank physically shuts off the capability in the branch.
Complicating all of this is the expectation of the customer, who tends to be less forgiving in digital account openings than when in a branch. While customers are often willing to go through an arduous 45-minute opening process in a branch, they are quicker to abort that purchase and choose another provider when encountering friction online.
FUTURE VALUE VS. CURRENT COSTS
Many omni-channel executives will question whether getting a human involved in digital account opening is a good idea. From a pure cost efficiency perspective, they are probably right. But if one or two agent interactions during the opening process results in a stickier primary relationship and potential follow-on sales, the economic returns can be extremely high. The key is to take a full relationship perspective, rather than a cost- and channel-centric view.
It is clear that Channel Choreography is proving successful in a number of industries. Novantas believes that banks that can rapidly implement these types of experiences will have significant opportunity to outgrow their competitors.
Director, New York