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January 11, 2018
Kris Carrera, Business Line Executive, Credit
The environment in which banks operate today is increasingly complex, where fundamental definitions of how customers interact and experience a bank are being totally rewritten. There is also the array of disruptors circling above, who threaten to completely disintermediate the underlying business model.
As banking processes become increasingly internally digitized, the target operating model needs to keep pace. This is exacerbated by the fact that the entire customer base, triggered by a rapid adoption of mobile technology, is changing the way they communicate with the bank. In the modern world, consumers care little about the growing number of touchpoints they have with banks. Instead, growing numbers of customers expect a fully integrated experience, one that seamlessly transitions between the physical and digital domains. Delivering on this expectation is the core challenge of omnichannel banking.
Banks may be making great strides in digitizing their internal processes and insulating the legacy systems that support the underlying business, but customer preferences and expectations change quickly. This is especially true of customer interaction points, but banks that fully embrace the digital economy can create opportunities to better serve customers and therefore create value.
So how should banks communicate with their customers? How often and through which channels? Is there a danger of overkill if banks spam their customers with unwanted and badly targeted offers? And is the digital experience consistent across the growing number of channels?
Of course, banks have always initiated the conversation by suggesting additional products and services that may be of interest, pushing out predefined alerts, or by informing customers about rate increases. Typically, this was done through posts or emails and was often a blunt instrument characterized by campaigns to large sections of the customer base with low uptake rates. With the advent of modern digital channels, banks have an opportunity to have a drastically different impact on the customer experience and on their ROI.
In addition to the traditional branch, posts, web adverts and emails, which channels should banks be utilizing? The old term of “multi-channel banking” was about offering channel choices and encouraging customers to use the one most appropriate for their needs and those of the bank. In some cases, this simply meant routing customers to the cheapest channel. Omnichannel demands that banks raise their game to meet customer expectations, keep them onboard and can deliver a seamless experience over any device. For the customer, omnichannel focuses on providing a seamless customer experience that delivers focused advice, product features and diverse services. For the banks, it is an opportunity to really understand the customer, streamline systems and focus attention on the most profitable.
An effective omnichannel strategy is not so much about supporting each new emerging channel as it reaches critical mass, but about a single omnichannel customer experience. As customers engage with more apps, websites, and bots, the move to digital is increasingly fragmenting and diversifying the customer experience. Staying relevant demands that institutions must go wherever their customers are and be available when needed. Omnichannel is primarily a customer-centric view. It allows customers to interact with the bank via multiple channels with little or no change in the service level.
A true omnichannel strategy encompasses understanding what customers want and like, using data analytics based on established systems of engagement. Plenty of banks have invested in the emerging art of data analytics, but most have leveraged those investments within channel silos. This often compounds the problem. The winners are the banks that have successfully combined information-rich data sources with advanced analytics, gaining valuable insights into their customer behaviors, preferences and life events. The target is to gain a complete picture of their clients and segments to be better equipped to offer new products, improve margins and reduce attrition.
But which data is relevant and is its usage even appropriate? Which internal data can be used and which external sources can be leveraged? Banks have been slow to adopt external sources given challenges in converting unstructured data into a useable form and the relatively high cost of detecting the relevant patterns and trends. However, smart usage knowledge becomes power, allowing the crafting of exquisitely targeted offers that match life events that result in much higher rates of acceptance.
The primary strategy for a consistent omnichannel offering is to begin with the destination while prioritizing initiatives based on short-term business objectives. Given that a patchwork of legacy systems underpins most banks, creating an omnichannel customer experience is not a trivial task. Whether looking at the larger digital transformation of banking, or the more pressing priorities of an omnichannel service, legacy technology can be an inhibitor because it restricts functionality and slows down deployment. Institutions are left with two options: rip and replace, or a more pragmatic and progressive renovation strategy.
Customers now expect a consistent and seamless service across all channels, so banks must step up and streamline their processes and internal systems when it comes to customer interaction. Using the omnichannel approach, banks will also reap the rewards of better customer intelligence and a clear idea of how best to spend precious budgets.
The migration toward a single, omnichannel customer experience will be a long one that includes multiple, incremental initiatives. Few banks can seriously claim to already have become a true omnichannel digital bank.This is unsurprising given the complexities of omnichannel delivery and the state of legacy systems in most institutions. But, the alarming reality is that only a small minority of institutions have even begun executing an omnichannel strategy.
The drive to digital is defining customer expectations. A quick and tactical mobile-first approach is no longer sufficient. Omnichannel is more than a user interface layer. Long-term success depends on business processes and products needing to be simplified and automated to keep up with changing customer expectations. Going digital goes beyond the traditional consumer-facing applications as it transcends the whole enterprise. This means a digitally integrated branch, contact center, website, kiosks, and consolidated bank apps to streamline and automate the whole experience.
Business Line Executive, Credit
With over 25 years of international payments experience, Kris was responsible for the launch of the first successful cobranded card program. A leader in risk-based pricing and target marketing using predictive data analytics, she specializes in merchant services, credit cards and home equity. Kris has received Best Travel Card, Best Cobranded Card and Best Private-Label Program awards.
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