Corporate digital delivery channels and the customer experience

Corporate digital delivery channels and the customer experience

Celent feels (and others agree) that it’s important that banks deliver an omnichannel digital customer experience, but the term means different things to different people. Based on our own research, we believe that omnichannel is about delivering a customized but consistent financial institution brand experience to customers across all channels and points of interaction.

An omnichannel experience is even more critical when delivering services to corporate clients. Each client has a unique set of business and technology requirements based on their corporate treasury organizational structure, geographic footprint, and treasury technology sophistication. A consistent financial institution brand experience is important to corporate clients, but the experience needs to be tailored to each client segment’s unique needs. For the largest, most complex organizations, an even more bespoke and customized experience is critical.

With banks investing increasing amounts of capital in technology incubators and startup accelerators, the pace of innovation in digital channels continues to grow. But for corporate clients, innovation isn’t about incubators, accelerators, or hackathons. Innovation is about simplification — increasing usability, straight-through processing, and digitization. As outlined in the new Celent report, Tailoring the Customer Experience: External Forces Impacting Corporate Digital Channels, the competitive environment, regulatory climate, economic conditions, and technology impacts are shaping the evolution of corporate digital channels. But emerging technologies will have the largest impact. External Forces Corporate digital channels are just one component of a complex treasury technology landscape, but a critical one. Corporates maximizing the efficiency and transparency of digital channels today are enabling and preparing themselves for innovative technologies for the future.

Customer engagement: how little things make a big difference (one analyst’s experience)

Customer engagement: how little things make a big difference (one analyst’s experience)
Typically, analysts opine based on analysis of industry data, informed by product demonstrations, telephone interviews and occasional focus groups. This time, I simply share my own experience at a top-5 US retail bank to illustrate how even seemingly little things may have significant customer impact – both favorably or unfavorably. This past weekend, I had a document needing to be notarized. Both my spouse and I had to sign the document and we had a busy weekend agenda. Recalling that as an account holder at a top-5 US bank, notary public services would be free of charge, I planned to visit a convenient branch in-between Saturday morning events. What could be easier? Recalling this bank was one of the relatively few that offered digital appointment booking, I thought it brilliant to book an appointment, rather than taking my chances upon our arrival at the branch. Plus, I was looking forward to getting up-close and personal with the appointment booking workflow. The bank’s appointment booking application was marvelously easy to navigate, but to book an appointment; one had to select an area of interest. This is a reasonable and beneficial requirement, because selecting an interest area ensures the subsequent meeting occurs with someone with requisite knowledge. The problem was that notary services wasn’t listed in the drop-down menu of interest areas. No appointment for me! Without the ability to book an appointment, I sought to make sure the branch nearby to our other activities would be open when we were available. Back to the bank’s website. Easily done, except for the repeated “Make an Appointment” buttons staring at me upon nearly every mouse click, which at this point served as an irritant. It caused me to think. On one hand, well-done to the bank for making the ability abundantly obvious. On the other hand, why no appointments for notary services. Are such needs rare, or does the bank only invite appointments for direct revenue-generating activities? The closest branch was no longer offering Saturday hours, so we trekked to another branch that was a bit out of our way, arriving just past noon. Being a Saturday, I expected it to be busy, but was unprepared for what I saw. Three staffed teller positions were active. All offices were conducting meetings and there were four people waiting in the lobby – complete with restless children which we were happy to entertain. To “speed service”, I was invited to check-in. The process wasn’t exactly high-tech. It consisted of a clipboard resting on a small table with space to write my name and time of arrival. Most of the previous names were scratched out with a combination of black and blue ink, so I figured our wait time would be acceptable. User impressions aside, I was struck with the notion that this very large bank had no consistently gathered information about why customers visit their branch, if they were actually served or not, or what their wait times were – unless some poor soul transcribed all our scribbles into a database. Not likely. Maybe that’s why they don’t offer appointments for notary services. After about a 10-minute wait, we were greeted by a well-dressed young man offering to assist. He quickly affirmed his ability to perform notary services and asked what it was that we needed notarized. I presented him our 1-page quit claim deed, whereby he apologetically replied that, while he was a notary, the bank was not able to notarize deeds. If only we had another sort of document, he would have gladly helped us. At least, he offered an alternative for us – driving back to the UPS Store next to where we hadbeen. No wait + $2.00 and we were done. We didn’t even need an appointment. I learned an important lesson that day.

Why diversity abounds in new branch designs

Why diversity abounds in new branch designs
Branch channel transformation is a complex and expensive undertaking. For all its complexity, however, there are at least two certainties. Namely:
  1. It is no longer optional
  2. There is no single blueprint
It is the rich diversity in approaches taken to the important task of improving branch channel efficiency and effectiveness that makes this topic so fascinating. Retail financial institutions need to possess a number of core competencies to remain successful. Among them is omnichannel delivery. For this reason, Celent launched two research panels in 2015, one devoted to digital banking and another focused on branch transformation. No Longer Optional In its first Branch Transformation Panel survey, 81% of financial institutions regarded branch transformation as an imperative. After roughly a decade of talk but little action, we are encouraged by banks’ embracing the need to get going. They’re not alone. Retailers of all shapes and sizes are wrestling with how to deliver a compelling and differentiated omnichannel experience, what that means in their stores and how to manage a rapidly changing cost-to-serve. The rapid pace of change increases both the uncertainty and sense of urgency. One only needs to consider the meteoric rise of mobile engagement (Figure 1). Things are not what they were just three years ago. Channel systems designed ten years ago aren’t the answer to tomorrow’s challenges! mobile usage chart No Single Blueprint While institutions may be aligned on the importance of getting on with branch channel transformation, there is much diversity of thought around what this actually means. Most banks appear to associate branch channel transformation with “radical changes” in the branch operating model. Arguably, for many banks, radical changes are needed. Not everyone sees it this way (Figure 2). branch meaning This diversity of opinion is to be expected. It stems from diversity in a number of factors: an institutions’ brand equity, desired customer experience, target market, legacy system capability and a host of other factors. The most distinguishing factor may be the willingness (or not) of each institution to intentionally disrupt its business model before someone else does. If you liked banking because it was slow-moving and predictable, the next few years will be stressful for you! Celent is accepting additional requests for membership in the Branch Transformation Research Panel and expects to field ongoing research through 2016 at semi-monthly intervals. To request to be on the panel, apply here.  

Why banks should pay attention to “Assistant as an App”

Why banks should pay attention to “Assistant as an App”
Last week I had the pleasure of going to Finovate, a biannual event (at least in NA) where startups and established vendors show off their newest creations. My colleague Dan Latimore wrote an in-depth piece about it last week. It’s usually a good temperature read of where the market is and what banks are thinking about. PFM used to be hot, now it barely makes an appearance. Mobile account opening and on-boarding was massive. Each year you can count on a few presentations tackling customer communication, whether it´s customer service applications or advisory tools. While this year was no different, I didn´t see any presentations representing an emerging trend in mobile: assistant as an app. What is assistant as an app? Basically, it puts a thin UI between two humans: the customer and the service provider (e.g. retailer or bank). The UI layer enhances the interaction by allowing each party to push information back and forth, whether its text, pictures, data visualization, etc. There are a wide range of possibilities. Apps are already starting to incorporate this idea. For a monthly fee, Pana offerings a human personal travel assistant who will take care of any travel related need. The concierge books restaurants, hotels, rental cars, and flights, all via in-app communication. Pana Vida Health allows users to push dietary information to a health coach that can then send back health plans, ideas to diagnose health issues, or create a weight loss regimen. The dating app Grouper uses a concierge to coordinate group dates. EasilyDo is a personal assistant that can manage your contacts, check traffic, schedule flights, etc. The app Fetch uses SMS to let users ask the concierge to buy just about anything. For a small fee (sometimes free, subsidized by business or premium services) these companies provide value-added premium services to customers through a mobile device. The applicability for banks is obvious. Finances can be complicated; most people aren´t good at managing money, and according to Celent research, consumers still prefer to speak to a human for important money matters. Assistant as an app would offer institutions a clear path towards monetising the mobile channel, moving interactions away from the branch, and capturing a growing base of digitally-directed consumers. I predict this will be a major trend in financial services in the future. What do you think? Feel free to comment below.

Why digital appointment booking will be commonplace in three years

Why digital appointment booking will be commonplace in three years
A friend of mine is a successful small business owner in his forties. Like so many in his demographic, Bryan developed a longing to own a Harley Davidson. He could easily afford a Harley, but chose to seek financing instead. Getting this business should have been a walk in the park for his bank. Bryan is a digitally-driven consumer who values convenience. With some frustration in his voice, he shared with me his disappointment that he couldn’t simply arrange for a loan on his bank’s mobile app. With resignation, he stopped by a local branch only to find the staff members engaged with other customers. After a few moments of impatient waiting, he chose to leave and return the following day. His second trip met with an identical outcome. With increased frustration, Bryan called his bank while en route to a business appointment, hoping for a straightforward way to quickly close on a loan. Instead, the cheerful staff member explained that Bryan could simply visit any branch at his convenience to close on the loan in about an hour. Bryan’s bank lost his business to a credit union. Bryan’s experience is probably not unique. His bank would have won his business easily – had they simply offered him an opportunity to engage with them on his terms. While certainly no panacea, digital appointment booking would have been exactly that. And, it would have been exactly what Bryan expected from his bank. After all, he makes appointments to see his accountant, healthcare provider and barber and books dinner reservations similarly. But, few financial institutions offer their customers this ability (Figure 1). The idea has recently caught on among the largest North American banks, while 40% of surveyed midsized institutions say they are “considering” the idea. Meanwhile, 70% of community banks (assets less than $1 billion) have no plans to implement. That’s going to change. OAB adoptionSource: Celent survey of North American financial institutions, October 2014, n=156 The benefits of digital appointments are manifest. Among them:
  • Convenience: Customers avoid unnecessary waiting for service by scheduling an appointment on their terms and at their convenience while online – where much shopping occurs. A worst case scenario is the customer who, after a lengthy wait, discovers the bank resource with the requisite skills and licensing to meet their needs is not on site.
  • Capacity planning: Sales and service interactions have historically been more difficult to forecast than teller transactions. Digital appointment booking provides a much-needed view into future demand for sales and service resources and improves an institution’s ability to plan accordingly.
  • Sales impact: Automated product origination platforms have been effective at facilitating self-service enrollment of simple products, such as checking and savings accounts. But many institutions see an opportunity to improve close rates of more complex sales such as mortgage loans or investment products that began with customers interacting with the bank online. Knowing that many customers would be more comfortable with in-person discussions in these cases, digital appointment booking offers a concrete next step for interested prospects.
A perhaps less obvious benefit of digital appointment booking is its favorable impact on institutions’ face-to-face interaction. Said simply, frontline employees are better equipped for sales and service interactions when they know who is coming and for what reason. More commonly, bankers must offer an impromptu response to walk-up interactions. A minority of institutions equip frontline staff with a “customer snapshot,” or optimally a “next-best action” recommendation, but that information is not available to staff until customers authenticate. With essentially no time to react to the information, consistency of service delivery is a tall order. To coin an overly-used expression, it’s not rocket science.

Banks are asking the wrong customer engagement question

Banks are asking the wrong customer engagement question
I have heard banks ask, “How to we use digital channels to bring traffic into the branch?” The rational is straightforward. After years of promoting self-service channels, branch foot traffic is declining – along with the sales opportunities that foot traffic represents. It’s a logical question, but the wrong question. A better question would be, “How do we enable effective customer engagement on their terms regardless of the channels involved? Rather than seeking to influence customer channel preferences, banks should be all about maximizing the effectiveness of each and every engagement opportunity, regardless of channel. They don’t seem to be. One no-brainer example is digital appointment booking – the ability for customers to book an appointment with a banker at a time and place of their convenience – using the bank’s online or mobile platform. Doing so represents convenience for the customer, a logical indicated action as part of online product research and an opportunity to improve branch channel capacity planning (because of the added visibility the mechanism provides). But, the most compelling reason to offer digital appointment booking in my opinion is because doing so maximizes the effectiveness of branch engagement. How so? Done well, frontline staff know who is coming and for what purpose. Consequently, they’re better prepared for the conversation. Banks that have implemented digital appointment booking are seeing significant improvements in sales results. Digital appointment booking should be commonplace – but isn’t. In a October 2014 survey of NA financial institutions, just 8% of respondents offered this capability. Most were large banks. OAB adoptionSource: Celent survey of North American financial institutions, October 2014, n=156 Even better would be to extend the appointment booking option to digital channels, as a phone or telepresence conversation. Engagement doesn’t have to be limited to face-to-face interactions – but is, in all but the largest banks. In the same survey referenced earlier, just 20% offered text based chat online, 12% offered click-to-call and 2% offered video chat. Online Channel Engagement CapabilitySource: Celent survey of North American financial institutions, October 2014, n=156 So, while banks offer abundant digital transactional capabilities, engagement remains largely something only offered at the branch. That dog won’t hunt for long!

More comments on the “branch is dead” debate

More comments on the “branch is dead” debate
*As mentioned in an earlier blog, the persistence of the “branch is dead” debate seems to be to betray the deeply invested interests on each side of the debate. In many financial institutions, digital and physical channels still have separate reporting structures (Figure 1). In Celent’s October 2014 survey of North American financial institutions, we found that less than a third of responding FIs have a single person responsible for all delivery channels. Interestingly, this appeared to be more likely among large banks. Channel Org Another observation is that much of the debate is deeply polarized – all or nothing – as if banks serve a static and homogeneous market. Neither is true. Most banks serve a diverse client base whose needs and preferences are in a state of change. Niche players, such as Moven, can take a more polarized (or shall we say extreme) position. A third (and my favorite) observation is that all too often, inaccurate assertions are made about channel usage as if demographics were a sole and causal determinant. We hear it all the time; “Millennials don’t use branches.” “Old people don’t use digital channels” and so on. In March, the US Federal Reserve published its third instalment of comprehensive consumer research on the topic, Consumers and Mobile Financial Services 2015. It makes for insightful reading. One myth the report busts is that digitally driven consumers have little use for other channels. Nothing could be farther from the truth – at least for the present. The survey (an online survey administered with a managed panel of nearly 3,000 consumers designed to be representative of the U.S. eighteen and over population) sought to understand how mobile banking users (35% of the panel, up from 30% in 2013 and 26% in 2012) used other channels. The results may surprise you. A few tid-bits:
  • Between 2011 and 2014, mobile banking usage has grown strongly across all age groups. Among 60+ consumers, usage has nearly tripled.
  • Hispanics reported the highest incidence of P12M mobile banking usage (53% of those having bank accounts, compared to 39% in the overall sample).
  • While mobile banking users are using the platform frequently and consistently, they also interact with their banks through more traditional branch and ATM channels. 72% of mobile banking users frequented a branch in the past month.
Channel Access Chart *1 Of those who used channel in past 12 months *2 Of those who used channel in past month Separately, respondents were asked to rank the three main ways they interact with their bank or credit union. 21% of mobile banking users ranked the mobile channel first. 13% ranked the branch first. Two implications from the diversity of channel usage that characterizes today’s consumers:
  1. Omnichannel is a legitimate pursuit. All channels need to be optimized.
  2. Banks neglect the branch channel at their peril.

Thoughts from American Banker Retail Banking Conference 2015

Thoughts from American Banker Retail Banking Conference 2015
This last week the American Banker Retail Banking Conference 2015 was going on in Austin, TX. As expected, it was a great way to read the temperature of the banking industry. The conference was well attended, with broad representation from all institution sizes and markets. There were a couple of overarching themes throughout the event. Competitive pressures on smaller institutions were top of many bankers´ minds. The conference was full of community bankers discussing evolving business models and the pressures its placing on their ability to gather deposits. Customer centricity is forcing a convergence of traditionally segregated value propositions. Large banks are now trying to compete on serving the customer and they´re positioning themselves to look and feel like a community experience. New entrants and delivery models are also opening up the competitive landscape. Consumers are no longer limited by geography when choosing a bank, and they have a growing number of alternative financial options from which to choose. Smaller institutions are finding it hard to overcome some of the barriers of resources and marketing that arise as the competitive landscape broadens. Many presenters discussed developing non-traditional revenue streams. With interest rates low and new regulations following the financial crisis, banks are running incredibly thin margins, and traditional revenue sources are no longer viable. Presentations focused on targeted marketing for “moneyhawks”, new P2P models (e.g. P2P lending), and new payment schemes. A few thoughts on some of the talking points:
  • Breaking down omnichannel applications for financial services: Omnichannel within banking was a popular talking point between attendees and among presenters, and it´s obvious there´s still more than enough ambiguity around its application in the context of banking. One of the presentations used non-FI examples to look at how banks can approach integrating omnichannel into customer interactions. Home Depot was an interesting case study. The retailer combines the in-store and app experience to enhance the customer buying process. Customers can browse the app and make a list of the materials they need. The app shows only what´s in stock at the nearest physical location, and each item is given a corresponding aisle number for easy location on arrival. While in the store, customers can scan QR codes on each product to bring up specific measurements and statistics. This is the essence of an omnichannel experience. It´s not about doing everything from every channel—it´s about optimizing the customer experience across the variety of methods used to interact with the retailer (or bank).
  • Community banks differentiating from large institutions: This was a common thread running throughout the presentations. How do community banks grow deposits in a climate of shrinking deposit share? Presenters proposed some solutions. One spoke of the need to market correctly. A recent study found that despite problems with megabank perception, 73% of those asked said a recognizable brand was important in choosing a financial institution. A regional bank poll of millennials found that not one could name a community institution in their area. These institutions find it hard to inform consumers about the value they provide, and often lacking the resources and experience to do so. A few small institutions spoke about shifting towards serving small businesses. Despite only having 20% of deposits, community banks are responsible for 60% of small business loans. Focusing on small businesses could be a way for small institutions to remain viable, without having to drastically alter their businesses.
  • eCommerce and Merchant Funded Rewards (MFR) through mobile banking to help consumers save:  During one of the sessions, a banker made a good point: consumers don´t need help spending, they need help saving.  The comment reflected a number of discussions about the role financial institutions can play in helping consumers save money, but was echoed across a handful of presentations on digital commerce. US Bank discussed Peri, its eCommerce app developed in cooperation with Monitise, while other presenters spoke about card-linked and MFR propositions.  These initiatives are definitely innovative, but is conflating the ideas of saving and driving commerce shaping the conversation around a fundamentally misaligned approach?  First, will a bank´s eCommerce app be able to compete with the likes of Amazon and Google?  Banks often do not have the customers, data, or pricing competitiveness to match big online retailers, and they seldom win on brand favourability. Second, even when these initiatives are successful, do they really help people save?  For many, the data isn´t targeted enough for banks to offer deals on purchases a consumer was going to make anyway.  For example, based on one bank´s demo, a customer would go to make a purchase at a retailer and the bank app would push out a geo-located card-linked offer for a nearby restaurant. This requires additional spending.  Without the right data, these programs are mostly playing off impulse purchasing, not saving.
Do these themes resonate with your experience? Feel free to leave comments about how your institution is tackling these challenges.

Debrief from India: It’s all about DIGITAL

Debrief from India: It’s all about DIGITAL
I’m on a plane over the Arabian Sea collecting my thoughts after a packed week in Trivandrum, Bangalore and Mumbai. The impetus for my trip was the honor of presenting at Suntec’s User Meet on the occasion of its 25th anniversary. The clients who attended were extraordinarily open about their stories and presented extremely compelling case studies. Learning about the pricing practices of Telcos showed how much opportunity is left for banks in this space. I spoke on Customer Experience Orchestration in a Digital World. It proved to be a perfect set up for the rest of the week, since the clients I met with – old, new and prospective – were extraordinarily consistent in their focus on a single concept: DIGITAL. Like Celent, many of the Indian service providers I visited have defined their vision of digital and begun the process of aligning their offerings to it. The best focused on a customer-oriented foundation (like Celent!) and then described how their combination of technical expertise, product / consulting delivery, and segment concentration combined to help their banking clients fulfill their digital vision. Innovation centers – spaces for client co-creation and brainstorming – continue to be hot: I saw two new ones this trip. Demos trump powerpoint every time, and there was a good focus on this. If you’d like to learn more about my impressions, please arrange for an Analyst Access call; I’d be happy to chat about them in more detail.

Why the branch banking controversy will continue

Why the branch banking controversy will continue
The branch is dead, long live the branch! Controversy around the wisdom (or not) of investing in the branch channel amidst rapidly growing digital banking adoption is showing no signs of letting up. Consider three articles published in the past week:
  • Bank Innovation covering Associated Bank branch closures to fund digital channel initiatives.
  • BTN coverage of Wells Fargo branch/digital convergence alongside the banks’ steadfast advocacy for maintaining its massive branch presence.
  • Brett King’s Op Ed in Banking Exchange, critical of the recent FDIC report, Brick-and-Mortar Banking Remains Prevalent in an Increasingly Virtual World
  I’ve observed that most advocacy is binary; either branches are next to worthless or the branch is king. Where is the middle-of-the road position?   I’d like to offer one. For starters, retail banks serve a diverse market with diverse needs and preferences. Why then do so many critics insist banks must react to digital banking’s growth in lock-step? How many times have you heard the comment, banks are lemmings? Well, this time they’re not. Get over it! We will continue to see a diverse response to the digital ascendency.   But, I do struggle with the sustainability (or even desirability) of the current branch density in many markets – particularly in the US. I don’t think it will be defensible for very long. Let’s put it into perspective. Between 2000 and 2010, US bank branch density grew from 230 to 270 branches per million. Celent looked at a dozen other retail categories and couldn’t find a single one (except banks) that grew store density over the same period. Just the reverse happened, even though digital commerce remains less than 20% of total retail sales.
Source: US Department of Commerce, FDIC, Datamonitor, Celent analysis

Source: US Department of Commerce, FDIC, Datamonitor, Celent analysis

Like retailers, banks have certainly embraced digital channels. But, unlike retailers, banks have not invested in digital engagement. Until recently, digital channels weren’t about sales and servicing (that’s what branches are for…) but about facilitating transactions. Rare is the retailer of any size that does not have a digital presence designed to conduct commerce. But, the significant majority of banks do not yet have that capability. And, in some cases, the user experience is poor. Why? In part, because banks have focused on transactions, not sales and service in the digital channels. As this changes (and it is), I believe we will see a corresponding contraction in branch densities – just like in most other retail segments. Until banks demonstrate the ability to sell and service customers digitally, they will be overly reliant on the branch channel.
Source: Celent survey of North American financial institutions, October 2014, n=156

Source: Celent survey of North American financial institutions, October 2014, n=156

The next few years will be telling. What do you think?