Guest Blogger: Philip Farah, Cisco Internet Business Solutions Group (IBSG)
Have you walked into a retail store lately and seen someone use his or her phone to “scan” a product’s bar code to get immediate access to reviews from consumers who have bought the product? This customer might also (to the chagrin of retail store owners) be looking for cheaper prices offered online or in a physical store around the corner!
This is the new “omnichannel” reality that retailers have to face nowadays—one where virtual and physical channels come together to enable in-store access to web-based customer reviews and price comparisons, while also taking some physical store capabilities to the virtual channel (for example, Remote Deposit Capture in banking).
Say goodbye to the multichannel days where banks focused on switching customers to the cheaper channel and on trying to achieve a minimum level of consistent look and feel across siloed channels (a strategy that many banks are still pursuing today). Instead, say hello to the new omnichannel reality where consumers research a mortgage offer online, discuss it over video with a remote expert from the local branch, and set up automated monthly payments using their mobile banking app.
Similar to retail, omnichannel brings a set of opportunities and challenges to the banking industry, including:
– First and foremost, the risk of rendering retail branches irrelevant . . . . Should we start shutting down branches given operations costs and reduced frequency of customer visits?
– Uncertainties about the strategy to adopt when it comes to the emerging virtual channels . . . With limited funds, should we still invest in online or move all our resources to mobile? Will social media have a role to play above and beyond customer service? Does access to a remote expert via high-definition video conferencing in the branch make sense?
To help banks address these questions, Cisco IBSG recently conducted global research of 5,300 customers across developed (Canada, France, Germany, United Kingdom, and United States) and emerging economies (Brazil, China, and Mexico) to assess consumers’ interest and readiness in a number of omnichannel-enabled banking concepts, including virtual-only banking models, POD banking, mobile/social/visual social banking, and several others.
So, how can banks prosper in a world that, according to our survey, is ready for omnichannel banking? Here are several ideas. You can find out more in our recent point of view paper.
The branch is dead? Long live the omnichannel branch
Much ink has been recently spilled on the imminent death of the branch (ever since the early days of the Internet, I might add).
It hasn’t happened yet, and our research indicates that it is not about to happen anytime soon: according to our survey, more than 50 percent of consumers would be dissatisfied if banks were to go all virtual, resulting in consumers switching banks or reducing assets at their current bank.
Consumers want their branches to refocus on delivery of expert advice, financial education, and personalized services, which garnered the highest consumer interest across all branch concepts tested.
And, 83 percent of global respondents are somewhat or very interested in expanding advisory services to new areas, including tax preparation, financial education, legal services, and insurance.
Consumers are open, however, to the delivery of expertise using video conferencing in the branch—provided it is a guided experience (with a local banker / relationship manager attending the session); 23 percent approved of this approach in developed countries, and 43 percent in emerging markets.
We call this concept of an advice-rich (combining in-person and virtual expertise) and welcoming YET lean (in terms of human resources and infrastructure) and connected branch “The Omnichannel Branch.”
Omnichannel means AND, not OR, when it comes to channel use
Respondents globally indicated an interest in using multiple channels for different transactions.
And, the most avid adopters of virtual channels—tech-savvy consumers—are also among the most frequent branch visitors, with 3.0 branch visits/month compared to the global average of 2.3 across all segments.
There are clear preferences when it comes to channel specialization
For the branch, respondents indicated a preference for delivery of expertise and personalized advice.
For mobile, the top priorities were real-time alerts (linked to PFM), location-based offers, and mobile payments.
Social networking as a banking channel is still lagging (only 1 percent of respondents in developed countries and 8 percent in emerging markets chose it as a preferred channel for some of their banking transactions), mainly because of privacy concerns. The most promising apps are FS learning communities, friend referral, and financial games / competitions.
Video has gained mainstream support as a channel for advice and interaction in the form of high-definition video conferencing (most of those interested are Gen Xers and the early majority when it comes to technology adoption). Video is the virtual channel best positioned to build trust (“seeing is believing”).
The infomediary opportunity
As we move into the omnichannel reality, protecting consumers’ private info and digital identity becomes paramount. Banks are ideally positioned to take on this role, opening the doors for banking associations or individual banks to protect people’s digital identities the same way they protect their wealth.
Worldwide, it is clear that customers are ready for omnichannel banking. The question is, are banks ready, too?
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