Hybrid bank: the post-crisis model of banks is ‘clicks and mortar’
The way consumers choose to transact is going through transition, with digital banking (whether internet or mobile) rapidly becoming the preferred medium for transactions. In fact, all major research houses predict that by 2015 digital banking will be the norm in transactions, with of 60% of the global population transacting online. Almost in parallel, banks are making significant progress towards stabilizing after the financial crisis, launching numerous initiatives to improve capital efficiency, revenues, and costs. A happy coincidence? With the relative transaction cost of the branch being almost 50 times higher than that of online and mobile, and 5 times higher than that of self service, it seems that truly embracing the hybrid bank model is really a one way street.
Converting the branch into a place for communication and advice, while taking advantage of the ‘digital potential’ will bring huge advantages to banks to minimize costs while increasing sales, offering an overall new, tailor made customer experience.
However, this combination of ‘clicks and mortar’ cannot happen overnight. Banks need to rethink the way they operate and lay down carefully detailed plans that will allow them to remain sustainable and profitable. The technology to support the new hybrid bank model is already available. Here are some examples of what we at Mellon are proposing to our customers to gain rapid returns on investment and achieve ongoing operational excellence:
Location-based offers and loyalty programs. To remain competitive it is important to leverage data and create a more interactive customer experience across channels. This can be done with advanced segmentation tools that will help them understand consumer wants and needs and identify segmentation strategies and marketing tactics for implementing loyalty programs and provide value propositions for the appropriate audience. Likewise, by adding the location parameter in their segmentation, a bank can reevaluate its branch network, the locations and their potential in accordance to their target audience. With such a tool, the bank can decide not only which branches to open, maintain or downsize, but also what type of services will be most attractive for the predominant consumer profiles of each location.
Customer Flow Management. The branch will not extinct; it is however being transformed as consumers’ expectations from the ‘bricks’ channel are shifting from performing mundane transactions to getting advice on financial issues. Improving the customer experience at the branch is therefore critical if a bank wants to transform its branches to advisory and selling points. For the customer, this experience can start even before visiting the branch, with mobile and internet booking applications that can show the user the nearest bank branches, waiting times for the desired service, and appointment scheduling options, all from the comfort of their home, office or while on the move. This will minimize waiting times at the branch, provide the bank with valuable pre-visit data, and enhance overall customer service experience.
Mobile integration. More and more banks want to incorporate mobile banking as a regular delivery channel as consumer adoption continues to increase. With security and integration issues playing a decisive role in providing true mobile banking experience, it is important to leverage a consistent mobile platform and a strong authentication technology that can work across all major operating systems of touch screen mobile devices. This infrastructure will be able to support enhanced applications like imaging, payments and location-based services that will soon become a prevalent trend as more and more consumers use smart phones and tablets for their interactions.
Self-care options are now a norm for our everyday transactions. Even when visiting the branch, consumers choose to perform the more simple transactions at the ATM. It is therefore important for banks to include various customer touchpoints to deliver a streamlined, end-to-end multichannel experience. ATM and Bill Payment manufacturers have been working towards this end for some time now, and are providing a host of features and functionalities that can really enhance the customer experience at the self service channel. With large color displays, video chat options, but also recycling and contactless capabilities, the self-service network can really transform into a cost effective self-care channel.
Outsourced and Shared services are becoming more and more popular as they allow banks to maintain a lean, focused operation, whilst leaving mainstream, non-core processes to be handled by expert third-parties. And although the concept is not new, the transforming financial environment and the urgent need of banks to rethink their operation in terms of productivity, efficiency and profitability, is brining a growing interest once again in delving into talent management, end to end process delivery, innovative structuring and gain-sharing partnering.
Dimitris Gavalakis, Business Solutions Delivery Manager, Mellon Group of Companies