It has become a commonplace to say that the traditional banking and payments industries need to be customer centric if they’re going to survive, much less thrive. Now, the customer-first concept seems to extend to the old debate about channels vs. devices. Some practitioners in our industry seem increasingly to define “channel” in terms of customer experience and less in terms of classic considerations such as risk.
A recent article in Bank Innovation raised the question of channel vs. device in relation to mobile and provided a classic risk-based definition of “channel:” “When it comes to defining their channels, banks still follow the old parameters, like risk, contractual terms, opportunities, negotiations and revenue targets, with no heed to the device of access or the associated quality of experience.”
But a couple of days later, another article appeared in the same publication arguing the contrary in its very title: “The Tablet is a Distinct Channel, and Banks Must Design a New User Experience for It.” It appears that terms like “channel” and “device” could stand some usage-based clarification from people who work in the field.
We’ve debated these issues for decades, of course. Earlier, the questions involved the telephone and call center, ATM and electronic funds transfer networks and PCs online. Hoping to clarify the matter, I conducted my own admittedly unscientific sampling of executives who work with these concepts day in and day out by posing these questions:
- Is there a meaningful difference today between a channel and a device and, if so, what is it?
- If there is a difference, how meaningful is it? If you get it wrong, could that mean problems for a bank’s strategy around distribution or payments?
For Matt Wilcox, senior vice president, Interactive Services & Marketing, at Salt Lake City-based Zions Bank, mobile is a channel “in terms of both banking and marketing. In fact, many bank marketing groups are reorganizing themselves to manage marketing by channel rather than line of business predominately due to the emergence of the mobile channel. The device is just a gateway to the fastest growing channel in banking history!”
For Tim Boike, vice president, Innovation and Payments Strategy, at San Francisco-based Wells Fargo & Co., the bottom line is customer needs: “People’s perception of what is a device vs. a channel is really just semantics. I personally think it’s fine for people to have different opinions on terminology. Even in Wells Fargo, people have differing terminology. As long as the decision-makers in everyone’s organization are satisfying their customers’ needs, we don’t think it matters.”
For George Warfel, director, Financial Services Banking Advisory, Pricewaterhouse Coopers (PwC), mobile is a platform. “A bank can get its mobile device strategy right only by thinking of it as a platform. If you think of it as a channel, then you limit your thinking because the first thought becomes, ‘what kind of channel?’ A channel like a branch? Then let’s put branch functions on it. A channel like telephone banking? Then let’s put only functions on it that can be done via a call center. A channel like on-line/home banking? Then we only make our home-banking products available via the mobile device ‘channel.’ By thinking of it as a platform, something that can support any banking function, and with the appropriate degree of security needed by that function, then we open the field to where we can do things with it that our customers want from us and outflank our competition.”
Chris Gardner, co-founder of Paydiant, a provider of cloud-based mobile wallet and offer-redemption platforms based in Wellesley, Mass., also refers to mobile as a platform. “I don’t think either ‘channel’ or ‘device’ adequately captures the transformative nature of ‘always-on,’ portable, Internet-connected devices. I think, in general, that computing platforms have become smaller and more powerful and thus users are clearly voting to prefer these devices over other channels in increasing numbers. If you must use one word over the other, ‘channel’ is better in my opinion, but I think the distinction is becoming increasingly meaningless. Banks need to interact with their consumers in the same way consumers are interacting with the rest of the world — and that is largely with their mobile phones and tablet devices. Risk is not the issue.”
Arkady Fridman, senior analyst and consultant with Aite Group, agrees it’s a platform, but he gets right to customer experience: “Mobile is neither a device nor channel. Mobile is a platform and we should expect the mobile form factor to evolve over time, many times over, in fact. To that point, mobile phones, tablets, internet-enabled watches, etc., will encompass different experiences and preferences for usage. Misunderstanding the implications of a mobile platform can be damaging to financial institutions (FIs), especially if FIs continue to think about their services as individual capabilities instead of integrated experiences that are channel-, device- and platform-specific.”
Dan Latimore, senior vice president in the Banking Group at Celent, argues that not only is the traditional notion of a channel outdated, its continued use can be detrimental to banks. “Consumers don’t think in terms of channels,” he said. “They simply think in terms of getting access to what they want, when they want and how they want it and generally as easily as possible. Conditioned by great digital experiences from retailers and other service/app providers, they wonder why banks can’t deliver equivalent services. I’d argue that banks need to think first about the customer and their use cases; checking balances while waiting for bus is a phone activity, for example, while serious bill pay needs to be done on a PC. There’s one digital channel. There are different ways of accessing that channel, but they should all derive from the same source data, and they should all have a similar look and feel.”
Richard Crone, founder and CEO of Crone Consulting, concurs about the importance of bankers focusing on use cases. Crone calls them “service interactions” and says that measuring them is where channel discussion should begin. In his view, mobile is not just one channel, it is at least 16, each commanding a different user experience/interface. He includes inbound and outbound voice, texting, mobile email, video, near-field communications (NFC), GPS and others. Of these, the most important channel is the financial institution’s own mobile banking app. Mobile is a cross-channel enabler, present in every other channel experience, Crone says. One of the biggest opportunities is to enhance the current channels with mobile integration to improve service and reduce costs and measuring service interactions by channel is the starting point.
For Bob Olson, vice president, Global Financial Services, at Blue Bell, Penn.-based Unisys, mobile is both, but ultimately it’s all about the customer. “I would consider mobile to be a channel and a device. I would consider smart phones, tablets and laptops to be part of a mobile channel but all considered separate devices that enable users to execute transactions, communicate and work in new ways. Banks want the customer to have a consistent experience no matter what channel or what device – and customers overwhelmingly want the same thing. Channel or device? I won’t say it’s a distinction without a difference because I can see how a corporate treasurer could come to view the mobile device by which he accesses the bank as its own channel. But for consumers, me included, my smart phone is a device.
“So does it matter?” Olson mused. “To us, the more important questions start with customers and business strategy. When you answer those questions right, the rest of these distinctions tend to fall into place without much argument.”
So, summing it all up, we can consider the matter settled, right?
Mr. Swift is director, content development, at BAI. He can be reached at [email protected].