The last five to seven years in retail banking have been dominated by the arrival of omnichannel, that is, a bank’s ability to allow the customer to pull a tailored customer interaction through the customer’s preferred combination of channels. While well-intentioned, this “everywhere to everyone at any time” approach has led to unwieldy channel transformation programs leaving distribution executives focused on technology implementation rather than ensuring that technology meets customer needs.
However, the leading retail banks are now refining their strategic approaches to move beyond today’s omnichannel principles to usher in a new era of retail distribution. At its heart is an evolution in customer approach, from pull to anticipate. This uses the right analytic “trip-wires” to anticipate critical customer events and then engineer event experiences that delight customers while also keeping them from the competition.
Success for these banks derives from four key principles:
Customer focus; moving from “moment of truth” to “customer event.” So much of what banks aim to do to please customers today is based on “moments of truth” – that point at which a sale or transaction is made. But success today requires a more holistic understanding of “customer events,” defined as windows in the relationship in which the customer has a clear need to be filled or goal to be pursued and which may comprise many moments of truth that act as magnets to align the customer-bank relationship. Future solutions will focus on holistic customer events, not just individual moments of truth.
For example, starting a business is a major customer event that encompasses within it many moments of truth: writing a business plan, determining the right legal structure, registering the business, obtaining the right tax identifications and licenses and establishing a bank account. Creating a “wow” experience for customers from this end-to-end perspective can build powerful, long-lasting customer loyalty. But beware: Customers will judge the overall event based on the sum of these moments. Getting even one wrong can affect what customers think about the event as a whole.
Customer approach; from pull to anticipate. Going beyond omnichannel means intercepting the customer at the outset of the customer event using the right indicators, rather than letting the customer alone decide where and how to interact with a bank. For example, if a customer uses a small-business support app to access a bank’s startup advice section, it could trigger the bank to begin orchestrating a customer event about starting a business.
Client profile; creating a contextual total wallet view. Banks today have a much better understanding of a customer’s total wallet, including the products held at another financial institution. Building on this data with context (for example, whether a customer is looking to buy a new or replacement car) is important because it gives intentions to a customer’s actions and allows the bank to tailor the experience. For example, replacing an existing car triggers a different emotional need than buying a first car.
Channel focus; from “integrated and seamless” to “virtual, digital and branch light.” It goes without saying that an integrated and seamless experience will be paramount, and that digital uptake will continue. However, the future will also be increasingly characterized by interactions with virtual sales and service interactions far from a branch or office. Ultimately, further reducing the branch footprint by 20% or more is likely by 2020 and future solutions should be built with this likelihood in mind.
Take the example of an Australian bank to show how these distribution principles can be put into action. This bank sought a new approach to anticipating and acting upon a customer buying a new home, a process that can take as long as a year. As a first step, it released a mobile phone app that employed augmented reality to allow customers to point their mobile phones at a particular property and access information such as whether it is currently for sale, last sale price and home layout and pictures. Not only were customers able to learn more about a property, but the bank was able to keep customers within its own distribution ecosystem while also receiving an anticipatory trigger that a home purchase, and the many moments of truth attached to it, may be near.
This was certainly a good starting point, but to truly move to a place where it can anticipate customers’ moves, this bank has additional work to do. For example, by supplementing the home purchase trigger with a contextual total wallet view, the bank could be able to determine whether the customer is a first-time home buyer or a current homeowner looking for his or her second home – important information that allows the bank to put a context around the customer.
Furthermore, the bank could determine how serious a customer is about a home purchase by collecting and analyzing information about how many open houses a customer is attending. For example, analytical modeling suggests that a person who attends two or more open houses on one day has a high probability to have an offer accepted on a home within six weeks. While this information has historically been quite difficult for banks to obtain, new solutions are available, such as iBeacons, which are already used by real estate agents to log open-house attendees. Leading organizations (and not just banks) can find creative ways to gain access to such contextual trigger data through partnerships, joint ventures and new product offerings and then use advanced analytics to refine their understanding of purchase decision timing.
Once a bank determines a customer will likely soon purchase a property, it can begin the next steps. For example, it can prequalify a customer for the type and size of mortgage likely required given the latest income and credit score known to the bank, or it can suggest an immediate discussion with a virtual mortgage officer to create a personalized offer. Importantly, throughout all interactions, the bank’s knowledge of a customer’s home-buying journey can help it reinforce why its services are perfectly suited for a customer.
Mr. Gordon is a partner in the Financial Institutions Practice at A.T. Kearney, a global strategy and management consulting firm. Based in New York, he can be reached at [email protected].
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