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8/4/2019 Microsoft-EFMA Report - Innovation in Multi Channel Management
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A report by the Retail Banking Advisory Council in partnership with Microsoft
Innovation in Multi-Channel ManagementIncreasing sales productivity by transforming the customer experience
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Contents
1
Innovation in Multi-Channel Management
Abn AmroEric Mackor, Head of Channel Development
AIB BankMichael O’Farrell,General Manager, Head of Retail Banking
Banca Monte dei Paschi di SienaPaolo Lombardi, Head of Infinita Offering Line
Bank Austria Creditanstalt, UniCredit GroupThomas Gatter, Head of Retail & Private Banking, Central and Eastern Europe
BankinterNarciso Perales Dominique,Head of Business Development
BarclaysCarole Plant,Head of Performance Improvement, Global Operations
BNP Paribas Fortis Joep Paemen, Head of Cross-border Marketing
Caja MadridIgnacio Ruiz de Assin,Director del Área de Servicio Multicanal
Che Banca!Giovanni Rossi, Head of Branch Network
Clydesdale Bank Jim Armstrong, Head of Marketing
Crédit Agricole Jacques Sainctavit, Head of Group Strategic Analysis
DenizbankMurat Erdağ, Senior Vice President,
Alternative Distribution Channels
Deutsche BankRainald Kirchberg,Managing Director Sales Network Management
Erste BankMichael Otto, Head of CRM & Channel Management
HSBCCarina Kemp, Head of Customer Insight
ING BankHans van der Horst,Managing Director, Retail Branch Banking Netherlands
IsbankHaluk Inanmiş,Head of Alternative Distribution Channel Strategy
KBCMarc Dorssemont,Senior Advisor, Distribution Leadership Centre
LCLMarc Oppenheim, Head of Retail Banking
Millennium BCP
Paulo Fidalgo, Director-Geral, Direcção InovaçãoPromoção Comercial
Nykredit Anne Kyhl Hauskou, First Vice President
Rabobank Jo Althoff, Distribution Manager
RBSChristophe Morson,Head of Proposition Development, Retail Direct
UBS Alfons Livers, Head of Customer Service Centres
UniCreditCarlo Giugovaz, Head of Multichannel Direct Bank
2 Introduction
3 Executive summary
4 Multi-channel management:
recent developments
6 Multi-channel strategies
11 Channel innovation
17 The impact of technology
19 Resourcing
22 Process improvements
23 Enhancing the customer experience
25 Conclusions
26 Case studies:
• HSBC
• Unicredit
• Denizbank
• Crédit Agricole
EFMA a Mcrft w ke t thak the fwg Reta Bakg
Avry Cc member fr ther partcpat th reprt:
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2
IntroductionThe EFMA–Microsoft Retail Banking
Advisory Council
The EFMA Retail Banking Advisory Council plays
a pivotal role in guiding and supporting banksthroughout Europe. The Council consists of senior
executives from major banks across Europe who
meet in closed sessions throughout the year to
debate and discuss issues critical to the future success
of the industry.
Formed by EFMA and Microsoft in 2005, the Council
has focused on: the future of multi-channel delivery;
the changing role of the branch from a service function
to a ‘bank store’; and the use of customer intelligence
in developing a new model for advising customers.
With the turmoil in financial markets and the global
economy, the 2008/09 Banking Advisory Council
explored the topic of ‘Innovation in Multi-Channel
Management’ and the role of multiple distribution
channels in the drive to boost sales productivity.
All banks and financial service providers are under
pressure to innovate. To succeed (or perhaps even
survive), they are striving to:
• Increase revenues by selling more products andservices through existing channels and staff
• Gain a higher market share and meet
profitability targets
• Retain existing customers and attract new
customers.
Our previous Retail Banking Advisory Council
reports showed most banks are still having
difficulty finding new ways of selling through all
distribution channels – particularly the direct, non-
branch channels. More importantly, customers
don’t always find the buying experience easy and
convenient across the different channels.
There has therefore never been a more important
time for banks to innovate and introduce new,customer-centric approaches to multi-channel
delivery. They must explore more creative ways
of increasing their sales as well as simply staying
afloat in these turbulent times.
The council identified the following key challenges:
• The ability of pan-European banks’ to transfer
best practice channel management from one
country to another
• Enhancing the quality of interaction and
liaison between central functions (such as
marketing) and front line staff in all channels
• Improving the sales process and productivity
through all channels
• The need for high quality training and
recruitment of staff for each channel as products
proliferate and become more complex
• The loss of ‘timely human contact’ with customers
due to an over-reliance on remote channels
• The question of whether or not a fully
integrated channel and customer experience is
just a dream that can’t be realised• Banks are searching for the ‘tipping
point’ that can change customer habits
to accelerate the migration process from
branches to less expensive channels.
Key issues this report will focus on include:
• New strategies for managing multi-channel issues
• Developing new and innovative channels
• Integrating different channels
• Matching the right employees with the
right channels
• Enhancing the end-to-end customer experience.
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The current economic climate has affected the
industry in different ways. But what has been the
main impact of the slowdown on individual banks
and how have their priorities changed as a result?
The Retail Banking Advisory Council feels
the main priorities now lie in driving sales
through diversified channels. Specifically, this
means using remote channels to boost sales
productivity and reduce cost.
All banks recognise the need to maximise the
potential of a cross-channel approach.
However, the changing economic climate means
individual bank experiences are essential for
gauging whether or not this should remain a
priority. Standards and goals that were set in a
different climate may no longer apply today.
An EFMA-commissioned Finalta survey has shown
that more and more banks are resorting to a cross-channel approach. Statistics revealed 8-10 per cent
of banks today use remote channels to boost sales –
and this figure is set to rise to between 20 and 30 per
cent in the next three to five years. However, these
figures should be viewed cautiously. There is still a
need to explore more effective and successful ways
of using multiple channels. How will this change over
the next couple of years and where will the biggest
impact be and the greatest results found?
All members agreed that boosting sales of the
right products was the main focus. Overall, their
priorities were:
• To increase sales, and diversify the sales staff
in multiple channels
• To exploit the potential for growth offered by
these channels
• To move towards more streamlined processes,
with an emphasis on cost cutting
• The overriding emphasis should now be on
non-proprietary channels.
The current economic climate has put enormous
pressure on banks to sell through remote channels
to lower the cost of their sales and services. This
trend is being deployed as a top priority by many
banks today. There are other underlying challenges:
for instance, the cutting of costs clashes with the
need for branches to sell more complex products.
Meanwhile, online banking is taking a leading role.
If banks fail to exploit the potential of this channel,
they are unlikely to survive. The statistics from
Finalta suggest online banking alone will increase
by 30-50 per cent in the next five to ten years.
Finally, members are concerned about what will
happen to branches over the next decade. They
agreed that the branch would always have a place
in the banking structure, but the key to success lies
in encouraging the use of all channels in line with
changing customer needs.
Executive
summary
3
Innovation in Multi-Channel Management
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With the current uncertainty in the economic
climate, banks are focusing on how to
reduce costs and improve efficiency in their
distribution channels. Many are also focusing
on channel migration. In some cases, there
has already been significant movement to less
expensive channels – with a particular emphasis
on improving the buying and ‘shopping’
experience through online channels.
Retail Banking Advisory Council members
base their multi-channel strategy on different
parameters. Most seem to have an integrated
approach, with a balance between customer
preference and cost-effectiveness. For others, the
primary driving force is the development of a more
innovative customer sales and service strategy.
All Council members indicated that their banks
planned to increase sales activity through remote
channels over the next two years. However, theyplanned to do this in various ways: through price
incentives; through specific products designed for
remote channels; or through the better marketing
and promotion of existing products. They stated
that remote sales currently account for between
5-20 per cent of total sales, and all felt this figure
would at least double over the next five years.
When asked what proportion of their customers
currently use remote channels, the answers
ranged from 20-99 per cent. Unsurprisingly,
all banks said one of the main uses of remote
channels was to obtain information. Others
included: consultancy with their Account
Manager; requests for advice; contacting a
member of staff; buying a new product; for self-
service; checking the account balance/statement;
or for transfers or investment funds.
When asked if there were any notable differences
between the profiles of those customers using
remote channels, several answers emerged. Some
banks felt there were no differences, whilst others
felt there were variations according to age, income
and education.
All Council members felt that a bank should
develop remote channels in response to changes
in customers’ lifestyles. When asked if there wereany products they don’t sell via remote channels,
some said all sales could start remotely. However,
others don’t use remote channels to sell products
such as mortgages, investment solutions, funds,
institutional products (such as corporate loans),
and insurance products. If products are sold
remotely, most banks still need the customer
to visit the branch to finalise matters. Electronic
signatures would make this process much easier,
but regulations to allow this are lacking.
4
Multi-channel
management:recent
developments
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The ftre f the brach – cre t the
ctmer reathp
The Council discussed the future of the branch
relationship model. There are significant differences
across Europe. Those countries that already have
too many branches will be able to reduce them fairly
easily, whereas elsewhere it will be more difficult.
In a country with an aging population such as
Austria, the branch remains the core channel for
managing the customer relationship. Although
customers are looking for more choice, most
banks depend upon branches for a significant part
of their market share. Indeed, one Austrian bank
intends to open an additional 150 branches.
Turkey, with a younger population, tends to have
customers who are avid users of direct channels.
Despite this, there is a likelihood that the number
of branches in the country will increase.
Overall, for banks with very large numbers of
branches (running into thousands) it seemsinevitable that there will be some very significant
closures in the next few years – with probably 20-25
per cent being closed. For example, one member
said he thought the size of branch networks in Spain
would be cut dramatically. However, in banks with
much smaller branch networks (100-200 branches),
the number of closures is likely to be minimal. The
focus for the future is about developing the right
type of branch model for each specific location.
There is little doubt we will continue to see more
market segmentation. There was considerable
discussion about getting the right service and channel
propositions for the different market segments.Council members believe there will be increasing
evidence of customer and market segmentation
in the development of all channels. The future
profitability of individual customers is likely to be one
of the keys to the quality of service they receive.
When asked about the main changes in the branch
over the next few years, it seems there is a need
to get ‘more out of less’. It was suggested that
mobile branches could start to appear – as in the
US and Canada. Although different usage patternsmay emerge, there may not be a dramatic change
in the mix of channels. Indeed, the past year has
seen a delay in new programmes, because banks
can’t afford the investment required. As mentioned
earlier, the main shift has been towards cost
reduction and improving channel efficiency.
Finally, although customers still want to be able to sit
down with a Relationship Manager who will provide
advice on issues such as pensions and finance, that
meeting should now take place anywhere. For many
banks, branches are no longer the first port of call.
5
Innovation in Multi-Channel Management
THE CounCil sAid:
“if bak repe t what ctmer ee har tme they w thrve.”
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ctmer recty reate t the vetmet
mae a chae.”
“We w e 5-10 per cet f r cet f we
’t make prct avaabe va ther chae.”
“We have’t yet create a ‘Amaz’ byg
experece faca ervce.”
Ctmer reathp
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dfferet way f tackg mt-chae e
Strategies for multi-channel management vary by
country. For instance, in Italy, there is a move towards
merging and streamlining banks. In some cases, the
multi-channel approach is still in its infancy. However,
banks continue to explore new methods of securing
new business and are seeking the most suitable
channels for achieving this objective.
The difficulty lies in managing customer contacts.
For example, someone who works in mass
marketing could miss out on their colleagues’
clientele (for example, affluent customers or
business banking users). Maintaining the right
balance involves optimising the organisation and
the management of the different functions – as well
as the sharing of initiatives, commercial services etc.
The product offer also needs to be calibrated.
In 2000, banks were making excessive offers.
Customers had low expectations, and banksoffered many different products in which they
had over-invested. Over the last year or so, the
situation has reversed. Customers have started
demanding more products and services from
banks. New market entrants are filling this gap and
banks need to react quickly. They need to manage
technologies and customer expectations so they
avoid problems in the future.
One Retail Banking Advisory Council member has a
multi-channel advisory department responsible for
developing innovative business ideas. It is focusing
on boosting sales and believes the overriding
emphasis should now be on non-proprietary
channels as these have been neglected in the past.
It felt that further innovative ideas could be gleaned
from non-banking and non-insurance sectors.
Another Council member’s bank has split its non-
branch banking department into two units, dealing
with operations (enhancing ATM, Internet and call
centre efficiency) and strategy (establishing seamless
integration between the channels and providing
a unified customer experience). The bank’s main
distribution channels are Internet banking, ATMs, call
centres and mobile banking. Mobile banking was
introduced in 2007 and is growing rapidly. A large
number of customers who use mobile banking within
the bank’s domestic market (most of whom are aged25 to 35) don’t use online banking, and the bank has
therefore enabled customers to pay credit cards, buy
investment funds and pay bills through this channel.
Another bank highlighted its focus on serving
customers after office hours. It therefore used
shadow accounting to calculate the profit it makes
from each branch and customer channel. Branches
and sales staff disliked the idea of migrating
customers to other channels initially. However,
they were eventually convinced by the shadow
accounting figures, which showed these channels
could yield five or six times more profit.
6
Multi-channel
strategies
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7
Innovation in Multi-Channel Management
Hw bak are tegratg ew chaeThe Retail Banking Advisory Council agreed that
channel integration remains a top priority and that
there is a need to create an integrated, cross-
channel customer experience that makes the
buying experience easier.
However, the recent financial downturn and
the severe problems faced by many banks
across Europe have exacerbated the situation.
The economic climate has affected the ability
of many banks to commit resources and givepriority to integration. Some members therefore
thought there could be a serious slowdown in
progress in this area until the overall financial
climate has improved. However, they recognised
that those who continue to make progress in
integration could gain a significant competitive
advantage, making it extremely difficult for
others to catch up.
When asked which channels they found best
for attracting prospects, Council members
still prioritised the call centre and the branch
(although one respondent interestingly found
SMS the most successful channel). All agreed the
branch was the most successful for transforming
prospects into customers.
In terms of identifying the customer’s channel
preferences, most Council members achieved this
by tracking operational trends or customer online
banking activities through Customer Relationship
Management (CRM). Council members then
integrate these customer preferences withintheir multi-channel strategy through campaigns
via the customer’s preferred channel (and in
some instances follow up via other channels to
encourage their use).
In terms of international banking, it can be difficult
to know what channels to centralise and what to
leave to the individual countries, given cultural
considerations, regulatory requirements, and IT
systems and processes. Overall, banks need a clear
vision, culture, development path and budget if
they are to make meaningful progress in building a
truly integrated customer experience.
An example of integrationAn example from one bank showed the
importance of a separate development budget
that isn’t tied to the increasingly short term returns
required by business cases for most banking
projects. It had implemented an integrated multi-
channel system into the lifeblood of the bank by
directing each channel system towards the ContactManager and Sales Support team of the branch
that had the most realistic view of the client.
An in-house application was developed to
produce a single, clear customer view and to
trace the inbound and outbound interactions
with the customer. This application has effectively
become the support manager for the bank. It
allows employees to have instant access to key
information such as: any selling needs; how
products are maturing; the relative success of
marketing campaigns; sales figures; and the rate of
customer retention.
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8
new way f meetg target
A key issue voiced by the Retail Banking Advisory
Council was the need to balance the allocation
of targets between non-branch and branch
channels. While the branch is an important part
of the relationship, the branch manager develops
a relationship with the client but then shares this
with other channels, supported by technology.Unfortunately, although branches undoubtedly
profit from a good relationship with the customer,
in many cases there is little or no relationship at all.
Although costs need to be allocated to the various
channels, this is not the main issue. The bank’s
main concern should be how it can best satisfy theclient. In some banks, this is the responsibility of
client advisers in the branch network. On the one
hand, client advisers need to be motivated to sell
more channels (because the more channels clients
use, the greater their loyalty tends to be). On the
other hand, they need to have more time for sales,
and targets need to be set.
This again requires a dual approach. Banks must set
targets for sales in the branches whilst also making a
profit from clients who never visit the branches.
One bank has developed a clear programme,
based on three major issues. It stressed the
importance of simplifying its operations:
• Cost cutting in the commercial process
• Simpler connections between the marketing
and sales force
• Increased levels of communication between
the two disciplines.
Investment or innovation? The Council felt that large banks can afford to
focus on sales and cost cutting, but smaller ones
need to look at innovation to survive the current
economic climate. At the same time, customer
service needs to remain an absolute top priority.
One Council member predicted there would
be only two types of bank in the future: those
with a reasonable level of service and those with
excellent service. The excellent one would be the
innovative one.
So, how should different channels be used in
light of the economic crisis and what effect will
the current loss of confidence have on channel
strategy? The answer is that banks need to
return to basics if they are going to restore
customer confidence.
“Banks need a clear vision, culture, development path
and budget if they are to make meaningful progress in
building a truly integrated customer experience”
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Ecragg ctmer t mgrate:ph ver p
In the current economic and competitive environment,
it’s vital to encourage customers to migrate from
branches to less expensive channels. However,
the branches and their staff must be involved in
the process, as they will be an integral part of any
transition. Without them, it would be very difficult to
manage the complexity of all the different channels.
There was much discussion amongst Council
members about the difference between ‘push’ and‘pull’. The consensus was that customers need to
be coached and encouraged (rather than forced)
to use non branch-channels.
A lot of customer barriers to new channels are
irrational – and may revolve around identity fraud or
a fear their money will disappear. Overcoming these
fears is a big step. Customers don’t always adopt a
very logical approach to the use of new channels
and need help in overcoming their reticence.
A lack of trust has also developed over the last two
or three years. The answer must be to re-establish
this and to ensure customers get what they want,
whatever channel they use. The approach used by
banks has to be dynamic.
Making changes at branch level: encouragingappropriate branch usageThe branch has often been seen as the hub of
all customer contacts. It has been suggested that
when introducing new channels, this shouldn’t be
regarded as a way of driving down costs, makingpeople come to the branch less frequently or as a
target for migration. It should be carried out in the
spirit of “this would be better for you”.
Customers won’t always find their own way to
automated solutions. They need to be encouraged
and helped to migrate. Customers often go to the
branch for assurance. One bank therefore built
this factor into its automated deposit system. The
customers see the scanned text right away and
the cash is credited in real time. This assures them
that the automated deposit system is stable and
consistent – and this was the key to its acceptance.
One large bank has identified three main goals for
channel migration:
1) To reduce its service costs by maximising self-
service for all customers
2) To change customer behaviour so that they
adopt the new services
3) To encourage them to continue to use direct
channels.
This bank is also committed to maximising choices for
customers online or via mobile banking – to make iteasier for them to make purchases and to increase
brand loyalty. To date, it has made huge progress with
channel migration. A recent report showed that it now
has nearly the lowest percentage usage of the branch
network when compared with its peers. Conversely, it
is ranked as one of the top three banks for its use of
telephony and online services. Despite this, the bank
believes branches are still an important part of the
mix but it didn’t want them to move away from being
transaction shops and towards a more advisory role.
The Retail Banking Advisory Council discussed the
‘tipping point’ – in terms of issues that ‘tip’ people
9
Innovation in Multi-Channel Management
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into using direct channels. Many people keep
using the same channel because they’re used to
it. They need a reason to change and need to be
supported through the migration process. If they
are shown what to do (and why) when they are in
the branch, they will soon realise this is the most
efficient way to proceed.
Indeed, minor changes can make a real difference.
One Council member reported how their bank
decided to have the same front end for its staff
and its customers. This enabled employees toshow the customers how to carry out specific
actions in the same environment.
Incentives to changePricing techniques can be effective as incentives
but Council members admitted they had probably
under-invested in staff and customer education
about the benefits of using non-branch channels.
More investment and a greater understanding of
what competitors are doing are needed. However,
at the moment, price incentives tend to be working
better than relationship building – but this isn’t an
appropriate strategy for the long term.
Does there therefore need to be a difference
between a relationship building model, (which
would be largely branch-based), and a pricing,
niche product model (which might be more of
an online offer)? Perhaps convenience is the key
challenge here.
Most of the Council members offer incentives
to customers to switch channels. The methods
used include loyalty rewards for using ATM
or online banking; periodic award campaigns;
and discounts (or penalties for using a tellerrather than an ATM). These have all proved to
be successful – and have occasionally helped
with the cross-selling of other products to the
customer. One bank had tried special prices and
promotions for Internet products, but this hadn’t
been very useful.
The banks were also asked what they thought
was most important in persuading customers to
switch channels. Council members agreed the key
factors were time and availability – the customer’s
ability to use services whenever and wherever
they needed.
10
THE CounCil sAid:
“We ee t ak ctmer whch chae
they wat t be ctacte a e every
ctact we ca.”
“We ee t get the rght frmat frm
the cet a creae way f gettg r
cet’ teret.”
“The ea t get the rght traact
t the rght chae rather tha the
ctmer themeve.”
“if y gve mre vae a a ctmer y
mght get a better rate, ether face-t-face
r e.”
“Bak ee t fc the hma eemet,
a th the factr that ca make a
rea fferece.”
Mt-chae tratege
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When asked about their latest innovations,
it emerged there has been some interesting
progress among Retail Banking AdvisoryCouncil members. They reported a range of
developments, including:
• A webdesk, a television channel and blogging
• Pre-paid phone cards via ATM; and all paper
output being made available via online
banking (including storage)
• Online banking with enrolment – where
customers with an ATM and/or credit card can
access online banking without visiting a branch
• Mobile SMS for fraud prevention and
commercial contracts; a mobile portal;
pre-approved online consumer loans; a
personalised ATM interface; access to personal
advisor agenda; and electronic identity cards.
In this section we examine some of the more
frequently used channels.
oe bakg
From a poll, the Retail Banking Advisory Council
reported the percentage of customers using
online banking is between 15-25 per cent acrossEurope.
One of the challenges facing Council members
is how to differentiate the online experience.
Migration to the Internet is a cost-based activity
– it doesn’t create any emotion. Online banking
also needs to be made more attractive to younger
generations and adaptable to the customer’s
changing needs.
The Council recognises investment in this channel
over recent years has been relatively low –
even when, for any bank, the online channel is
effectively its largest branch. However, Council
members reported they are now increasing
investment in the online buying experience in a
drive to accelerate sales and, at the same time,
reduce the costs involved. The challenge (as
always) is to get the right balance between cost
reduction and revenue enhancement.
The Retail Banking Advisory Council believes the
use of the Internet as a multi-channel tool can
still be contentious. Is it appropriate to contacta customer without their permission, based
on knowledge received from tracking their
movements online?
Regional differences played a major role in
answering this question. Some Council members
favoured a more low key approach to online sales
and there was a suggestion it might be beneficial
to see how non-banking retailers strike a balance.
Amazon was suggested as a great example.
Alternatively, other banks reported no objections
from their customers in terms of using information
from tracking their online usage.
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Channel
innovation
Innovation in Multi-Channel Management
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In Italy, privacy laws forbid any unwanted contact
of clients. There is no opportunity for online
Customer Relationship Management, as no ID
is entered and the user can’t be monitored. In
Portugal, the online channel is used less than
in other European countries – and then only
for transactions. This is a cultural issue and only
branches are used for investment purposes.
In contrast, one of the Council members fromSpain reported how the bank worked with
psychologists to ensure the transition to online
banking was as painless as possible for the
customer. Today, every product and service the
bank offers is available online. It believes that
ultimately even more activities may be possible
online than in the branches.
The cultural divides weren’t the only issues
discussed by the Council. There is also a
generation gap. Young people use the Internet
differently from older people. They won’t waste
time on a website if it doesn’t quickly provide the
options they want. Most young people prefer to
receive an SMS, email or instant message when
they are contacted, whereas the older generation
still prefers the phone.
One bank is using online banking for campaigns
and to send messages to clients. It reported that
22 per cent of clients open the message and 66
per cent of those respond to it. The first and last
days of the month are seen as the most important
times for sending the messages. The bank also
linked online visits to its campaign and identified
the ‘clickers’. These customers received the same
offer and were sent a message at the end of the
month. Around 50 per cent of people read the
message in the first ten days, with the purchase
rate moving from 7 per cent to 12 per cent.
Another Council member stated that the Internet
is a tool rooted in immediate returns. It needs to
provide the answers the customer is seeking whilst
they are visiting the site. People who use it don’t
want to be told that they would be contacted in
due course. It seems banks still have a lot to learn
about this new channel.
Mbe bakg
Today’s mobile technologies provide a wide rangeof new opportunities for banks to improve sales
productivity while offering customers greater
convenience. Council members believe that
extending basic banking functions and services to
customers via mobile devices can deliver a wide
range of new sales and services scenarios.
The first bank in Spain to start a broker line
launched it simultaneously over online and mobile
banking channels. The mobile banking approach
proved perfect for clients who are always on the
move but want to be able to check their stocks
and shares anytime, anywhere.
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Although SMS banking has been available in Spainsince 2000, it has improved greatly in recent years.
Most transactions can now be conducted by
mobile phone and its use in banking (particularly
in terms of SMS) continues to grow rapidly. For
customers using a credit card, the bank can send
an SMS to their phone asking them if they want
to buy or not. This warning enables them to block
the transaction if the card has been lost or stolen.
In a discussion on fees for SMS services, one
member reported that its fees depend uponthe customer’s profitability. If the customer
is unprofitable, they are charged a fee, but
otherwise this is waived. Some participants said
customers were unwilling to pay the fees if they
had previously been getting the service for free.
There was a general consensus that people don’t
want to pay micro-charges and would rather pay
one large fee.
One Council member recalled that when the
interest rate on mortgages was raised by the
Central Bank, the bank sold more mortgages. It
had sent an SMS to clients a day or so beforehand
and encouraged them to fix their rate for the next
three years.
Another interesting feature is synchronisation with
a mobile phone. A member of a call centre using
a screen can ask for the person’s mobile phone
number and use this to gain a better connection.
They can then close the application and continue
to keep the conversation going with the person
on the screen through the mobile phone.
Turkey continues to be far more advanced than
other European countries in its development of
new and innovative remote and mobile banking
services. There seems to be an appetite for these
services (and a suitable infrastructure) that doesn’t
currently exist in other parts of Europe. This is
driven by the needs of a young customer base,
and intense competition between local banks.
Cash depositsOne bank explained how it allowed anyone –
whether a customer or not – to deposit cash
using their citizen ID and mobile phone numberinstead of a card or security device. Cash can
be deposited in both personal and third party
accounts, up to a certain limit. The receiver is sent
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Innovation in Multi-Channel Management
“Users can choose the messaging service they prefer.
Some may want a notice of every debit, or an alert
when their account falls below a certain figure”
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an SMS notifying them of the transaction, and
then proceeds to an ATM, enters their citizen ID,
the amount and the reference number (which
allows them to withdraw the money). These
functionalities were implemented with the specific
aim of acquiring new customers, and if these
services weren’t available from ATMs, branches
would have to provide them.
Until recently, another bank’s messaging service
was used solely to notify customers of withdrawalsand other transactions. However, users can now
choose the operation they want to complete.
Some may want a notice of every debit sent to
them, or an alert when their account falls below a
certain figure.
Transaction authentication numbersOne security method used in Turkey involves
transaction authentication numbers. After the
customer has logged in, an SMS is sent to their
mobile number with a code which must be
entered for authentication. A mobile number and
an OTP (one time password) device are needed
for this service, which can be accessed throughan ATM or in the branch. The customer has to
identify themselves twice – once via the bank and
once through the mobile operator. They then
receive a sim card with the electronic signature
required for authentication.
Whilst Council members expect increasing
customer demand to perform banking functions
through mobile devices, the ability to deliver
complex products is not generally part of their
vision. This does not mean the capability willnot be available in some parts of Europe. The
issue is the willingness of customers to use
mobile devices for this type of service – based
on cultural differences and the age of the
population.
Ve cferecg
One Council member highlighted an innovative
project using video conferencing to connect
customers with the bank’s staff. This retains
human contact while enabling the customer
to make choices from their own PC. As well as
being convenient for the customer, this approach
also enables the bank to offer support when a
customer is accessing the bank’s website.
The system has proved to be very efficient at
converting enquiries into sales for complex
products. In fact, the bank has found the video link
is six times more effective for securing sales than
using the call centre.
From Council discussions, there is a geographicaldifference in the way that video conferencing
is being used, with greater penetration in the
Nordic banks. In Italy, no one reported using
this technology in 2001, but now there are over
10,000 users.
The Banking Advisory Council agreed video
conferencing would be most effective when
targeted at specific clients, products and services.
The products in question would need to be very
profitable and video conferencing solutions need
to be linked to all channels in case the client wants
to change products.
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ATMOne bank reported that while it had offered
considerable functionality through ATMs from
an early stage, it had recently offered this
functionality to customers from other banks as
well. If customers don’t want to carry their ATM
cards, they can use an OTP generator or mobile
signature to withdraw money.
Both soft and hard OTP solutions are available
on the market. Soft OTP might rely on software
downloaded to a mobile phone or issued by a callcentre. For hard OTP, a token is issued by the bank
and used to generate the password. This solution
is felt to be more secure than simply using a call
centre, which is unable to ensure the request comes
from the customer. OTPs can also be used to
access Internet banking, rather than having to use a
different security mechanism for each channel.
iVR teephy
Interactive voice response (IVR) telephony has
received some bad press from both customers
and the media. However, one member bank has
been successful in increasing the use of this across
all of its call centres. Customers who regularly use
the IVR channel report higher levels of satisfaction
compared with speaking to an agent. The bank
recorded 55 per cent satisfaction with IVR contacts
that resulted in a contact with an agent, compared
with a satisfaction level of 90 per cent for those
customers who completed the whole activity via IVR.
This may be because IVR actually handles the
simple activities. Questions from customers whocontact an agent are typically more complex. As
a result, it’s harder to achieve the same level of
satisfaction when speaking to a person, as the
customer’s expectations are so much higher.
Eectrc gatre
Digital signatures can play an important role in
mobile banking – as is already the case in Turkey.
For example, a customer with a phone that has
a mobile signature capability can enter their
customer number, password and PIN number.
An SMS is sent to the mobile number with a hash
value, which is compared with the value on the
screen. After the digital signature is signed with
the six-digit PIN, the login process is completed.
There were a lot of mobile applications already in
existence in the Turkish market. One example is a
loan application using a citizen ID. Until recently,
customers still had to visit a branch to sign the
application. The need for an electronic signature
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Innovation in Multi-Channel Management
“Digital signatures can
play an important role in
mobile banking”
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for loan applications was introduced in 2004. This
was one of the first applications in Turkey that
didn’t require the customer to visit the branch.
There are certain limits imposed on this method
– for example, the upper limit is 5,000 Turkish
liras (€2,500). Other methods of applying for a
loan, such as via the Internet, don’t use mobile
signatures. This is the only way in which loan
applications can be digitally signed. The loan is
deposited directly in the customer’s account and
the customer can then use the digital signature to
make withdrawals from the account.
The digital signature costs 150 liras (€80) per
year. Up to 10,000 customers in Turkey use this
method, and there are around 50,000 mobile
signature transactions each month. Some 3,000
loans have been issued employing this method.
smmary
In summary, Council members identified several
areas in which action needs to be taken:
• There is a pressing need to implement
electronic signatures everywhere as soon
as possible, and to manage dematerialised
documents and registered sales.
• There is a need to improve video conferencingas soon as possible, particularly in regional
banks, where personal relationships are so
important.
• Mobile banking needs to be developed further.
• Convergent web solutions are also necessary –
it is important to have the right tools at hand.
• Regional branches need to add new functionality
to their online banking services to improve
efficiency and improve simulation tools.
• Multi-channel commercial tools can also
be improved in terms of shared databases,
sharing the interactive commercial process,
and sales control and tracking systems.
16
THE CounCil sAid:
“it ’t the bak wh avgate ctmer
t the iteret r ther chae, bt the
ctmer themeve.”
“it’ a matter f fferg the ame ervce a
capabte acr a chae, wrwe.”
“There w be y tw type f bak the
ftre: the wth a reaabe ervce a
the wth a exceet ervce.”
Chae vat
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The proliferation of new channels has created
major challenges. The Retail Banking Advisory
Council agreed banks must adapt quickly tosurvive and recognised the need for a new
customer relationship model. With transactions
and customer information generated across
multiple touch points, the reliance on traditional
(siloed) processes and outdated technologies
reduces sales productivity and leads to an
inconsistent customer experience. The heart of
the issue is disparate, disconnected systems that
have made it extremely complex to integrate
customer and transactional information.
The Council’s view is that technology enables
the transformation of the customer experience.
However, many people believe they need to
devote more resource to getting better use out of
the technology they already have.
Issues identified by Council members included:
• Legacy systems and poor use/implementation
of CRM systems limit their ability to provide
an integrated customer experience. Input
to the system is crucial but staff have noincentive to capture information on customer
interactions
• Banks need to accumulate valuable customer
data in a single repository, have the capability
to analyse this information to obtain in-depth
knowledge of customer needs, and provide
that knowledge to front line staff
• Managing their business with real-time
analytics and performance management will
help banks provide a more consistent level of
customer service
• Banks that replace their core banking systems
have a potential source of competitive
advantage in personalisation, customisation
and interconnectivity
• The opportunity in mobile banking is now. While
many banks are waiting for a ‘killer application’,
some have already successfully implemented
mobile banking solutions in the consumer loans
and payments areas, particularly in emerging
and ‘underbanked’ markets
• Technology can play a vital role in training
and developing the advisory skills of existing
sales and transactional staff.
Techge t rve trafrmat
The following technologies were identified as key
to transforming the customer experience and
driving sales productivity:
Services oriented architectureWithout a foundation to build loosely coupled
services, banks’ IT infrastructures are required to
‘communicate’ with other services in very specific
ways via each individual channel. This creates
a costly, complex infrastructure with multiple
silos of information that are difficult to maintain
The impact of
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and adapt. Banks need to implement a service-
oriented architecture to integrate disparate
channels and create an agile infrastructure where
back end systems can be exposed to new services
and channels as they emerge or evolve.
Business intelligenceBanks require business intelligence solutions to
integrate and analyse their customer data and
report on that information to make better-informed
decisions. This will enable banks to measure and learnfrom customer behaviour for product development
and marketing purposes – as well as performance
management. Banks want to access this business
intelligence using a familiar and easy to use interface.
Customer relationship management CRM backed by strong business intelligence
is critical to better serving the customer and
supporting growth opportunities. CRM solutions
should be fully integrated with the day-to-day work
environment of front line staff and make it easy to
translate customer insight and centralised marketing
campaigns into successful customer interactions.
Existing systems are viewed as difficult to use with ahigh learning curve. Ultimately systems should use
familiar user interfaces and be designed to work the
way staff are used to working.
Unified communicationsA significant factor in building lasting customer
relationships is the ability to communicate
with customers in the way they prefer and in
a way that is most appropriate to the stage of
the sales cycle. This means the whole range of
communication capabilities, including email,telephone, SMS text, instant messaging and
video conferencing, should be integrated and
made available to front line staff. This will have
a significant impact on real-time collaboration –
between advisors and product specialists or legal
expertise within the bank – required to complete
a proposal or customer analysis.
Mobility Increasingly, we can expect customer contact to
take place outside the branch – in locations such
as the workplace or at the customer’s home. In this
context, mobile technologies will be an essential
tool for advisory staff who operate remotely
and need full access to customer and product
information in a secure and protected manner.
Recognition and authenticationSome banks already practice automatically
recognising customers as they enter the branch as
a way to provide a differentiated service. As RFID
technology becomes more widely used for payments,
it will become easier to identify customers enteringthe branch without requiring direct contact.
ATMsA new generation of ATMs makes it possible to
fully automate cash transactions in the branch
and eliminate the role of the teller. In addition
to cheque imaging, examples include the ability
to accept cash deposits, count cash and issue
receipts, and (for small merchants) the ability
to dispense coins for floats in shops. This will
also have a significant impact on the design of
branches – enabling a more relaxed environment
to build customer relationships.
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The rght pepe fr the rght chae
With multiple channels, it’s obviously important
that the right staff with the right skills areemployed for each option. Banks also need
people who can cope with the inter-relationships
between sales managers, regional managers and
different business units. One key requirement in all
of these roles is commitment.
Employees need to build a good understanding
of the products offered and a wide knowledge
of how they can be accessed. They also need to
understand the connection between the product
and the customer’s life stage and to nurture this
understanding for future use. This extends to
understanding each of the different customer
segments, the different product for that segment
and the distinct management needs of each.
The Council agreed that the main issue that needs
to be addressed is to improve the contact with
the customer. It may be difficult to know which
employee or branch has the best knowledge of
a particular customer but the manager or sales
employee in charge must make the final decision
about what the customer needs or is ready for.
The Council was asked about their top priority in
terms of staff management in relation to multi-
channel integration – and members reported that
they are focusing on three main areas:
• New channel/business development
• Customer management/marketing
• User-friendly interface designs.
imprvg perfrmace eve
Innovative technology is seen as essential to develop
an integrated channel and customer proposition.
However, members continue to stress the importance
of having technology which has practical user
applications at the point of contact with the customer.
The greatest need seems to be for front line banking
staff to make better use of existing technology and
to be able to access new technology. The latter will
speed and ease the process of delivering both service
and sales to customers at whichever ‘touch point’
they choose to use.
One member bank plans to align workplace
designs with business functions to enhance sales
productivity. Although sales productivity is viewed
as being online and in the branch, it is now alsooften related to activities at the customer site and
over the phone. The bank found that 45 per cent
of employees today are only in an office for 20 per
cent of their working time and work from home
for 35 per cent of the time.
In banking the call centre employee is often a
home worker or a mobile person on the customer
site. There is therefore a need to work out how
all of these different activities will come together.
One bank provides its employees with the latest
unified communications technology and mobile
devices. Employees then make their own decisions
Resourcing
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as to how they can achieve the best results in
the most efficient way. At EFMA most staff have
unified communications technology
If this type of solution was extended to
branches, customers could do anything
they wanted at any time by contacting the
relationship manager, who is linked to the
system. They wouldn’t need to go to a branch.
This must therefore accelerate the move to the
‘any time, any place, anywhere’ concept.
imprvg trag a recrtmet
The Council was asked what skills were needed bystaff who were in direct contact with customers to
guarantee excellence in CRM. The respondents
said employees need to be able to use customer
information and to help customers see that the
bank knows them and understands their needs.
Members agreed they need to have an
overview of client behaviour across all channels
(transactions, usage, preferences etc). They should
register all relevant customer information they
receive on the CRM system and all employees
from the call centre and branch should have
access to this information.
Based on this, the most important skills include:
• The ability to listen carefully to the customer
• Registering the relevant information
accurately (discipline)
• Most importantly, using this information
during the next visit or call (preparation)
• Commercial and relationship skills in the
branches and call centre
• A customer-centric approach with a ‘customer
advocacy principal’ mindset• Product and customer knowledge and
behaviour
• Accountability (to be able to establish and
gain trust).
When asked if they were recruiting new types
of people and skills from outside the banking
sector, members gave varying responses. One
bank was recruiting younger sales people from
the retail sector. Another bank hired call centre
agents through recommendations from friends or
colleagues. These agents are then developed and
transferred to branches after a couple of years.
Another member was looking at workers from
areas such as creative web agencies, marketing
and behavioural disciplines.
imprvg taff-ctmer reathp
The Council members explored the issue of re-
building customer trust. One member commented
that the recent loss of trust hadn’t affected online
transactions as there has always been a distinction
between the bank and the branch relationshipmanager. Within this bank the branch remains
the core: it owns the profit and the relationships,
no matter what channel customers use. The
next stage is to ensure that there is visibility and
transparency in terms of where the numbers are
coming from. The important thing is that people
do not feel threatened by the channels.
There was consensus among Council members
that they could improve sales of complex products
and cross-selling if this could be done in a more
informal and interactive environment. Customers
don’t like the feeling of being interviewed. Various
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Innovation in Multi-Channel Management
possibilities were discussed, including multi-touch
screens installed on branch walls, or surface
devices so that front line staff and customers can
communicate in a much more interactive way.
One of the issues that arises from such
developments is that of putting the customer in
control of the technology. Banks would first have
to rethink their interaction with customers, so
that they stay loyal and there is compliance with
new regulations.
For face-to-face meetings, the adviser should
be supported with offers and promotions from
CRM tools. One member bank has developed
five contact points for new customers, with the
aim of cross-selling and building up a good
relationship within the first year. These five
points are: citizen information; the welcome call;direct mail follow-up; another call; and asking
the adviser to contact the client and make an
appointment. The service centre makes the
first calls for standard clients, whilst the adviser
makes them for individual clients.
Only a few banks seem to offer an annual review
that is designed to understand the needs of the
client to enable cross-selling. One bank asked its
clients about the usefulness of different types of marketing contact. Email was seen as being very
useful, followed by online offers, then phone calls
and finally direct mail.
THE CounCil sAid:
“Trt the mber e prrty: that
ctmer fee they are gettg the bet avce.”
“There gba trt the bakg ytem
epte the preet gmy ecmc tat.”
“The bak becme mre trtwrthy whe
the chae perceve t be . Th mght
very we w w the evepmet f -brach chae.”
“it may t be that cet eceary trt the
bak e, bt that the fferetat fr them
betwee the bak a ther e tet
becme arrwer.”
“oe area f ccer vetmet avce. it w
be eve mre cmpcate t ffer vetmet
avce thrgh rma bak chae. Y are
eve e key t trt e ervce f y
t trt the bak areay.”
Ctmer trt a cfece
“The greatest need seems to be for front line banking
staff to make better use of existing technology and to
be able to access new technology”
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spprtg prcee a perat
When asked what actions they had taken to
improve the process across channels and to
enable the customer to switch channels seamlessly,
members gave various answers. These included
increased operational efficiency; innovation
in home banking tools; card login and online
automated product sales platforms; a ‘usability
laboratory’; usability training; multi-channel
interaction guide and a frame front factory.
Council members felt there is a need to change
from silo processing to a straight-through
customer relationship. This can be challenging in
terms of both organisation and vision. The impact
on distribution, structure and processes can be
tremendous.
The challenge is to define how banks share
inbound and outbound telephone calls, arrange
paper and electronic processes, and managephysical location and branch platform organisation
so that the client has an effective branch platform
that is available anywhere.
The council was asked how changes in the
marketplace are affecting approaches to channel
management. One member replied that radical
action is needed to reduce costs. Another
remarked that the best way might be to close
thousands of branches. Another felt that in terms
of costs, the priority was to look at the overall cost
of the operation and then at the cost of the IT
platform and perhaps corporate purchasing.
Process
improvements
22
THE CounCil sAid:
“Ct acat t the ma e. The ma
ccer hw we atfy the cet.”
“The frt e t k at facay the vera
ct f the perat. The ec e the
ct f the iT patfrm. There a crprate
prchag. 85 per cet f r revee are
geerate thrgh the etwrk.”
“We have t methg t racay rece ct.”
“Chae maagemet e f a prrty
term f ct avg.”
“Chae maagemet mprtat. Cg a
the brache a g everythg ver the
iteret t wrkabe.”
“Bak are er erm ct prere a
eek t get ther ct w. The bg ct
the brach etwrk are the ae avr.”
Prce mprvemet
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The gap betwee am a reaty
The problems banks have experienced recently in
maintaining customer trust and confidence haveposed a considerable challenge to any plans to
expand sales and advice through non-branch
channels. The recent financial crisis has highlighted
how difficult it may be in the coming months to
rebuild customer trust and confidence in using
direct channels for more complex product and
advice solutions.
Many members are focusing on offering better
and more up-to-date information and support
online, which is either fully integrated or closely
linked with the front line face-to-face service.
Once banks have weighed up the needs of
both customer (in terms of service) and the
bank (in terms of re-modelling to meet those
requirements), they can regain some security and a
definite responsive plan for the future.
Customer insight is critical. Every time a customer
goes to a branch, front line staff should take
note of their needs and profile and ensure this
information is entered into the CRM system. Thefull co-operation of the branch manager and
every employee is also needed, so that everyone
is aware of customer contacts, call-backs, and
appointments that could lead to sales. Otherwise,
it is easy to lose contact with customers – and
therefore to lose potential revenue streams.
Interactions therefore need to be made even
easier. Banks need to invest in technology to
provide customers with the services they want.
Although everyone in the industry agrees about
the importance of CRM and channel management,
and the need for an integrated customer
experience, there are many different ideas about
the progress that banks are making.
One member bank felt it was important to get its
CRM system more integrated with its channels and
branches, with the focus on contact with the client.
Although the bank knows a lot about its clients, it
would like to know more – especially in terms of
interactions between the client and the bank. One
of the major tasks it currently faces is being able tomaintain a relationship with them. It is trying to find
the best campaigns for customers (not just sales
campaigns), looking at the effect on the customer
and trying to build trust whilst saving costs.
One problem that banks encounter is that if
customers are provided with multiple access
points, these can result in the same revenues, but
with higher costs. Although banks are doing more
things on different channels, the customer remains
the same. The challenge therefore involves looking
at what items can be taken out of the branch and
the Internet that clients don’t use.
Enhancing the
customerexperience
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Ehacg the ae a byg experece
There are many ways of monitoring changing
customer needs and circumstances and the sales
force needs to be in touch with all of these.
Both transactions and online banking use can indicate
areas in which the client is interested. The bank also
needs to take responsibility for warning the customer
of the risks attached to certain investments as well as
the potential gains. This should help information toflow freely in both directions.
Another useful tool is the bank’s contact queue,
which can be used to differentiate customers that
are due to be contacted with a sales offer. One
member bank explained that all staff members
use its client lists. Each customer profile is
updated regularly and is accessible through the
website. The profile includes the client’s name,
characteristics, and inbound and outbound offers.
Once the client moves up the contact list, the
Relationship Manager will contact them with the
most suitable offers. The channel and person
chosen are decided centrally, according to the
type of offer chosen for the client.
This shared customer knowledge helps ensure all
staff working in all channels are on the same single
platform. It simplifies matters and represents a
move away from local platforms to a general one.
The Council has a near-term vision where banks
will have just one intelligence centre providing all
of this personal information.
24
“Interactions need to
be made even easier.
Banks need to invest in
technology to provide
customers with the
services they want”
THE CounCil sAid:
“There’ bttte fr what the ctmer kw
abt what he ee. s we have t gve them
a pprtty t te , befre we get t that
prpety e f whether byg e thg
mght ea t ather.”
“We wat r ctmer t be abe t a mch
a they wat t e, we ffer a may
e-t-e prcee a we ca. A we e iTtechge ch a PiCT ca, web chat a c-
brag t hep the ctmer thrgh a certa
prce r experece.”
“We try t b mpe ttve, cmpeg
experece that ctmer ca ee thrgh t the
e, t keep them gg e, ctety, wtht
havg t rert t teephe r pera ctact.
Bt we ’t tp them frm chae-hppg.”
The ctmer experece
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Looking to the future, there are several large
challenges facing banks but many will open up
new opportunities.
Some of these challenges could also be a source of
conflicting pressures. For instance, there is a strong
overall need to reduce costs and migrate customers
to less expensive channels. However, this needs to
be achieved while also improving the overall service
levels and providing a homogenous customer
experience – which in turn can lead to increasing
costs. Similarly, banks need to regain the trust of
customers without incurring additional costs.
Other key issues include segmentation; getting the
role of the Relationship Manager right; developing
the right type of communications; and the effective
use of CRM. Banks also need to refine how they
incentivise both staff and customers.
What other key improvements in channel
processes should be pursued in the next few
years? Suggestions from Council members
included radical reform of branches. There should
also be better integration of the different channels,
taking customer preferences into account without
neglecting the effectiveness and efficiency of the
sales and service processes.
Allied to this, there may be a major change
in multi-channel architecture and the user
experience, along with increased usability and
standardisation. Other suggestions included quick
access and account opening; the ability to open
an account or relationship via online banking;
buying products online without visiting the branch;self service mini-branches; and voice verification.
Electronic signatures are also likely to bring
dramatic improvements in sales and processes.
So, the next few years promise to be a time of
change for banks. Some of these changes may
have been overdue; others forced upon the
industry by external circumstances. Hopefully,
banks will rise to the challenges and be able to
develop their channels to both their own and their
customers’ advantage.
Conclusions
25
Innovation in Multi-Channel Management
“Hopefully, banks will rise
to the challenges and
be able to develop their
channels to both their
own and their customers’
advantage”
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A key aim for HSBC by the end of 2010 is to
encourage more customers to interact with the
bank via direct channels. This will enable it to
deliver a more consistent experience and enhance
customer satisfaction levels.
Internet bankingThe bank’s brands (HSBCandfirstdirect)are
already at the top of the league tables for
Internet banking usage. However, with high
levels of branch interaction, the bank needed tounderstand the main barriers to Internet banking
adoption and identify channel migration strategies
that would encourage customers to log on and
take control of their finances.
HSBC therefore launched its Assisted Internet Service
earlier this year. After a trial in seven branches, it
was implemented throughout the branch network.
The premise is simple: customers are asked what
activity they want to carry out in the branch. Then,
if they are willing, they are given support to do this
using Internet banking instead. Specially trained staff
provide assistance if customers need help.
The feedback from customers has been extremely
positive – and there has been an increase in the
adoption of Internet banking since the service was
launched. This is expected to grow further by the end
of the year, as the branch teams become fully trained.
The primary barriers to Internet banking adoption
were found to be habit, security concerns
or a general lack of confidence. A prioritisedprogramme of improvements that address these
concerns is now in place.
In the longer term, one aim of HSBC’s channel
migration strategy is to enable customers to
undertake more complicated banking activities
via the Internet. However, in the short term, the
Assisted Internet Service is already changing the
habits of some customers. They are continuing to
log on, unassisted, either remotely or within the
self service areas of the branch. The initial results
are promising, but further data are needed to
prove this has been a success.
One HSBC (OneBank)The delivery of a consistent, Internet-based
customer experience across the globe is a
strategic imperative for HSBC. ‘One HSBC’ is
the biggest single transformation programme
embarked upon by the bank. It will see ‘best of
breed’ processes and technologies replace the
numerous bespoke systems currently in use.
Based on a philosophy of ‘build once, deploy many
times’, a consistent customer sales and service
experience will empower the bank’s customers,
irrespective of the distribution channel or location.
In tandem with significantly improved efficiencies,
this is a crucially important strategy for HSBC.
The programme is driven by business processes
rather than IT systems, and has three guiding
principles:
1)Makeitsimpleandintuitive
2)Enable24/7selfservice
3)Bedrivenbythecustomer.
It includes clear directives to relentlessly challenge
the status quo and think like a customer. This will
ensure that ultimately, this initiative will physically
connect all aspects of the world’s ‘local bank’.
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Case studies
HsBCInnovation in multi-channel management
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UniCredit has considerable experience in the
migration from branch-led banking to a multi-
channel approach.
Planning the changeIn the 1980s, some 90 per cent of the bank’s
contacts were made through the branches, and
only 10 per cent via ATMs, telephone or the
Internet. By 2005, these figures had reversed: 90
per cent of transactions were carried out remotely
and 10 per cent through branches. However,persuading customers to migrate to new channels
can be difficult – in Italy, a typical customer
will make four branch visits per year, whilst in
Scandinavian countries, customers tend to visit a
branch once every four years!
A UniCredit spokesperson commented: “Several
years ago, a merger increased our size by 50
per cent and increased the number of channels.
Different channels boost the opportunities for
reaching the customer. If you rely solely upon
branches for sales and don’t use the different
channels, you miss out on many contact
opportunities and could lose the customer.”
UniCredit operates a range of channels, including
bank kiosks, and web, phone and mobile banking.
One problem with Internet banking was the
prices are lower, resulting in lower revenues. The
bank had to cut costs to compensate, partly by
reducing the number of branches and employees.
However, the lower revenues were also offset by
higher volumes of business, helped by providingsupport for migrating customers.
The spokesperson explained: “If you teach a
business customer how to use online banking,
they will do more business with you. This
approach helped us to retain customers and led
to our volumes increasing by 25-50 per cent.”
Ret f the chage
The bank’s online system was originally developed
with an internal focus on employees and later
developed for customer use. This approach has
worked well. From 20 million transactions that
took place in one month, 75 per cent were carried
out by customers and only 24 per cent by the
branch.
Over the last two years, UniCredit has migrated
nearly all branch transactions. The best results
have come from emerging countries, which have
gone straight onto the new generation of IT
systems. In Europe, the bank has also invested
in some 3,200 deposit ATMs. As a result, the
use of direct channels for transactions has risenfrom 44 per cent to 75 per cent. The number of
transactions has also increased: from 160 million
to 310 million. Deposits and withdrawals of cash
account for 70 per cent of all transactions.
The UniCredit spokesperson concluded: “Even
with the arrival of multi-channel banking, the
branch remains an important part of the whole
mechanism. If you don’t understand that it’s an
important channel in itself, you miss the point.
Without branches, it would be very difficult to
manage the complexity of all of the channels at
our disposal.”
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Case studies
uCretMigrating from branch to multi-channel banking
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Denizbank, founded in Turkey in 1997, continues
to pursue an innovative approach to banking.
Its integrated multi-channel strategy is based on
three key components: excellent accessibility,
good communications and versatile technology.
The bank has developed a wide array of channels.
In addition to its branch network and contact centre
services, it offers mobile, ATM, online and kiosk
banking and an express teller capability. Visitors to
the bank can also use web-banking facilities.
SMS loansDenizbank has implemented an innovative mobile
banking application that provides existing and
prospective customers with the ability to apply for
loans via SMS. Applicants send an SMS message
with their citizenship number, from which the
bank can check their credit background. Once
checked, the bank then provides an answer on
whether their application has been successful
within five minutes.
This seamless process has very low operating
costs, and provides the bank with an additional
route for acquiring new customers. To date, the
bank has received nearly two million enquiries,
and over 154,000 loans have been granted
(equivalent to over €436 million).
Instant serviceDenizBank has also developed the role of its
alternative distribution channels (ADCs) to
enable it to form long term relationships withits customers.
One example is an ‘instant card’ machine that can
issue ATM cards or credit cards without having
to visit a branch. This machine works in a similar
way to the SMS loan system. When a customer
applies for a credit card, their citizenship number
is entered into the system, their credit background
is checked and scored and a card is issued with
a specified limit (based on the scoring). The new
card is printed and embossed by the machine,
ready for use.
Benefits of this system include zero delivery
cost to the bank and no return risk. The card
number also gives the customer instant access to
online banking. This approach has proved very
successful. In 2007, the bank sold 8,000 products
online, solely to registered users – whilst in 2008,
it sold 35,000 products online, to both registered
users and cardholders.
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dezbakThe benefits of an integrated multi-channel strategy
“Denizbank’s integratedmulti-channel strategy
is based on three key
components: excellent
accessibility, good
communications and
versatile technology”
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Over the past 15 years, Crédit Agricole has been
developing a multi-channel strategy in its regional
banks. Starting with local branches, specialist
branches and call centres, it has since added four
further channels: branch ATMs, online ATMs,
online banking and mobile phone banking. Two
recent innovations are online virtual advisers and a
videophone system.
A Crédit Agricole spokesperson explained: “In
terms of channel management, our main priorityis innovation. We want to move away from vertical
silos and towards straight-through processing
across channels. This philosophy will have a
tremendous impact on our organisational structure,
distribution methods, and other processes.”
Part of Crédit Agricole’s drive to become a multi-
channel bank involves a greater commitment to
sharing information and processes. It wants to
let its 15 million French customers choose the
channels they want to use, rather than imposing its
views upon them.
The key challenges it faces in implementing these
changes in its regional banks involve both business
and technology issues.
Be e
Changes in distribution by developing innovativesolutions in a consistent way across all channelsThe bank needs to define how it shares inbound
and outbound telephone calls; arranges paper and
electronic processes; and manages the physicallocation of its 7,000 branches and branch platforms.
The need to increase sales and productivity Over the next few years, the biggest impact on
sales will come from the bank’s transformation into
a multi-channel bank, and from giving customers
more choice.
Currently, 80 per cent of sales are carried out
through traditional channels, and 20 per cent
through new channels. The bank needs to set
targets for sales and make products available via
other channels so it can make a profit from clients
who never visit branches.
The need for development and training inmulti-channel distributionThe branch is still at the core of Crédit Agricole’s
activities. The call centres work with and for the
branches. The branch manages and owns all
the relationships and profit, irrespective of the
channel involved. The next stage is to ensure
there is visibility and transparency in the activity
that takes place through the different channels.
This is designed to improve customer loyalty and
to increase the 25 per cent market share already
achieved by regional banks.
Techgca e
The key technological issues cover two main
areas: direct sales tools and the standardisation of
communication channels. The bank has identified
five specific aims:
• Widespread introduction of electronic signatures• Management of dematerialised documents
and registered sales
• Improved video conferencing capabilities
• Greater emphasis on mobile banking
• Development of convergent web solutions.
The bank also wants to strengthen its online
relationships by adding new functions, improving
the efficiency of its website and by better
simulation tools. It is also striving to increase the
effectiveness of its multi-channel commercial tools.
Ultimately, it wants to ensure online banking is a
two-way process that enhances its relationships
with its customers.
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Case studies
Crét AgrceThe implications of a multi-channel strategy
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About us
Founded in 1975, Microsoft (NASDAQ ‘MSFT’) is the worldwideleader in software, services and solutions that help people and
businesses to realise their full potential.
For more information on Microsoft, visit www.microsoft.com
The European financial management and marketing association
(EFMA) gathers more than 2,500 different brands in financial services
worldwide, including 80% of the largest European banking groups.
On a non-for-profit basis, EFMA promotes innovation and best
practices in retail finance.
For more information on EFMA, visit www.efma.com
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