Microsoft-EFMA Report - Innovation in Multi Channel Management

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



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:



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.



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




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



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


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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



7


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.



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”



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




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

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t the rght chae rather tha the

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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.

11

Channel

innovation




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.

12

“For any bank, the online

channel is effectively its

largest branch”



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

13


“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”



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.

14



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

15


“Digital signatures can

play an important role in

mobile banking”



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



17

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

technology




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.

18



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

19




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

20



21


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”



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



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

23




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



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


“Hopefully, banks will rise

to the challenges and

be able to develop their

channels to both their

own and their customers’

advantage”



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’.

26

Case studies

HsBCInnovation in multi-channel management



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.”

27

Case studies

uCretMigrating from branch to multi-channel banking



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.

28

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”



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.

29

Case studies

Crét AgrceThe implications of a multi-channel strategy



30

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

Microsoft-EFMA Report - Innovation in Multi Channel Management

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