Omni-Channel Banking in the Branch: Increase Customer Service and Loyalty; Boost Branch Profitability
By Meredith J. Deen, COO at FMSI
With steadily declining financial institution (FI) branch volumes—from an average of 11,700 per month in 1992 to 6,400 per month in 2013, documented in FMSI’s Teller Line Study—bank management is often faced with tough choices regarding its under-performing branches. Making matters worse, deciding whether to shrink a bank’s branch footprint is far more complicated than just crunching the performance numbers and closing the branches with the lowest results.
Taking such an action brings into play significant account-holder satisfaction (and possibly retention) concerns. Even with the rising popularity of digital processing and communication vehicles such as online and mobile banking, account holders still express a clear preference for keeping branches open. In fact, according to Ernst and Young’s (EY) 2014 Global Consumer Banking Survey, 52 percent of all banking customers currently prefer to make deposits at their branches. More importantly for sales volumes, 54 percent prefer using branches to ask for advice, and a whopping 65 percent prefer that sales of banking services and products are conducted in their branches.
These statistics leave banks with an interesting conundrum—how can they satisfy customer expectations for branch service and maintain or enhance profitability in the face of diminishing volumes? The answer, we believe, is not to accept that branch visits will continue to decline, but rather to leverage and respond to these customer preferences, thereby encouraging them to visit more often—and to transact more business when they do.
One such approach that is helping banks achieve this goal is omni-channel banking. An omni-channel banking strategy, when properly executed, not only can increase sales; it can also foster greater customer loyalty and satisfaction. When that strategy extends to the branch level, the results are even more impressive.
Omni-Channel versus Multi-Channel Banking
Despite the buzz surrounding omni-channel banking over the past few years, management in many banks persists in confusing it with multi-channel banking—or, in failing to take it far enough. When a bank has expanded its connection mechanisms to include call centers, mobile and online banking, and other “touch-points”—and is encouraging its account holders to use these mechanisms, it is engaging in multi-channel banking.
As its name suggests, omni-channel banking takes the relationship a step further—from many touch points to all. This means more than reaching out to and/or transacting business with customers through multiple channels. To qualify as omni-channel banking, the effort must create a consistent, seamless, high-quality customer experience across all touch points. In other words, all account-holder interactions, across all vehicles, should be unified and should complement one another. At the highest, most successful level, efforts should also be non-redundant and should harmonize with the account-holder’s expressed needs, preferences and characteristics. Here’s an example:
Customer A inquires online about a car loan in June then purchases a vehicle in July with financing from ABC State Bank that he applied for at the branch. During a subsequent call to a branch in August, Customer A inquires about the opening date of a new branch in another part of the state. He mentions that he wants his daughter, who is starting college in the fall, to be able to make payments for the car loan at a branch near the college, if possible.
In September, because Customer A inquired about a car loan three months earlier, he receives a follow-up from a call center, asking if he would like a loan. At that time, he informs call center personnel he already secured a car loan at his branch. In October, as part of a standard marketing effort, Customer A receives a mail offer from the bank regarding a car loan financing special. Around that time, Customer A also notices that a new “Car Loan Special” banner appears on the bank’s website.
The bank has connected with the customer through multiple touchpoints, and it has closed a sale, so the multi-channel approach has been successful from the bank’s perspective. Unfortunately, the customer doesn’t feel this way. The bank has engaged in unnecessary, non-productive follow up on a product he already purchased. He loses confidence in the bank because it failed to capitalize on the data from the sale—and the information he voluntarily shared.
The Omni-Channel Difference
Had the bank adopted a true omni-channel banking approach, the information from Customer A’s in-branch loan and subsequent call about the branch locations would have been collected and used to target future communication and sales efforts. The follow-up from the call center would have asked him how he liked his new car and confirmed he had no other loan or banking needs at the time. The mailer card could have thanked him for his business and invited him to consider supplemental loan products for his car loan.
This is a dramatic comparison, but the scenario that underlies it is fairly typical. Particularly for smaller community banks, the assumption is such an approach is too sophisticated to be affordable. Yet, the value of achieving and retaining customer “stickiness”—the desire by an account holder to reward the bank with future business—can make failure to capitalize on these opportunities even more expensive.
It is a painful fact for companies at all levels that consumers are taking control of their outcomes and experiences like never before. When they are dissatisfied, they not only make decisive choices about where they spend their dollars, they also share their experiences with friends, family and fellow consumers, and can literally impact corporate outcomes as a result.
This mindset shift has impacted the banking industry, where account holders now value good experiences above all other criteria other than financial stability. Referencing the 2014 Ernst and Young Global Consumer Banking Survey again, the number two reason, overall, for trusting a banking provider was “the way I am treated.” Furthermore, in a search for a financial services provider, 29 percent of survey respondents look to the advice of friends and relatives. Omni-channel banking, when implemented effectively at all levels including the branch, is a perfect mechanism for turning account-holders into satisfied influencers who will recommend their banks.
At the Branch Level
Until now, we have been discussing omni-channel banking from a bank-wide perspective, even though some of the interactions we described in our example took place in the branch. Returning to our original supposition, how can banks leverage omni-channel banking to help boost branch volumes and sales? Branches play a unique role in an omni-channel banking strategy. First, the ability to connect on a physical, more personal level enables branch personnel to gather relevant information, more easily. It also allows them to change outcomes for customers more quickly. Second, banks can actually refashion their branches into omni-channel operating centers, giving account holders and prospects more reasons to visit—and linger in—the branches. Following are a few examples.
- Support multiple channels in the lobby. Enabling customers to perform virtual banking at a kiosk or on mobile devices while waiting to speak with a representative will enhance customer service and position the branch as “high-tech.”
- Implement data collection programs that enable lobby and customer service representatives to capture meaningful customer insights for integration into future sales and marketing efforts.
- Adopt a specialty branch model with a palette of inventive, enhanced services. This could include everything from financial and/or loan advisors, to offers on targeted products and services. It could even expand to non-traditional value-add services such as cyber-security consultations (another top item account holders want, according to a 2012 Cisco survey).
- Implement advanced appointment booking solutions. Achieving a status as “respected, trusted advisor” involves respecting customers’ time. Banks that transition from traditional “sign-in and wait” models to proactive, advance-scheduling solutions position themselves as considerate and initiate the need for a future visit to the branch. The best of these systems incorporate an automated scheduling process, text and email confirmations and reminders, universal calendars and the ability to accept appointment requests via multiple channels (mobile device, Internet, in-branch and others).
A Very Bright Future
The branch will continue to play a major role in the customer’s interaction with the bank, especially those that are properly integrated into the Omni-Channel strategy. Accenture’s 2014 North American Consumer Digital Banking Survey found that 51 percent of account holders want their banks to recommend products or services that they might need, while considering which accounts they already have. The 2012 Cisco survey referenced earlier found that 53 percent want their branches to handle their loans. Twenty eight percent even want banks to do their taxes. With statistics like these, omni-channel banking isn’t just a theory—it’s a practical solution that makes perfect sense.
BIO, Meredith Deen, FMSI
Meredith Deen is the Chief Operating Officer of FMSI. FMSI provides easy-to-use, yet sophisticated, business intelligence and performance management systems that facilitate efficient staff scheduling and systematic lobby management of the branch. She can be reached at email@example.com. For more information, visit www.fmsi.com or call (877) 887-3022.