A Different Look At The Strategy of Omni-Channel Banking

Yesterday, we looked at overwhelming data that shows, when given a choice, bank customers will use a variety of banking channels to complete a transaction such as account opening. In fact, 40% of customers, as of the end of 2018, used multiple channels such as phone, online, branch, call centers, and mail to open an account. We also walked through how expensive and complicated it is to properly pull off an omni-channel approach to allow a customer to have the same experience, with the same workflow, through a variety of different channels such that the customer can start and stop at will. Today, we will take a different approach to the data to show why going down the omni-channel path may be a mistake.

 Looking Deeper

 While 40%, a number that has grown over time, of customers started and stopped on one channel only to complete the account opening process on another channel seems material, let’s take a closer look at why this is. When AT Kearney asked why the branch was involved (you could have multiple reasons, so the data does not add up to 100%), you get the following data: 

Developing A Better Process

The data that jumps out the most is the 20% that had to go into the branch to show some form of ID or present some other document and the 11% that had no choice but to go into the branch, presumably to render a “wet” signature in person. That is likely about a quarter of the customers that were forced into the branch not because they wanted to talk to someone in person but because their bank MADE them. Create a better digital account opening process, and a material chunk of that 40% are likely to stay home in their fuzzy slippers to open up an account.

Bankers Much Educate

The data also shows that 41% thought the branch was the most convenient place to start or stop the account opening process. That is a huge number and if you have never opened an account online and are not familiar with the process this answer is going to be your number one rationalization about why you are going into a branch instead of figuring out how to open an account online. Combine that 41% with the 14% that had security concerns at some point during the opening process and you likely have about half of the omni-channel customers using the branch or the call center because they are unfamiliar with the process.

Those are similar statistics as the travel industry saw in 1998, two years after Expedia made online travel booking easy. Then, about 20% thought the Internet was unsafe, and 50% thought it was easier to use a travel agent. A couple of years later and the majority of the market was booking travel themselves with few concerns regarding convenience and safety. Now, the trend is the growth of customers that book travel solely on their phone. This number stands at 40% now and has been growing at a double-digit clip.

Online account opening is likely to go the same route as the travel industry. As account opening workflow gets better and banks spend time educating their customers about convenience and security, digital banking will become more common. While we are at it, the 18% of the people that said they needed help opening an account, a great number of those will seek help digitally over time as banks use chat and Facetime-like apps more often to solve customer problems.

Other Reasons

Finally, there are several other items such as the 16% that was already in a branch. As reasons for going into a branch drop such as the rise of person-to-person and person-to-business payment, expect branch traffic to drop and digital account opening to rise.

Putting This Data Into Strategy

The omni-channel strategy that many banks are perusing is not wrong, but it might be deep overkill for a great number of banks that are heading down the path but can’t afford the architecture and technology. As the data above indicates, a majority of objections on digital account opening can be overcome over time.

In terms of bank strategy, it may be far better to target resources making sure you get the account opening and digital onboarding process right instead of distributing your resources so wide that you diffuse your effectiveness. It might be far better to have a single platform that is primarily mobile and then have all devices render off that.

Should a customer need assistance, the client service representative would access the same mobile platform as the client to assist. This “mobile-first” architecture might result in community banks leapfrogging much larger banks that are trying to implement an omni-channel approach across a variety of legacy systems. 

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This commentary on this blog reflects the personal opinions, viewpoints, and analysis of the author and not CenterState Bank. This blog is only intended to provide general education about the banking industry, leadership, risk management, and other related topics and is not intended to provide any specific recommendations. Banks should consult their professionals and fully explore any opportunity and risk referenced herein.

CenterState Bank is a $16B (post-merger), publicly traded community bank in Florida experimenting our way on a journey to be a $25B top performing institution. Financial information can be found HERE. CenterState has one of the largest correspondent bank networks in the banking industry and makes its data, policies, vendor analysis, products and thoughts available to any institution that wants to take the journey with us.