Omnichannel expected, not quite here

Although digital engagement is where the industry may be headed, face-to-face engagement is where the industry remains, says Celent in a recent report.

Consumer preferences are on the move, and their seismic changes are forcing most banks to play catch-up, says the report, which draws upon multiple interviews among financial institutions and solution providers as well as a survey of 156 North American banks and credit unions during October 2014.

The survey found continued interest in branch transformation, but more banks and credit unions are playing digital channel catch-up as a first priority. Alongside improving digital channel capabilities is the quest for omnichannel delivery. Banks of all sizes hold omnichannel delivery as a matter of first importance—but there is great diversity of opinion of what “omnichannel” means.

Insights from the research include:

•  Megas use multiple tech blueprints. Nearly 40% of banks with assets over $50 billion operate more than one branch technology environment, increasing the cost and complexity of much-needed technology initiatives.

• Long way from actual to potential. Barely a third of surveyed financial institutions leverage automated (paperless) account origination systems in the branch, and fewer have similar lending systems. These business processes need to be redesigned if financial institutions are to realize the nimble, tablet-equipped, universal banker vision so many espouse.

• Disagreement over evolutionary pace. Three-quarters of surveyed institutions expect continued transaction migration of more than 5% per year, and nearly 40% expect transactions to leave the branch channel at twice that pace. Yet, a third of surveyed financial institutions expect no change in branch count over the next five years, while 40% expect a net add in branches. Just 25% of financial institutions forecast a decline in branch count.

• Online will exceeds online way. A growing number of institutions seek ways to engage customers online, but capability is lagging this ambition. Less than one in five financial institutions offer shopping coupons, discounts, or rewards programs online; fewer offer text or video chat options; and fewer still offer online appointment booking.

• Smart devices still mostly do basic tasks. The mobile/tablet channel remains transaction-focused, although only two-thirds of financial institutions offer account-to-account transfers, and less than one-third offer person-to-person payments. In terms of customer engagement, just one in five institutions deploy targeted marketing messages via the mobile channel, and fewer still offer even rudimentary personal financial management (PFM).

The result is that digital channels are a long way from being sales channels at most financial institutions, lacking even the capability to enroll new customers across many products.

“Banks have a great deal of work ahead of them to deliver a high-quality, low friction, and engaging customer experience across all delivery channels, while concurrently lowering the cost to serve,” says Bob Meara, a senior analyst with Celent’s Banking practice and author of the report. “Doing so is not optional, and most banks are worlds away from this objective.”

Read more about Celent’s report, Retail Banking Channel Systems in North America: The Quest for Omnichannell Continues, with graphics