Key to Building Bank Customer Loyalty Is Disruptive Innovation

To build loyalty among customers and gain a competitive advantage, banks must demonstrate radical thinking and vision and provide a seamless experience across all channels, including the branch, according to HCL Technologies' Amol Shingrupe.

Banks face fierce competition, regulatory compliance pressures, inefficient processes, aging technology and customer-retention pressures. Meanwhile, to meet the demand for greater agility and responsiveness to diverse customer preferences that demand personalized services and a convenient banking experience, banks must increase efforts to improve front-office effectiveness through modern, innovative technologies and processes.

But as the complexity in banking grows, customer trust in banks is falling. To reestablish trust and build loyalty, banks must demonstrate radical thinking and vision. Technology-enabled innovation has become the top source of competitive differentiation and will return to the top of the priority list for many banks in 2012. As a result, a number of market trends have become part of the focus for bank CIOs.

Providing a RIch Customer Experience

In retail banking, the delivery channels are where "the rubber meets the road." Until recently, banks rarely viewed delivery as a cohesive strategic requirement, seeing it as a collection of disparate services at best. At the same time, consumers have been spoiled by the superior delivery of services from providers outside the financial industry. As a result, customers are pressuring financial services institutions to improve product and service delivery and provide a seamless experience across channels, ranging from the branch and online to mobile and even social media.

What happens when your customers request help on a specific financial product or service? Can you fulfill every mortgage, wealth management and small-business lending request regardless of channel? If a customer begins a transaction online, can it be completed seamlessly in a branch? With competitor banks just a URL away, an unhappy consumer can simply click to a different website.

Meanwhile, banks' use of video has rapidly proliferated. By 2015, 90 percent of all Internet traffic will be video-based; nearly all bank websites already include video to promote products and services and to build financial literacy. Internally, both live streaming and on-demand video is used in training, and corporate executives now can live broadcast to all employees. In addition, interactive touchscreens and full blown video walls increasingly are utlizied in bank branches for marketing purposes.

Interestingly, in 1999 banking analysts boldly predicted the demise of the bank branch. Their mantra was, "Turn bricks to clicks." From their perspective, consumers were going to abandon the branch in favor of alternative channels, such as contact centers, ATMs, the Internet and more recently, mobile devices.

But it hasn't quite played out that way. Despite the increased use of non-branch channels, the bank branch remains a keystone of many banks' retail strategies. While many low-value transactions are covered by self-service channels, the branch remains the preferred channel for high-value transactions, for which person-to-person collaboration and interaction is important. In this role the branch experience provides an unparalleled chance to capture otherwise inaccessible sales and services opportunities, build personal customer relationships, and present a consistent bank brand and ethos.

Research has shown that 70 percent of banking customers will leave a bank branch if help is not readily available. It's called revenue leakage. There likely is only an eight-minute to 10-minute threshold from when the customer enters the branch until an appropriate bank expert engages the customer. To meet this threshold, banks are implementing technologies, such as videoconferencing, that provide remote, consultative person-to-person interaction with experts, even when the experts are hundreds of miles away. With this capability banks can have wealth managers, small business lenders and mortgage lenders available in every branch via video.

The Road Ahead for CIOs

Clearly, IT will drive innovation as technology is consumerized. Likewise, customers will demand innovation. CIOs face a tough but interesting future. The solutions a CIO needs to look for should enable the monetization of customer interactions, enrich customer experience with a collaborative multichannel model, improve the bank's top and bottom lines, improve operational efficiencies, and provide a lean IT application and infrastructure environment. And they also should deliver a low total cost of ownership.

Amol Shingrupe is group manager, industry solutions, at HCL Technologies.