Power to the People: How Multichannel Banking Became Less About Channels and More About Customer Preferences

The obituaries of Eugene Polley, an inventor who died in May at the age of 96, focused on his most-famous invention — the television remote control. Most of the articles included jibes about how the remote has contributed to human laziness, obesity and marital disagreements. But reading about Polley's inspiration for the Flash-Matic device, which was released by Zenith in 1955, I saw a parallel with the evolution of multichannel banking — or more specifically, the shift to a delivery model that is dominated by customer choice and control as opposed to bank marketing and product development.

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As the New York Times wrote, "Flash-Matic made the TV audience less captive. … For the first time, viewers could comfortably exercise dominion over sound and image without simultaneously exercising the body."

Yes, you didn't have to get off your butt to change the channel. But more significant, with the ability to mute the volume or switch easily to a different station, viewers gained a small amount of control over the source of entertainment and information. Flash forward to today: A shrinking number of people actually watch TV shows on a television set at the scheduled date/time — preferring the on-demand model and convenience of time-shifting and viewing shows whenever they want on their computers, tablets or smartphones.

Banks find themselves in a similar situation, 57 years after the introduction of the remote control. Banking is truly multichannel today, and while established channels — mainly branches and ATMs — remain important to many customers, it's the newer digital channels — online and mobile — that are seeing big growth.

More important, multichannel increasingly is less about the channels themselves and more about customer expectations, preferences and experience. With customer loyalty more tenuous than ever — thanks to factors ranging from demographic shifts to new competitors and continuing fallout from the financial crisis — banks must be smarter about improving retention and customer value.

Just as there no longer is a specific night or network for "Must See TV," banks can't predetermine or force on customers a favored delivery channel. That approach didn't work in the late '70s when Citibank tried to steer customers to use ATMs, and it won't work with today's customers, who are even less accepting of restrictions. Call it a 21st century version of the 1950s TV show "The People's Choice."

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio