Digital Channels: Windows to Financial Institution�s Soul
For years, bankers have been quick to differentiate themselves based on their level of customer service. A superior level of customer service inevitably leads to a more satisfied customer and a deeper level of loyalty. While no institution strives for poor customer service, those that have spent the time to listen to their customers and invest in systems that improved customer relations have found themselves in a better position over the competition. It has been a relatively simple formula, until the customers started dictating how they defined customer service and came to have ever-changing expectations for the financial service industry.
Customer service has evolved around the human interactions aspect, and the physical channel (branch, call center, ATM) will continue to be an important component of the customer experience. How quickly are calls answered and issues resolved? What feedback do we get from customers when they interact with the branch? How well do our sales associates do on our mystery shopping expeditions? All these factors for success require that the employee is fully educated, is well spoken, and provides the customer what he or she needs to complete a transaction or resolve an issue. Why then has the industry not embarked on the same quest to make the digital channels as satisfying? By digital channels, we are referring to the bank’s website, online banking and bill pay, and mobile and tablet banking.
Few customers have all their financial services with the same bank or credit union. Our mortgage may be with one institution, our car loan with another, our investments with yet another, and our primary checking somewhere else. Because of this, we are able to see how well (or how poorly) institutions invest in the digital channels based on the experience we have using those channels from our various financial providers. It becomes painfully obvious when a bank or credit union is being defensive with its digital investments and has a “check the box” attitude.
Online banking has now been in existence for almost 20 years, and some institutions are clearly only on their second- or third-generation platforms. While the argument can be made that online banking has matured and has little room for expanded usage, the reality is that online banking provides many people a peek into the institution’s technology offerings. A poor online banking experience may cause individuals to look elsewhere for future products and services. Often times the users of retail online banking products are small and midsized business owners. These users can provide us with a greater level of profitability than a retail customer, but they are often unimpressed with the online offerings. While the investments do not necessarily have to be large, they do have to exist. Having a dated platform for online banking at the consumer level will demonstrate a stagnant approach to investment and a subsequent lower level of customer satisfaction.
Mobile banking is another area where many institutions have failed to invest. While the growth in investment in mobile banking continues to grow, the percentage of the IT budget allocated towards mobile banking is still relatively modest at most institutions. Here is the primary problem with that: Consumers are having their mobile experiences shaped by industries outside of banking and are expecting the banking industry to follow suit. While this has primarily been in the retail space, we are also seeing examples in things like transportation.
Uber, for example, is a great example of an experience that individuals like, but, broken down, Uber is simply a digital payment application. The “stuff” that makes up the digital payment of Uber is the experience that individuals are looking for when it comes to their financial services. Uber provides real-time information about where the closest cars are located, provides an agreed-upon fare, and settles the transaction to the customer’s bank, credit card, or some other payment scheme that has been set up. Imagine being able to conduct a banking transaction as smoothly as hailing an Uber car in midtown Manhattan on a Friday afternoon.
The branch is still a very important part of the customer relationship. In fact, there will need to be some reinvestment back into the branch in the near term to fit the needs of tomorrow’s customers. No need to build branches of marble columns, velvet ropes, and lengthy teller platforms -- those belong in a museum of banking's past. Instead, the branches will need to reflect this new investment into the digital platform and embrace where the digital world and the physical world intersect. The digital channels have become the windows to the bank's soul, and it might be time to clean those windows and improve the view.
Marc DeCastro, Research Director, IDC Financial InsightsAs an industry veteran, Marc DeCastro provides extensive information technology expertise to assist IT managers with all facets of web-based technologies for online strategies within financial institutions, including ... View Full Bio
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