Today’s reality: channel islands

A problem that many banks suffer from is that they‘ve become more fragmented and siloed internally as they have grown and become older.

When call centres were first introduced, there was little cohesion between a customer’s experience on the phone and the experience they would have had in the branch. When ATM services were introduced, the technology used was often incompatible with the bank’s existing back-end systems. Then online banking services came along and created yet another silo. And now with mobile apps, history is repeating itself.

With each generation of channel technology, banks have created additional channel islands. All of these islands exist within their own world, with little alignment or reuse between them. The inefficiency created by each new channel island has become extremely costly for banks. Compared to lean fintech challengers, they’re left with expensive and inflexible channels that make it more challenging for incumbent banks to successfully compete with fintech challengers, who have a more lean, digital-first operating model.

The new technology world will provide a single view of the customer

5 habits of highly effective bank transformation projects

01.Two-speed architecture
Most banks have been through waves of IT transformation in the past and understand that overhauling legacy architecture is a complex, expensive, multi-year process. Yet, today’s fluid marketplace requires technology that can drive innovation, automation and personalization much more quickly. So, the best are moving to a two-speed IT model that enables rapid development of customer-facing digital programs while evolving core systems designed for stability and high-quality data management more slowly.

02. Omni-channel is the final objective
The worst thing for a bank to do would be to spend big on creating a mobile app that has all of the features that a customer wants, yet doesn’t fit in with all of the bank’s existing channels. Creating yet another silo in an already fragmented organization will cause more problems than it solves. Mobile apps cannot exist simply to plug a gap in a bank’s offering. Introducing a new mobile app that will please existing customers and attract new ones has to be part of a wider digital transformation strategy. Banks can leverage the unique features of smartphones, such as push notifi cations, location-based sales campaigns, easy document scanning, biometrics-based authentication and real-time payments. However, they should ensure that the customer experience on a mobile phone is embedded in a larger omni-channel digital transformation execution plan.

03. Streamline onboarding and origination
Banks and credit unions need an onboarding application that helps them deliver a seamless experience for their customers and members, not focused just on data capture but also efficient orchestration of the full end-to-end client life cycle management process: onboarding through to KYC, credit, fulfillment through to legal and customer service. The best applications are those that are able to manage regulatory changes globally, integrate with leading KYC utilities and legacy systems, globally manage complex entity onboarding and due diligence, and are able to scale. Global banks are moving towards global client life cycle management technology investment to not only ensure compliance but to drive revenue while improving customer experience, all the while ensuring a fully digital experience for the customer.

04. Implement an agile way of working
Banks wanting to execute a digital transformation strategy at speed need to completely shift their mindset and operating model. Banks know that rigid, slow-moving models are no longer viable. The first banks have started to adopt the agile methodology used by technology startups in order to re-platform the entire bank onto a digital foundation. They let structure follow strategy and align the organization around their customer objectives with a focus onfast, lean startup structures.

05. Increase digital sales
The vast majority of banks believe that by 2020 the majority of their sales operations will have shifted from the branch to digital, mostly via web and mobile applications. Therefore, it becomes very important to create strong digital sales capabilities and to streamline end-to-end digital origination processes. Banks need to develop strong digital marketing and sales capabilities, including one-to-one targeted campaigns, microsegmentation, more dynamic, tailored pricing and product bundling, third-party integration (for example, with social networks), product white labelling, appropriate distribution via aggregators, and of course establishment of distinctive mobile and online sales offerings.