By Frank Diekmann
CHICAGO—There is little doubt that omni-channel delivery is not the future for successful financial services providers, but the present.
But where many FIs make a key mistake, said one analyst, is in making budget and strategy decisions based on what other institutions are doing in omni-channel.
That was one of the key points stressed by Gareth Gaston, EVP-omnichannel with U.S. Bancorp, who addressed how to make the omni-channel experience a “reality” at the BAI Retail Delivery Show here.
When it comes to making capital investments in omni-channel, said Gaston, the question shouldn’t be “Is any other bank doing it?”
“That shouldn’t be the rationale,” he said. “Customers expect it, they are living it in other industries.”
Still relatively new to the financial services industry, Gaston offered observations based on his career outside banking and in hospitality services, as he was formerly EVP of global e-commerce for Wyndham Hotel Group.
“I’m not from the industry,” he acknowledged. “I think this industry is perhaps playing catch-up to other industries as far as omni-channel is concerned. At the end of the day the consumer doesn’t give us a pass because we are banks. Their expectations are what they experience elsewhere.”
Gaston cited the recent introduction of Apple Pay as a prime example, noting that all the consumer has to do to register the card they wish to use for payments is to take a picture of it.
Another mistake many institutions make, Gaston believes, is assuming “omni-channel” means “digital-channels,” and not including physical branches and ATMs. “An overall
channel strategy has to include the branch,” he said. “We have to stitch all the channels together. It has to be all channels, otherwise it isn’t omni.”
For his part, Gaston remains a firm believer that branches will remain critical in the near future, if not longer.
“I think omni-channel is way more than just digital, even as we’ve become digital obsessed,” he said. “It’s about moving beyond digital obsessions towards customer-centricity. With banking, it’s quite a way off to get to the kinds of numbers seen elsewhere. So it’s easy to say no need to worry about ATMs, etc., as we’re going cashless. That’s not true. When I joined the industry I heard the branch is dying, the branch is dying, but I see no evidence of that in the near term. Yes, we may have to think of different formats and rethink where we put branches, but we still have to have branches. There are some stark lessons from Europe where they rushed to close branches and then lost business. My view is branches are big and important and here to stay for some time. The overarching research shows that even for those that have never touched a branch, up there in their top criteria is seeing a branch on the corner. Digital isn’t going to replace everything tomorrow.”
Omni-channel is being powered by consumer expectations, but most consumers have different experiences as they move through different channels, such as inconsistent policies and pricing. “This isn’t just about providing the same appearance on your website as when calling the call center. This is about aligning the experience regardless of channel.”
Gaston urged financial services executives to “pick your report,” or research: “They all point to the need to service the customers across the channels. The percentage of online researchers who move offline to apply differs greatly by product. I think we’re seeing that there has to be a belief that this is what customers want. There is overwhelming data for customers either using multiple channels, or for having a preference moving forward.”
As an example, Gaston noted that 64% of consumers who shop digitally for a checking account finish in another channel.
Another mistake that often bogs down institutions is debate over which departments or channel should get credit for a sale or for revenue in an omni-channel environment. For instance, in mortgages, a consumer may move across multiple channels over a long period of time.
“If we all get hung up on whose revenue it is, we will fail at this,” he said. In the case of U.S. Bank, it assigns revenue/sales to one place: the branch.
Gaston outlined what he called “five paradigms” for the financial services industry:
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Instant information availability. The key features are no long waits and ongoing updates, so no surprises. Gaston cited Uber as the perfect example. “It gives you all the information when you’re standing there waiting. Who your driver is. How much it’s going to cost. You can watch them coming.” Other companies that excel at this, he said, are Domino’s, Delta, CVS, and HR Block.
- Ubiquitous access across channels. “It’s not just about the channel, it’s about having the information desired in that channel. I think what Starbucks is doing with payments is very interesting; huge amounts of customers can pay with their app.” Companies that excel at this include Tesco (customers can order from a virtual display), Audi, and Macy’s. “These companies blur the line between what I have to do in the store vs. what I can do befo
re or after the store.”
- Personalized service. These are products and services that are tailored to the client’s needs. “The work is automatically done, especially if you started something here, and then you pick it up somewhere else. Amazon has to be at the top of this list, including its ‘mayday button’ in which a customer service person responds in seconds. Think about Amazon’s recommendation engine that is so important to this industry. If you think Amazon knows a lot about their customers, what about this industry? We’re in a terrific place.” Companies he said excel here include Progressive, Walmart, Sephora and Walgreens.
- Direct control of the process. “I think this is one of the most powerful things. You are now in charge. You are now the Person of the Year.” He pointed to eyeglass retailers that let a consumer try on frames at home, or upload a picture of themselves to see what different frames would look like on their faces. He pointed to Apple’s Genius Bar and Zip Car as excelling in this regard.
- Information for decision support. “This is about how to make your products and services so transparent they are easy to understand. I think that is one of the big challenges for this industry. In hotels, the more commoditized and consistent a hotel brand, the higher the conversion rate.” He cited Microtel as an example, along with Yelp, Zocdoc and Airbnb.
The four drivers of omni-channel, said Gaston, are increased acquisition, deposit relationships, increased retention, and reduced cost to serve. He especially enjoys that last benefit.
“My favorite source of innovation is the elimination of negatives. How many times have you experienced something that was easy and it was just awesome simply because it worked? Removing those hassles is one of the most enjoyable things you can do for a customer.”