Editor's Note: This is the first of a two-part series offering insights (and correcting some perceptions) around an omnichannel strategy.
SAN DIEGO–If a group of credit unions and banks who were meeting here are a representative sample, then most financial institutions are making investments in an omnichannel banking strategy, but none feel they are anywhere close to reaching their objectives.
That leap forward should not come at the expense of the branch, cautioned one analyst, who noted that while many FIs point to data showing consumers visiting branches less frequently, and equal number of members actually have also reported visting more frequently. And that’s going to require some critical evolution, said Ed O’Brien, director of the Banking Channels Advisory Service of Mercator Advisory Group, who emphasized understanding that “omnichannel” cannot be confused with “multi-channel.”
“To be omnichannel you need to have clean, replicable data; interoperability, and business intelligence,” O’Brien told D+H’s Connections Conference here. “The data analytics are going to be key as we move to an omnichannel environment.”
Prior to addressing the focus of his remarks, which addressed using technology to defend a customer/member base, O’Brien polled credit union and bank representatives in his audience on several issues. According to shows of hands by audience members:
- Most are considering or currently undergoing a branch transformation effort.
- A few said they offer a combination of online and mobile banking solutions, primarily through mobile web, but most said they offer a combination of online and mobile banking, mostly through apps.
- Most in audience said “we are actively mining our data using customer analytics to better understand our banking customers. We are actively using sophis ticated predictive analytics models to better ID the profiles of ideal customers and members
“Delivering an outstanding customer/member experience with omnichannel banking: this is what it comes down to in talking to all our clients,” O’Brien said.
No Surprise, But...
The channel that has seen the largest reduction—and it will surprise no one—has been physical branches.
“The number of branches has declined to just about 100,000 over last two years, and the number continues to be reduced,” shared O’Brien. “Smaller banks and credit unions have been ahead of curve in reducing branches. Some of the largest banks are now reducing their branch totals by 5% to 15%. There are some experimenting with pop-up and hub-and-spoke branching.”
O’Brien pointed out that when consumers have been surveyed over their frequency of branch visits over the past two to three years, about 10% to 15% of people say they have decreased. But he also noted that at the same time about 15% of consumers say they have increased their visits.
“Three-quarters of people who were interviewed said (branch visits have) remained the same. What we’re hearing is that ‘When I need a trusted advisor, I need a place to go to.’ Some of the Internet banks have found they need a very good contact center for problem resolution and for offering some level of advice.”
O’Brien acknowledged that it’s not surprising that more consumers, especially younger, more mobile banking users, indicated that that use both self-service and branches. “They may not go in often, but they want them to be available when they want a branch,” he said. “The ability to have a rich conversation is increasingly important.”
The result of all that, said O’Brien, is that consumers are in need of all kinds of specialists as branches evolve into “advice centers. We’re seeing a strong opportunity to expand the advice channel to include the near-affluent, to catch people on their way up. This includes investment services, private banking, and insurance reps,” he said.
Experimenting With Branch Configurations
Financial institutions have been experimenting with a variety of branch configurations as they try to find the right balance. O’Brien said such models include the “flagship” branch of between 3,500- and 15,000-square feet; the “traditional” branch of between 3,000 and 10,000 square feet; the “mini” branch of between 1,000 and 3,000 square feet; the self-assisted (including video) branch of between 1,000 and 1,500 square feet; the “supermarket” branch of between 300 and 750 squiare feet, and “pop-up variants” of between 160 and 500 square feet.
O’Brien, who stressed the difference between a call center and a contact center (with the latter better at conflict resolution), said that in some early conversations the video/ATM combination in which a higher-trained teller is available has often demonstrated it can be a “win-win.”
“The thought of being able to have more face-to-face time and eye contact seems to be in some of our research a reason to consider to take another look at cash recycling and whether it work in some of these smaller branches,” he said. “These types of machines are expensive, but in high-volume areas, it’s worth exploring the two as the technology is getting better.”
In part two of this series, O’Brien discusses other channels, including the “amazing” and the “boring.”