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Retail banks need nimble yet scalable operations to enhance customer centricity in the digital age

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Retail banking customers are quickly and steadily moving from branch visits to a more varied range of avenues increasingly including digital—to conduct banking activities. Customers now expect seamless access to their banks through multiple channels. That access is proving to be a differentiator in the industry and requires retail banks to invest significantly in digital channels. These developing digital strategies also offer the potential for significant cost-savings along with increased customer satisfaction and profitability. However, capturing this value requires an entirely new level of operations planning that must include more robust and effective technology and processes in the back office delivered through an integrated operating model.


Retail banking’s response to the rise of the digital consumer

Over the last decade, the source of differentiation and value creation in the minds of retail banking customers has conclusively shifted from products and pricing to customer experience. Retail banks have taken notice as indicated in a recent survey in which 83% of retail banking leaders indicated that multichannel management has a significant impact on increasing customer satisfaction[1]. However, the challenge for the Banking industry has been the increasing number of digital avenues customers use to interact with their banks. Customers now conduct more than 50% of all transactions outside the branch through alternative channels such as web, chat, mobile, or even social media, and this number is expected to reach 75% by 2020. [2] The growing acceptance of these channels across all age groups and income levels has prompted banks to increase investment in their multi-channel capabilities. The effect is most visible in the front end as websites are now rich in features and functionalities, ATMs use enhanced user interfaces and one-to-one marketing, and mobile apps are widely available. In addition, banks are investing in digitizing through “teller-less” branches, digital walls, interactive work benches, video conferencing between customers and advisors and some of them are even launching entirely branch-less banking options.

Customers now conduct more than 50% of all transactions outside the branch through alternative channels such as web, chat, mobile, or even social media, and this number is expected to reach 75% by 2020.

The response is uneven

Although front-end capabilities have undergone a transformation, back-end systems and processes have not kept pace. Banks remain organized by different business lines with separate owners, systems, and P&Ls. Change-the-bank initiatives in the back office are often stalled due to multiple IT systems with duplicate functions and data repositories. This bifurcated evolution of the front and back office, coupled with the sequential addition of alternate channels, often without an organization-wide, multi-channel strategy, has prevented banks from fully benefiting from their investments.

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The ideal solution is to rewire the bank’s IT systems and replace the entire technology architecture with a more nimble platform that can serve as a cloud-based master repository across different lines of businesses. This transformation would provide a single view of the customer and not only incorporate input from different channels but also track customers and learn how they navigate channels. However, this type of transformation requires significant investment over a long horizon, and as a result, a staged approach tends to be more common.

Ring-fencing the customer service organization as the first step

Due to the challenges involved with large-scale transformations, some banks are ring-fencing the customer services organization, focusing on upgrading call centers into “contact” centers that serve customers across multiple channels. Contact center help fulfill a critical need for human interaction when customers experience a disruption in their cross-channel journey. As a result, these banks are more adept at serving customers in today’s environment. However, many still face significant challenges in continuing their transformation, including the following:

  • Fragmented technology architecture resulting in the lack of a single view of the customer
  • Limited knowledge of customers’ channel preference and usage behavior resulting in suboptimal cross-sell/up-sell
  • Limited or no capability to use social media for customer servicing
  • Lack of adequate training for agents to handle customer interactions across multiple channels, leading to lower first-touch resolution and agent utilization
  • Insufficient data quality and analytics functions to leverage the data collected

Utilizing advanced operating models to create greater customer centricity

Addressing these challenges for every customer of a bank can be arduous and must be prioritized. Two levers become important for addressing these challenges practically within a contact center environment. The first is creating clarity on the alignment of the segments, products, and channels, and the second is creating customer centricity across channels through technology, analytics, and operations.

Although the first part of the equation is routinely addressed by strategy groups and business leaders, the second still often suffers from weak, defensive approaches to transforming operations. It is critical to leverage advanced operating models aggressively and strategically to “industrialize” the customer centricity required from the contact center. For example:

  • Analytics is often the most under leveraged area within a contact center. As banks look to mine the significant amount of transaction data, intimate knowledge of prioritized customer segments helps identify the right sources and creates a hypothesis-driven approach to generating insights and identifying patterns. Very often, organizations fail to realize that analytics has limited power unless tightly weaved into the fabric of business processes, and the analytics work itself is typically a process that can be industrialized
This ecosystem can help the contact center develop into a center of excellence, while broader technology inefficiencies continue to be resolved
  • Technology in the short to medium term will continue to be a combination of different systems and platforms. Banks will have to proactively shape this ecosystem with CRMS at its core, supported by ancillary systems in telephony and niche areas such as speech analytics. This ecosystem can help the contact center develop into a center of excellence, while broader technology inefficiencies continue to be resolved. Just like analytics, the issue with technology is often insufficient understanding of the end-to-end process by IT decision makers, resulting in solutions that optimize only part of the value chain, and often overly “build” the solution, depriving it of the required flexibility to accommodate future rapid evolutions.
  • Operations should be the sole focus of analytics and IT, aiming at the most efficient, effective, and agile solution for “moving the needle” of the core metrics that influence the most material business impacts. A highly metricized operation, clearly identifying the practices that generate material business impact, can be the best “true north” for advanced technology and analytics as well as more traditional business process reengineering and organizational models such as shared services, outsourcing, or hybrids. Transforming processes to harness technology and analytics so that they strictly align with strategic business goals results in a truly intelligent bank, able to transform more effortlessly and then run more effectively, efficiently, and agilely.

As banks increasingly rely on more intelligent operations to bring the front-to-back office processes into the digital age, many are turning to knowledgeable and experienced partners to help in this process.

The main reason is that practices evolve so fast that developing those competencies in-house—and executing on them—is very often inefficient from a time and cost standpoint, especially since the changes will be continuous. In addition, experience shows that developing fully integrated multi-channel customer contact centers through partnering can reduce operating costs by as much as 10% and developing advanced analytics capabilities can enable banks to cut marketing campaign costs by as much as 30%, while improving ROI on multi-channel investments by up to 20%. Even possibly more importantly, a partner with a thorough and proven understanding of the “art of the possible” of vendors, technology innovation, customer engagement and risk management, and data-driven analytics can be the deciding factor in whether a change-the-bank initiative is effective in the short term.

This aspect, although traditionally important, is particularly vital now that missing a two-year window to recover from a botched transformation can affect banks’ profitability more profoundly than ever before.

For more information, contact, banking.solutions@genpact.com and visit, genpact.com/what-we-do/industries/banking-financial-services

  1. Survey conducted across senior executives and management selected based on their ability to make or materially influence operating model decisions in the Retail Banking industry. 
  2. Genpact analysis of customer views and data.
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