Develop a successful omnichannel strategy for banking

Banks must ensure that the human touch remains a critical element when capturing the entire worth of digital distribution.

As digital banking grows in popularity, there are still customers who prefer human interaction when doing business with their bank. Although many customers are comfortable using smartphone applications for day-to-day banking, they prefer one-on-one engagements when faced with complex financial products. Stakeholders in the banking sector need to remember that the human touch is critical in omnichannel even as they continue to digitize the customer experience. Combining human and digital channels effectively to develop a flawless omnichannel offering increases sales in the banking sector. After implementing just a few omnichannel solutions, one North American bank experienced consistent growth in sales of up to 20% in two years. This is just one example of the benefits of optimizing omnichannel capabilities.

In 2018, at least 60% of active bank customers in Europe, North America, and the Asia Pacific region utilized digital channels (mobile and online). Customers are using digital channels at an even higher rate in 2022, with 80% of consumer touchpoints located on digital platforms. However, only 25% of total sales can be attributed to digital channels, 20% to online sales, and 5% to mobile phones. Evidently, even though customers have embraced digital channels that have led to a massive transformation in the banking sector, most sales involve human interaction, be it branch visits or telephone calls.

As customers continue to embrace digital channels, banks have reacted by minimizing their physical footprints, which significantly reduces operation costs. In fact, the number of physical branches in the banking sector has been reduced by 10-30%. Additionally, banks are adopting branch formats best suited to specific micro-markets and testing low cost-distribution approaches like the non-proprietary retail networks. This strategy leaves branches to deal with complex issues while remote teams use digital tools such as screen sharing and video conferencing for other services.

Customers' willingness to use digital interactions is dependent upon the product. They are more hesitant to use digital channels for complex products such as mortgages and loans. Similarly, different markets demonstrate varying levels of enthusiasm concerning digital channels. For instance, digital sales skew lower for the investments market. In the eyes of retail banking customers, certain products require personal interaction and attention.

In response to market demands for personalized advice, banks trained relationship managers on how to deal with specific services and demographic groups such as young people seeking their first mortgage. Doing so allows banks to offer personalized advisory meetings, both in-person and virtually, for the services that demand such interaction.

Banks are responsible for identifying the mixture of digital and human interactions that best fits the preferences of the targeted local market. Many banks have made significant progress as they have ramped up investment in digital channels that complement traditional platforms. Nevertheless, there has yet to be a significant move from multiple channels to omnichannel. The result is that many banks still do not have seamless movement between channels and cannot maximize digitization to facilitate cross-sales and advertising. As a result, banks are missing out on an opportunity to increase their sales productivity.

Below are three capabilities that banks ought to develop in order to adapt to actual omnichannel distribution:

• Advanced analytics and granular customer data for better targeting
• Marketing personalization across channels, based on data-driven insights into customer activity and sales journeys
• Motivate salespeople by equipping them with the tools required to operate in an omnichannel environment.

Advanced analytics for better targeting

Advanced analytics of data collected from digital banking activities and consumer transactions can help increase omnichannel sales effectiveness. Through data analytics, banks can gain insights from consumer behavior and segmentation, which is crucial to improve market targeting and modify products to meet customers' value propositions. Data analytics can positively impact the market by increasing sales productivity by 40%.

Application of advanced technologies helps retail banks find ways to convert passive customers with saving accounts into confident, active clients who use diverse financial products, while maintaining a personalized quality. For example, SoftServe’s smart financial planning application helps convert customers’ life goals into investment and other financial services. It combines advanced ML algorithms and data analytics that makes it possible to build scalable and secure next-generation solutions to help financial institutions drive smart customer engagements via digital channels. The solution leverages a human-centric design approach to understand customer life goals and aspirations. It then deploys ML to design a comprehensive financial plan that can automatically build an underlying portfolio of financial products to support the plan.

Banks can use data-mining techniques on online behaviors and consumer spending patterns to identify customers who bring high value and high potential based on a disproportionate revenue share. Furthermore, banks can use data mining techniques to recognize granular behavioral clusters, set sales and revenue generation goals, and determine service levels and their associated costs. Analyzing consumer behavior further helps optimize lead generation, enabling banks to identify the right customers to focus on at any given time.

Some recent advancements in data analytics, such as granular data combined with non-linear machine learning algorithms, have significantly improved the power of model prediction and customer targeting. As a result, some banks have nearly tripled conversion rates for commercial campaigns after integrating granular high-frequency variables derived from customer behaviors with traditional static consumer profiles. Examples of consumer behavior measured include visits and activities on bank websites as well as daily transactions.

Advanced data analytics can also be used to enlighten product development. For example, one of our customers used a combination of k-means clustering, cloud AI, and text analytic models to identify features exhibited by a customer segment likely to consider a competitor financial institution for loans. As a result, the bank developed a new product targeting specific consumers.

Advanced data analytics can only deliver its maximum potential if the bank has high-level data management competencies. That is, the bank should be able to access the possible leading resources and analyze data sufficiently. Undoubtedly, internal data sources create a robust source of insights. However, a few US banks have recognized that external data sources are becoming increasingly crucial for advanced analytics. Good sources of external data include work portals, home buying websites, and social media.

Marketing Personalization across channels

Companies ranked as digitally mature within the retail sector benefit from using personalized digital and cross-channel marketing to make bespoke clients' journeys. The banking sector will see similar results from adapting and adopting the same strategy since it is evident that channel combinations that include human touchpoints are highly successful.

Using digital marketing strategies can result in substantial uplift. Banks can acquire data on customer behavior (including visitors' clicks on different web pages), assess time spent on specific subjects, and link the information obtained with engine analytics. Using the collected data, banks can personalize messaging when reaching out to customers. The behavior of consumers on online platforms signifies their interest in a particular product or service. Banks with digital capabilities to track consumers' behavior on online platforms will be able to send them the most relevant offers.

Banks should then organize their efforts across different channels, external agencies, and customer relationship management teams to back the digital marketing techniques. One strategy banks should consider is having an integrated e-marketing "war-room." Coordinated efforts among all teams keep the messaging in all channels on target and facilitate customer satisfaction.

Human intervention is crucial when making sales since direct channels such as text messages, emails, and internet or mobile banking notifications do not prompt the purchasing decision. In scenarios whereby consumers conduct online research and later work with an individual for the final purchase, the conversion rate is dependent on the efficiency of the bank's response after the initial contact is made. One bank experienced a 30% increase in sales after integrating relevant and timely human responses within 24-48 hours compared to when it relied entirely on digital channels.

A practical omnichannel banking experience allows customers to switch between various channels without fearing that the bank will lose track of their journey. One of our clients has successfully built an omnichannel platform involving credit card sales where consumers can disrupt the purchase and complete the transaction using other channels. For instance, consumers can begin by conducting an online search, deciding to purchase via mobile, using their phone to answer a few questions verbally, and then completing the mobile transaction. The bank also reduced the client's journey from 47 minutes to 5 minutes by integrating wallet activation with an immediate pin.

Maintaining a balanced partnership between humans and machines optimizes channel efficiency. Banks can attain the balance by analyzing transaction data comprising where and when the customers purchased a product or service. As a result, banks will optimize sales by accounting for the capacity and cost of individual channels.

Motivating and Equipping Sales Team

Banks must focus on the omni channel’s human touch, such as the competence and motivation of the sales team. Customers can have a positive or negative experience based on their ability to decide what digital option to use and when to use it. It is the same with human interactions, whereby a timely call from the relationship manager can significantly help meet a customer's needs.

Discussions related to sales team motivation in the retail banking sector should consider the emerging regulations emphasizing customer-centric sales approaches and balanced performance management. Policymakers pushed new laws that reflect consumers' needs, including capping the variable pay and balanced scorecards. Regulations can have a significant impact on operations within the banking sector. For instance, US banks experienced a decline in adviser productivity after introducing new regulations. In response, banks decided to redesign incentives while enhancing their focus on customer-centric services.

Banks should give support by providing relevant tools, performance management frameworks, and capability building to navigate the shift effectively.

Bankers should use sales tools to respond to the needs of their customers and give them a seamless experience. Working to personalize digital touchpoints is as important as conveying identified customer needs using analytics and digital behavior triggers. This enables managers to apply their insights in person at branches or during a call. For instance, relationship managers might suggest having a unique value proposition and sales script for individual customers. US banks that applied the tools earlier within the call centers and among remote advisors led to a substantial rise in marketing returns on investment and a 20% increase in conversion rates.

Employees working in bank branches are tasked with intervening when an initiated customer journey needs to be completed in a different channel. As a result, banks should create the appropriate sales network capabilities to make the interventions successful. Banks are trying to provide progressive, focused, and engaging support to their customers, which has led them to invest in digital training platforms targeting a variety of objectives such as learning games, videos, and infographics. Further focus needs to be on increasing network management expertise and coaching. An interview with branch managers revealed that they spend between 10% and 40% of their time coaching. Findings also indicate that coach-oriented branch managers accounted for double the number of performing branches, thus outperforming the performance-oriented managers.

A sales team can be motivated by fully aligning incentives with consumer needs. Additionally, banks should credit sales to branches and remote advisors even when they are completed electronically, for example, by double-counting sales. It is essential to establish a collaborative culture in which the entire firm shares in the approach, and those at senior levels should actively participate in developing new sales platforms.

Finally, banks should make performance management a continuous process. KPIs should align with consumer needs and be simple, actionable, measurable, and appropriately rewarded.

Omnichannel sales are crucial for retail banks. Customers may not be familiar with the concept by name but know when it is missing. For instance, customers experiencing challenges in switching channels or failing to receive a call from a branch banker after making an online application for a product. Banks already invested in omnichannel sales are well-positioned as banking becomes further digitalized and to experience continued growth since they can meet changing consumer needs.