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The Omnichannel Banking Handbook: Benefits, challenges and more

IR Team

Written by IR Team


With a shaky start to a new decade and plenty of challenges ahead, 2020 has seen financial ecosystems undergo a digital transformation. With financial services evolving at lightning speed, and a consumer-driven surge in omnichannel digital banking and retailing, consumers have more choices in the way they bank than ever before.

Download a PDF copy of our Managing your Changing Payments Business guide!

Financial institutions are closing the online/offline banking divide, improving customer experience, and attracting new ones with a digital first approach - while at the same time reducing operational costs. With a mobile app for almost every retail transaction, online sales and and the online marketing approach is now common strategy for financial institutions and retailers alike.

Whether you use an online app, or go into your bank branch, personalized customer service is the key element of every retail banking strategy, across all channels. While in-branch transactions are still important, the phone or digital platform (mobile, internet, social) is the new era of true omnichannel banking. Financial institutions have no option but to keep up, and strategies are continuously developing to merge the digital channels with customer demands.

What is true omnichannel banking?

Consumers increasingly expect their band to provide omnichannel experiences. They want to perform the same banking operations whether it’s online banking, by phone, via a call center, in a bank branch, or any other available channel. But additionally, they want these experiences seamlessly - when, where and on whatever devices they prefer.

However, a true omnichannel platform also allows real-time data synchronization, and consumers the flexibility of banking in multiple ways. Consumers want to be able to start their onboarding process with one channel, and if they choose, finish it with another – without the need to repeatedly provide the same information.

Many banks have already started the digital transformation from traditional in-branch, single channel banking - to banking across channels, with the introduction of apps, phone, and websites. But the challenge now, is that they often lack a link between the channels. Interruptions and complications in the customer journey cause frustration and could potentially see them shopping elsewhere. In contrast, new competitors, like Apple and other tech giants, use their technological advantage to provide intuitive, easy-to-use banking solutions. Customers are well and truly used to this, and it’s what they expect in this digital era. Banks are realizing that they need to act quickly to transform their multichannel offerings into a truly omnichannel banking experience.

Omnichannel vs multichannel - what’s the difference?

While the terms are interchangeable, they key difference is integration. Multichannel simply means that financial services and banks must provide services to its customers through various channels such as in-branch, ATMs, call center, online banking and mobile – but they don’t necessarily work together in a unified way. Simply put, each channel supplies different services and runs separately from the others.

While multichannel is focused on transactions, omnichannel focuses on interactions. Omnichannel has the customer as their central focus, providing them with a personalized message in a seamless, unified experience. This allows the customer to easily access information from any of the channels since the channels are connected to each other.

According to The Economist, an omnichannel strategy means customers can “shop with smartphones, tablets, laptops and even in stores as if waited upon by a single salesman with an unfailing memory and uncanny intuition about their preferences.” With omnichannel, banks can achieve the ultimate goal of meeting their customers’ specific needs and at the same time, anticipating their wants and likes.

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Source: IBM Omnichannel banking: From transaction processing to optimized customer experience

Key benefits of omnichannel banking

As mentioned, omnichannel banking is all about integration, and it’s this integration that allows banks the best of all worlds. It means support for a choice of channels and the ability to switch from one to another without a disrupted, fragmented journey. It also means banks can offer consumers the convenience of digital channels, but they must also provide the vital trust aspect of face to face, human interaction.

o   Fast problem resolution. One major advantage of omnichannel banking is that by interacting online, issues can usually be resolved more efficiently and quickly than face-to-face in branch.

o   Less support costs. Digital tools like chatbots can often help solve simple and straightforward customer service inquiries, which frees up advisors to focus on more sensitive or complex issues.

o   A more personalized experience. For bank customers, the one-size-fits-all approach no longer works. A hybrid customer journey, alternating between a digital service and person-to-person offers more flexibility and adapts to a customer’s specific needs.

o   Customer experience and satisfaction increases. With a faster, more tailored experience, customer satisfaction grows, meaning improved customer loyalty. Customers who get exactly the help they want, are far more likely to stay on board.

Challenges of implementing omnichannel strategies

While omnichannel is the way of the future, many financial institutions have been somewhat slow on the uptake. For some, they’ll have to implement an entirely new technical infrastructure with enhanced data capabilities to implement omnichannel management strategies.

To realize the customer journey across different channels, including the possibility of switching between channels and real-time interaction, banks need to facilitate data exchange between them. This requires a high level of system integration and performance. 

Banks must monitor and trace every interaction with a customer, meaning they’ll need to process and manage exponentially more data. This data all needs to be stored and retrieved in real time, including respective historical data.

The availability of data and infrastructure provides a seamless offering and communication journey for customers, and this is the key element in omnichannel banking. However, implementing successful omnichannel banking strategies are not always straightforward, and banks can even risk alienating and losing customers.  For example:

o   Relying too much on isolated touchpoints. Communication strategies like video conferencing tools can reduce the opportunity for positive interactions. Many customers are either unfamiliar with, or uncomfortable using such technology. An over-reliance on digital tools can result in frustrating experiences for customers unless banks prioritize a mix of tools to meet each customer’s unique individual demands – such as live chat, co-browsing, messaging, video and face-to-face.

o   Automating all services. Customers still need to experience the human contact that builds trust. Banks need to integrate the physical and digital in a way that focuses on meaningful interaction.

According to a survey by Banking Hub, only 27% of banks in Europe have a unified record of all customer interactions via all channels, including key results of customer inquiries. Their study also revealed that only a minority of 24% of banks have the technology and data capabilities required to enable further omnichannel steering.

In the U.S., Bank of America is now responding to the client-driven dual imperatives of cross-currency transactions, and an omni-channel offering that now includes Application Programming Interface (API) and mobile connectivity.

Staying on top of omnichannel security

While omnichannel is the way of the future, the technology is also a double-edged sword. Criminal cyber activity is constantly evolving, and attacks on banks and customers means that staying ahead of fraudsters is a complex, full-time endeavour. Banks need to keep these issues in mind regarding security measures:

  • Address mobile weaknesses: As demand for digital services grows, banks must explore how to keep their mobile channels secure, whether it’s through biometric options like fingerprint, voice or facial verification, tokenization or additional passwords and PINs.
  • Address established channels: ATM skimming is still prevalent and becoming more difficult to detect, as fraudsters come up with more sophisticated devices. Card and cash trapping, as well as physical attacks on ATMs are also still problems that banks should overcome.
  • Forecasting future trends: As banks close one avenue of opportunity for criminals, others inevitably open. While predicting the future is not easy, using innovative technology including advanced analytics can help detect fraud and malicious activity through trends. Omnichannel frameworks build a holistic view of a customer journey to help spot future areas of vulnerability.
  • Engage with customers: Channel innovation remains a primary focus for banks. According to PwC, 61% of bank execs believe a customer-centric business model is crucial, and banks are making investments in driving this change. But to stay on top of security, they need to track consumer activity, monitor social media channels and develop dialogues to discuss potential changes.
  • Finding the right solution: Managing multiple channels is an incredibly complex undertaking, especially when many banking organizations still have disparate systems and siloed departments. A single security product that covers all the bases is therefore unlikely.

With  the right suite of solutions, businesses can build a comprehensive defense against security threats. This will help strike a balance between developing robust security and ensuring that new processes don’t hamper seamless customer transactions and interactions.

Key takeaways: Implementing omnichannel banking

  1.  There are four basic criteria banks need to implement to make the transition to true omnichannel distribution.
  •  Advanced analytics and granular customer data for better targeting of customer needs and wants.
  • Personalization of marketing across every channel, based on data-driven insights into customer activity and sales journey.
  • Motivated instigators equipped with the tools and understanding of processes to operate in an omnichannel environment.

     2.  Client-centric vs bank-centric. Historically, banks have focused mainly on managing clients’ money reliably and processing their transactions accurately. In omnichannel, banks must discard the bank-centric view in favor of a client-centric approach, by shifting attention to the interactions with customers.

    3.  Anticipating wants and likes vs fulfilling needs.  Banks must elevate from fulfilling needs to anticipating wants and likes and strive to exceed customers’ expectations.

    4.  Service-oriented architecture (SOA) vs omnichannel.  SOA is the standard way that banking components interact, allowing easy integration and greater reuse. Omnichannel, on the other hand, is built on Big Data, a technology that allows a vast amount of information to be managed and analyzed.

In rapidly evolving payments environments, IR’s Transact suite of solutions can simplify the staggering complexity of implementing new technologies and improve performance to keep your customers satisfied. By deploying our management solutions, you can monitor, troubleshoot and see your entire omni channel banking platform from a single vantage point. With the right support, consumers have a better sales experience and the transaction process becomes even more streamlined.,

With digital transaction volumes booming, new payment technologies to accommodate,  and customers demanding a seamless payments experience, everyone in the payments space has more complexity to contend with than ever before. 

In rapidly evolving payments environments, we simplify the complexity in your omni channel strategy and assure the transactions that keep you and your customers in business.


Download a PDF copy of our Managing your Changing Payments Business guide!

Topics: Banking Finance Payments Payment processing eBooks, Guides & Reports Transact Transaction analytics

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