Nearly two-thirds (63 percent) of senior retail banking executives agree that an emerging trend in financial services is the growing use of direct and self-service channels, according to a recent report from the global management consulting firm Accenture.1 More than eight in 10 (83 percent) say account holders have responded to the financial crisis by increasing their use of direct channels, such as online and mobile banking.
This translates to a huge opportunity for banks and credit unions. "Account holders are increasingly expecting a fully functional internet branch, whether it's for information, customer service or transactions," says Bob Williams, director of marketing technologies for Harland Clarke. "If you provide a service at a brick-and-mortar branch, you should also be able to provide it at your electronic branch."
An In-depth Look
Delivering Value plans to run occasional recurring features on self-service optimization. These articles will explore the topic in more detail and will offer practical how-to advice. Check upcoming issues of Delivering Value for more about the following topics:
Who is making top-level decisions about your website and determining your online strategy? Does your site have the features required to meet your goals? Is it aligned with industry standards?
Who builds, tests and manages software releases? What steps are in place for troubleshooting? Are the needs of all business units being addressed?
Experience and Usability
How positively is your site seen by its users? Is it easy to use or difficult to navigate? How can you improve the
How do you promote your site? Are you making effective use of social media, such as Twitter and Facebook? Are you reaching the right audience with the right message?
Product and Service Management
How are your products and services portrayed on your site? Does it encourage cross-sell and up-sell? Are you making effective use of banner ads and landing pages?
How do you define the success of your website? Are you measuring the right activities? Are you ensuring that results meet objectives?
The Accenture report emphasizes that the growth of new technology channels and services is enabling account holders to call the shots these days. The report states, "The opportunity for banks is to recognize the new nature of this self-directed customer early, to acknowledge the transformational nature of the change … and to mobilize to provide what the
What the customer wants, according to Williams, is a financial institution that is easy to do business with. "The report points out that 'service quality' and 'ease of doing business' are two of the biggest factors when choosing a bank or credit union,"
A challenge, especially for
Not surprisingly, financial institutions are trying to meet this need. When Accenture asked banking executives for their top three strategic investment priorities for customer management and distribution, the majority (54 percent) mentioned developing and improving new channels, followed by integrating multi-channel distribution (49 percent).
However, their success in achieving these goals may be correlated with size. "Many larger financial institutions have much broader functionality on their websites," says Williams. "They're opening new accounts, signing up account holders for loans and filling out applications, all online. But many smaller institutions have to outsource this functionality, possibly because they don't have the staff to manage it internally." For too many account holders, online banking is still a very information-centric experience — often because information is all that is available to them. "You can go online and read, but it's not necessarily transactional," he adds.
Financial executives agree. Almost half said their institution was weak in customer insight, channel development and integration, despite believing they are critical to future success, according to Accenture. Williams notes that, historically, the internet was mainly an information source, not necessarily a place to do business. "As the online experience has matured and become more transactional, financial institutions have been slow to adopt, perhaps because of the investment involved as well as concerns about fraud," he says. "They see it as a high-risk channel."
Regarding online security, Williams agrees that criminals lurk on the internet. "But they commit crimes in brick-and-mortar branches, too," he indicates. "The key is to develop a framework for a complete security system at your financial institution. Don't penalize your account holders by limiting internet services because of fear."
Younger, technology-savvy account holders on board
In addition, it is critical for banks and credit unions not to assume that high-value account holders want only old-fashioned, high-touch, brick-and-mortar services. "Many high-value account holders tend to be highly technology-savvy and want to conduct transactions from their smart phones or computers," says Williams. As the Accenture report notes, multi-channel integration is not about reducing costs; it is an investment for growth.
Of course many account holders, especially those who are older, simply are not in the habit of banking electronically, despite the online offerings from their financial institutions. "They go to a branch," says Williams. "This should remain an option so account holders can choose how they want to do their banking, whether it's at a brick-and-mortar location or an electronic branch. Both should be equally accessible."
Not surprisingly, it's the Gen X and Gen Y consumers, and everyone growing up behind them, who have come to expect online and mobile banking. "Unlike the older generation, they don't want to drive to a branch," says Williams. The use of smart phones to provide financial services is growing exponentially, according to Accenture, which notes that "the primary owner of the customer relationship through this channel is as likely to be the telecom or provider of applications as it is to be the bank." The firm suggests that collaborative technologies may hold potential as financial institutions work with developers of new hybrid products and services.
Account holders will grow savvier about when, where and how they manage their money — so a banking website that grows overly complicated will be a turn-off. Williams offers some very straightforward advice: "Keep your online banking system easy to use," he says. "Simple is good. People like simple."
For more information on developing a fully transactional online presence, and a toolbox of online resources, go to harlandclarke.com/self-service or contact your Harland Clarke account executive. You can also follow us on Twitter @Harland_Clarke.
1 Accenture, "Customer 2012: Time for a New Contract Between Banks and Their Customers," 2010