Building a Better Delivery Model in Banking

It is time for financial institutions to respond to the changing behavior of consumers, delivering products, services and financial education through both physical and digital channels. Integrating and optimizing this channel delivery can bring value to the consumer as well as the banking organization.

Guest Post by Meheriar Hasan, CEO, Terafina

Today’s consumers demand financial services to be available and delivered to them as seamlessly and ubiquitously as any transaction they complete with Amazon. And it’s not just about improving customer service … it’s about satisfying today’s hyper-connected consumer by delivering both service and sales through any channel the consumer chooses to use. The financial institution that fails to deliver sales, as well as service, through the platform of their consumers’ choice is doomed to stagnant growth.

Most consumers no longer need a branch or any other brick-and-mortar structure to consume financial services (though they may still visit their local financial institution’s branch for advice or validation about complex real estate or investment transactions, or complex servicing issues). Instead, an increasing number of consumers are transacting their financial business remotely through a variety of digital platforms: desktops, laptops, tablets, phones – even watches and glasses! And they get financial advice and information digitally also, through countless traditional financial and non-traditional websites.

Technology – The Catalyst for Change

Digital technology is evolving rapidly … and consumers are adopting to new technology at record levels. The industry has experienced double- to triple-digit growth in mobile banking users over the last few years. The result is explosive growth of a hyper-connected customer base. Customers are connected to their financial institutions through multiple channels and devices. According to study by Mckinsey & Company, more than 65 percent of consumers interact with their financial institutions through multiple channels.

Unfortunately, this significant increase and shift in financial institutions’ total customer interactions has not resulted in any measurable improvement in the deepening of customer relationships or in consumer satisfaction. In fact, Accenture research suggests that about 34 percent of the total traditional banking products sold were from institutions other than the consumer’s primary bank.

The unplanned introduction of additional delivery and communication channels has led to a significant increase in operating expenses with very sub-optimal value creation. Customers want to transact with their financial institutions through multiple channels, wherever they are and whenever they want, based on their needs rather than conform to the operating model of their financial institutions.

And consumers expect their financial institutions to recognize them and acknowledge their real-time financial needs and status regardless of their choice of channel. However, many financial institutions have built incomplete operating models that improve service without significantly affecting sales … resulting in stagnant customer satisfaction on the one hand, and deteriorating sales force effectiveness and branch productivity on the other.

Buy ‘Strategic Planning Imperative: Capitalizing on Digital’s Promise‘

Building a Digital Banking Model

The operating model for financial institutions, especially regarding distribution, must change to serve digitally empowered consumers. Financial institutions must transform their current operating model in four ways to add significant value for their customers and add significant value for their brands.

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