By John R Wright
In my last article headlined ‘Banking — Back to the Future’, I challenged the industry as to whether they could ever effectively re-engage with its customers, rebuild the trust and make themselves relevant again. I concluded that they could indeed make themselves relevant again provided that they were able to create an integrated multi-channel offering to deal with all the various customer segments that exist and continue to emerge in the banking market as a whole. The viability of the “standalone branch” needs to be challenged and an understanding developed as to how it might be repositioned and slotted into an appropriate multi-channel offering.
Recent reports from McKinsey and other sources indicate, interestingly, that customer behaviour across the US and Europe is not generic, nor indeed is the customer response in these two major banking markets, to the digital revolution.
Nonetheless, major banks in both continents suffer from notable limitations — executive mindset, management inertia and a terror of having to face in to the massive IT investments that an effective response would appear to require.
Executives and management seem to be caught in the headlights and appear to be completely unable to formulate any kind of a cohesive strategic plan, which will get them out. The old adage of “chunking for success” is never more relevant.
A series of tactical investments, ie “stepping stones”, towards the strategic goals is definitely the way to go.
In the executive mindset the “we know best” syndrome prevails. So very important to drive market research, which in turn will drive one’s strategy and investment plans.
Use the young people in the organisation who are digitally literate, form staff focus groups etc etc. This does not cost much money and it’s available on the doorstep. Certainly for those much over the age of 25 there’s no hope!
It is really important to plan for an integrated offering multi-channel process and a price per channel. Understand the manufacturing costs in each channel, ie costs of ones processes; therefore understand product profitability based on a manufacturing model not marginal return.
Staffs are then freed up from dealing with processes and manual Interfaces to deal with customers, but then training is vitally important and that’s where a significant investment has to be made. There’s a real danger that unless banks also integrate these offerings for SME and private customers, there’s a danger of being stuck with the costs for-ever!
Very few banks are able to produce a “single customer view” in their IT environment; this is mandatory, if that means going back to the beginning and starting over with unique customer IDs etc, then so be it!
Consistency needs to be the watch word, that’s the message coming out of the United States and the importance of “cross sell” cannot be overestimated.
Executives and management must have the confidence to empower the frontline, and allow decision-making at the point of sale. Staff and customers alike will be delighted and significant productivity gains are possible!
It is interesting that McKinsey’s refer to the need for an understanding of customer behaviour. An organisation I was involved with did this research in 1992 and 1993 to understand customer behaviour and “switching propensities”. Nothing moves quickly in our Industry!
None of this is particularly “new” to those of us who have spent years in and around the banking scene. “Making it happen” is the key!
Glasgow-based John R Wright is an academic, veteran banker and a former CEO of Oman International Bank and Gulf Bank, Kuwait. The views expressed are his own.