Bank of the Future

Driving Retail Banking Success with Phygital Experiences

 
March 20, 2019

Today’s digital-first customers prefer autonomy and anytime, anywhere frictionless banking, forcing banks to shift towards digital models. The success of many digital-only banks validates the consumers’ changing behavior. However, this doesn’t mean the death of bank branches. Various industry experts and reports emphasize that branches still have a very important role to play across the customer’s lifecycle. According to a JD Power survey, customers of digital-only and branch-only banks  are the least-satisfied. The segment with the highest level of overall satisfaction comprises branch-dependent digital customers i.e. the group that used the branch two or more times in the past three months and also used online or mobile banking .

Clearly, branches will remain an integral part of banking, but their role and format will need to undergo transformation to suit the palate of new age customers. Let us deep dive into various roles that bank branches can play in an increasingly digital world:

  • Digital banking advocate: Provide the launch pad for banks’ new digital offerings such as video teller machines and chatbots and act as digital ambassadors to help increase digital uptake among customers through education aimed at raising awareness.
  • Centralized hub for:
    • Advisory services – Increasing adoption of APIs and analytics enable banks to keep a finger on the customer pulse in real time to provide personalized advisory services at the branch. This is especially true for complex products and advice on long-term financial planning.
    • Complaint resolution – As competition intensifies, customer retention becomes more critical than customer acquisition, making first-time compliant resolution a key metric. Well trained employees can provide the human touch and offer rapid resolution to customers’ escalated complaints,  sharpening banks’ competitive advantage.
    • Delivering omnichannel experiences – Branches help fulfil regulatory requirements that mandate in- person KYC as well as assist customers who are not tech savvy. The future will see bank branches become a part of well-connected channels offered by the bank where all the information collected at various touch points will flow seamlessly, enabling a frictionless omnichannel experience.


Playing the phygital card to win the customer service battle

To win the customer service battle, it’s clear that banks must offer frictionless services by judiciously balancing physical and digital channels. Here are six ways to get the blend right:

  • Rethink retail distribution: To understand the scope of branch banking in the overall channel strategy, it’s important to leverage analytics to study demographics and psychographics. This can help decode the target customer segments and their in-branch needs to determine the right mix of branch formats. Various formats gaining popularity include:
  • Assess channel capabilities

Benchmarking channel capabilities against market leaders is the first step to assessing the capabilities of digital and self-servicing channels vis-à-vis  customers’ needs. Partnering with an experienced service provider can help create a roadmap of channel enhancements based on the bank’s long-term growth strategy.

  • Devise a strategy to increase channel migration and adoption

Footfall analysis can be instrumental in analyzing customers’ historical transactions, understanding major types of transactions, and tallying them with other channels in order to identify customer expectations as well as the gaps in other channels such as ATM, mobile, or online banking. Thereafter, banks can incentivize targeted customer groups to migrate to desired channels through differential pricing across products. For instance, introducing digital reward points can help boost uptake and adoption of digital banking channels.

  • Create smarter branches: Banks can innovate the in-branch experience by harnessing technologies such as biometric authentication, chatbots, and IoT-enabled identification and verification to reduce customers’ interaction time during branch visits. Self-service can be promoted using video-enabled ATMs, tablets or mobile devices to demonstrate bank’s digital platforms, or creating a digital wall to demonstrate products and capabilities.

  • Create an omni-channel experience: Customers should have the same immersive, consistent and personalized experience at the branch as on other channels. How can banks achieve this?  Some options include exploring automation to simplify processes, deploying an integrated  CRM solution across channels, and creating a 360-degree view of the customer by leveraging analytics to contextualize and personalize products and services.
  • Empower branch workforce: The right information, tools, and training help harness the potential of human interaction for increasing brand equity and ensuring long-lasting customer loyalty. Launching a digital ambassador program to increase awareness and reviewing and redesigning branch KPIs to align them with the overall digital strategy are two ways to achieve this.

Banking on trust to build a strong future

Physical bank branches have endured the test of trust for years and still remain the biggest source of trust for the millennial generation. 80% of millennials say they want the option to visit a bank branch, even as 83% want more options when it comes to overall banking.  At the same time, the consequences of ignoring digital and cognitive revolution can create an existential threat for banks. The success lies in perfectly marrying the digital and physical channels to build a bank of the future that is connected, consistent, and customer-centric.

Ranjeet Kumar is a domain consultant with TCS’ Banking, Financial Services, and Insurance (BFSI) business unit. A CFA® charter holder from the CFA Institute, USA, he has more than 13 years of experience in consulting and operations across private, retail, and commercial banking. In his current role at TCS, Kumar anchors various digital transformation (front- and back-office), automation, benchmarking, and risk management projects for global financial services enterprises. He is adept at charting out transformation roadmaps and crafting cost optimization strategies for TCS’ clients the world over.