MAKING OMNI-CHANNEL A REALITY - Ncr

3. CUSTO M E R I S E VE RY TH I N GBanks don’t need to be told how important it is to keeptheir customers engaged and satisfied. But when it comesto omni-channel transformation, it’s impossible to overstatejust how crucial it is to understand your customers, and toknow what they want and how to give it to them.As I explore in this whitepaper, the customer should be oneof the core focuses for any financial institution developingan omni-channel strategy. But understanding whatcustomers want and coming up with an effective plan tomeet their expectations isn’t easy.Here are some of the key customer-related challenges yourbusiness will face as it embarks on the journey towardsomni-channel service.Knowing your customerHow can you ensure that you are really engaging with yourcustomers and developing a clear, reliable understanding ofwhat they expect from their bank? One fundamental step isto come up with a comprehensive model that enables youto create a detailed profile of your customers andtheir behavior.In order to understand and segment your customers, it’simportant to have a clear picture of everything from theirage, gender, cultural background and income to theirtypical spending and saving habits.It’s also extremely useful to know how certain customerprofiles and groups are likely to engage with their bank. Forexample, what existing products do they hold, what sort ofproducts are they interested in and what is their preferredmethod of communication?Gathering these sorts of details and using them effectivelywill help to ensure that your business offers appropriateproducts and services at the right time. This is mutuallyadvantageous for the customer and the bank.5 Winning through Customer Experience: EY Global Consumer Banking Survey6 McKinsey: The New Rules for Growth through Customer EngagementMaking Omni-Channel a RealityIn a report that grouped more than 32,000 customersinto segments, EY said this sort of segmentation “providesa unique lens and highlights opportunities to considersegment-based strategies to more effectively invest bankresources based on those segments that are currentlyprevalent in one’s customer base, or are targets forfuture prospecting”.5PersonalizationDeveloping a strong understanding of what your customerswant is a fundamental element of personalization, aconcept that is attracting more and more attention in theretail banking industry.The new generation of smaller, more agile banks, such asAtom in the UK, are using technology to deliver bespokefinancial services that are contextually relevant to thecustomer. The aim is to provide a service tailored to theindividual, as opposed to the customer simply having toaccept whatever the bank is offering.Given its importance as part of the modern customerexperience, personalization needs to be at the heart ofany omni-channel strategy. In order to deliver a trulypersonalized, relevant service, banks should be striving fora productive dialogue with their customers, rather thanbeing preoccupied with sales and revenue.“As opposed to the traditional product upsell mentality,optimal engagement relies on knowing what behaviorswill enhance the customer-bank relationship (e.g. appdownloads, clicking to chat, redeeming an offer, watchingresearch videos), which may not always take the form ofanother transaction or product. Developing this knowledgerequires an understanding of consumer expectations bysegment. The greater the shift from broad segmentation tomicro-segmentation to one-to-one targeting using customerdata insights, the greater the impact.”6

Balancing ‘inside-out’ and ‘outside-in’The fundamental goal of omni-channel transformation isto deliver maximum convenience and efficiency for thecustomer by providing a seamless experience acrosschannels. When designing this experience, it’s beneficial toseek a balance between two approaches: ‘inside-out’ and‘outside-in’.The ‘inside-out’ philosophy places an emphasis on whatyour organization is hoping to achieve. What, exactly,does the customer experience that you are striving todeliver look like? What products and services are you mostinterested in promoting to your customers, and how is yourproposition distinct from that of your competitors?‘Outside-in’, on the other hand, gives you an insight intohow the customer views your brand, helping to build upa picture of the differences between ‘perceived’ and ‘real’value to the customer. This often requires measures suchas surveys, customer interviews and mystery shopping.Making Omni-Channel a RealityStriking the right balance between these approaches couldbe the key to creating an omni-channel experience that istruly rewarding for your customers and for the business.Any bank embarking on a journey towards omni-channelservice delivery will have many questions to answer andchallenges to overcome along the way.One of the key stages of an omni-channel transformationis assessing your existing operating model and looking forways it can be improved. This is likely to involve buildingup a clear picture of your business capabilities (andopportunities for developing them), optimizing processarchitecture, evaluating your product portfolio, andunderstanding the strengths and weaknesses of yourphysical distribution network.

4. A SS E SS YO U R O PE R ATI N G M O D E LAny bank embarking on a journey towards omni-channelservice delivery will have many questions to answer andchallenges to overcome along the way.One of the key stages of an omni-channel transformationis assessing your existing operating model and looking forways it can be improved. This is likely to involve buildingup a clear picture of your business capabilities (andopportunities for developing them), optimizing processarchitecture, evaluating your product portfolio, andunderstanding the strengths and weaknesses of yourphysical distribution network.Understanding business capabilitiesThere are many benefits to be gained from having a clear,in-depth business capability model and understandingyour organization’s ability to perform key activities. This willgive you a more holistic view of the company’s capacity andmaturity, as well as highlighting your key strengthsand weaknesses.Capability maps can also improve your ability to anticipateand respond to change, prioritize investments and spotpotential challenges and opportunities in the plannedchange agenda.Here is an example of a high-level capability model for theretail bank distribution network:HIGH LEVEL RETAIL OPERATING MODELCUSTOMER & BRANDPROPOSITIONSMANUFACTURINGDistribution diarySocialSales & ServiceAdvice & SalesMarketing Products & ServicesCustomer ServicesCustomer Complains ManagementCustomer Relationship ManagementSales & Channel ManagementSales Planning &ManagementChannel InteractionManagementIntermediary RelationshipManagementCORPORATE COREMaking Omni-Channel a RealityCustomer and ProductManagement

The next step, after defining a high-level overview of yourcapabilities, is to conduct a more detailed examinationof each capability, which will require interaction withsenior and mid-level leadership. Equipped with a solidunderstanding of specific abilities within your business, youcan compare with industry benchmark data to ensure youstay ahead of the competition.A next-level capability overview might look like this:C A PA B I L I T YS U B C A PA B I L I T YDESCRIPTIONM AT U R I T Y L E V E LAdvice and Sales- Selling- Regulated Advice- Etc.Covers all the key areas relatedto sales and type of sales e.g.which channels are used for sales,which processes are included,how mature these processes are,which technology supports it, etc.Retail banks can assess theirbusiness capabilities againsttheir competitors and thebenchmarking data to alwaysstay ahead of the gameIt’s important to remember that more detailed capabilitymaps might look different for different banks. Anestablished financial institution that places a strongemphasis on its physical distribution network, for example,will have different priorities to a purely digital provider.Once your business has come up with a thoroughassessment of its capabilities, another useful step is tointroduce standard reporting capability such as executivedashboards, which can make it easier to visualize changingcapabilities and to track and plan investments.Here is what an executive reporting dashboard could look like:ADVICEAND SALESMARKETINGPRODUCTSAND NTERACTIONMANAGEMENTCUSTOMERSERVICESSALES PLANNINGAND MANAGEMENTCUSTOMERRELATIONSHIPMANAGEMENTMaking Omni-Channel a RealityCUSTOMERCOMPLAINSMANAGEMENT

Optimizing process architectureIn financial services, processes are defined by the use ofspecific inputs to achieve key outcomes for the organizationand its customers, with minimum use of resources. Takingaccount opening as an example, one of the goals of omnichannel delivery is providing a seamless experience acrosschannels—so customers can start to open their accountonline and finish the process in a branch, for instance.However, there are some significant obstacles to achievingthese objectives, one of which is the existence of manualoperational processes within many banks, which can raisethe risk of inefficiencies, human error and compliance failings.It’s important to have a clear view of your processes andto identify where improvement is needed by dividing theminto logical categories and measuring performance in eacharea. Possible performance metrics include the percentageof ‘straight-through’ processing vs manual processing,turnaround time, number of variations and defects, andnumber of internal and external complaints.Once you have a strong grasp of how your key processes arefunctioning, the logical next step is to look at methodologiesto optimize your process architecture. A Lean Six Sigmaapproach, for example, could help your business to be morecustomer-focused while reducing waste and variation.To deliver a truly customer-centric operating model, it’simportant to look at these processes from an outside-inperspective as well. That’s where customer journey comesinto the picture. According to The Financial Brand’s 2017Retail Banking Trends and Predictions report, the single mostimportant trend for the retail banking industry this year willbe the drive to remove friction from the customer journey.There are various ways of creating and documentingcustomer journeys. However, the system must capturethe customer segment, customer objective, the highlevel activities the customer needs to do to achieve thedesired outcome and the time it takes them to do it. Mostimportantly of all, it should connect back to your operations.Here is an example of a customer experience journey:CU S TO M E R S C E NAR I O39 years old female seeking a sole high value personal loan of 15,000 for home improvements, but wishes to speak to various loan providers beforemaking a final decision.CU S TO M E R E X P E C TATI O NAs an “x customer segment”, the customer is not financially savvy in terms of loans but is aware of competition in the market place and expectscompetitive pricing. She is looking for a fast and efficient process with instant disbursement and anytime, anywhere servicing model.MARKETRESEARCHLEAD GENERATION(INSIDE MENTPOST SALEPOSITIVE Partial info available onthe website Partial info availablevia branch Typically inside out but canbe very useful if we knowcustomer very well e.g.personalised contact Can use Mobile toarrange appointment . Customer is pre-vetted Customer informedabout docs . Post Customer contact. Money disbursement. . Balance enquiry. .NEGATIVECU R R E NT CU S TO M E R E X P E R I E N C E 2017 Not part of anyaggregator site Info not available onmobile channel . . Process variation basedon channel . Customer is notable to discuss anyother product . . . . Pre-approval,pre-populated Includes suitability,sustainability &affordabilityacross channels Tailored riskscore card Instant decision &money distributionvia FPS . Consistent customer journeyacross channels Enhance digital capability Risk appetite andeligibility changes . STP Instant decision . Post sale feedback process Enable digital capability forfull service . High value personal loanin x mins X mins for fulfilment Instant money transfer X number via digitalPOSITIVE Detailed info availableacross all channels Able to actively targetthe right customersegment for right offers Booking via channel ofchoice Online videos toexplain productsNEGATIVETARG E T CU S TO M E R E X P E R I E N C E 2019 Part of someaggregator sites Not fully integrated with allaggregator sites . . . .K E Y C HAN G E S ( E NAB LE R S AN D N E W C APAB I LITI E S) Marketing and targeting customersvia aggregators Targeted leads at various touch points . Onlineappointment booking Enable virtual channels Personalised customercontact strategy and delivery .K E Y P E R FO R M AN C E I N D I C ATO R S ( K P I S) X number of salevia aggregators X number of customerneeds met 24 x 7 booking facility X minute booking process

It is critical to understand a customer’s “Moment of Truth”and to re-design these end-to-end customer journeys inorder to remove friction and to create a seamless customerexperience that is personalized and contextualized inreal time. This would also help retail banks to meet theircompliance requirements, whether it’s AML, fraud orcustomer conduct risk.Analyzing product portfolioEvaluating your product portfolio will be an important partof an omni-channel transformation, for the simple reasonthat having more products and associated services makes itmore difficult to remove barriers between the channels thatmake up your distribution network.One of the questions banks need to ask relates to theviability and value of legacy products, which can increasecomplexity, cost and risk through the number of people,processes and technologies required to manage them.Identifying and taking opportunities to simplify yourproduct portfolio can result in benefits such as a more agileoperating model, reduced regulatory difficulties and feweroperational challenges.“A move to a customer-driven approach will require banksto rationalize and simplify their product sets. By breakingproducts into their component parts, banks will enablecustomers to tailor-make products to suit their needs.Banks that achieve this will be able to provide customerswith truly differentiated offerings.”7Getting maximum value fromphysical distributionDespite the growth of digital channels, physicaldistribution—primarily through the branch and ATM—stillhas an important role to play in retail banking today. Havinga branch network allows banks to engage with customerson a face-to-face, human level, which could be crucial inbuilding trust. This is particularly important when peopleare seeking advice or taking out new products.7 Defining the New Core of a Bank—EY8 Why Branches Matter in a Digital Age—TSBMaking Omni-Channel a RealityHowever, it also needs to be acknowledged that branchnetworks are costly to maintain, and footfall has beendeclining steadily in recent years.When it comes to optimizing and deriving maximumvalue from your branches, one common pitfall to avoid isfocusing on individual sites in isolation, or conducting onlya partial assessment of your network. By taking a holisticapproach and reviewing your distribution network as awhole—based on methods such as analysis of customersegments and behaviors—you will be in a better positionto make strategic decisions about the value and viability ofyour branch network.“Customers are adopting mobile and digital banking ata pace we’ve never seen before. But the importance ofhaving a branch in a convenient location is as important asever for consumers. For those who want to offer genuinecompetition in the future, the ability to meet that customerdemand is crucial. The focus for banks shouldn’t be indeciding between branches or technology, but in investingin branches and the service they offer, alongside a first ratedigital offer.”8Of course, physical distribution also encompasses ATMs,a channel that mustn’t be forgotten in your omni-channelstrategy. According to forecasts from Global Market Insights,the ATM market is set to grow at a compound annual rateof nearly ten percent up to 2023.The ATM remains one of the most visible and heavily usedbanking channels around the world. It has the flexibility tofunction as everything from a simple cash dispenser to a fullsales channel, with users interacting with tellers via video.There is clear potential for the ATM channel to continueinnovating over the coming years, so we can expect it toplay a central role in omni-channel transformation for manyfinancial institutions.Finding the right balance between the physical channelsthat so many customers continue to rely on and the latestinnovations driving forward digital and mobile banking—and striving to ensure that one channel is not prioritized atthe expense of any other—should be one of the key goalsat the heart of any omni-channel strategy.

5. E N SU R I N G D I G ITAL WO R K S FO R YO UIt should come as no surprise to any financial institutionthat digitization is the biggest disruptor for any business atthe present time. Today’s range of digital tools offer banksgreat opportunities to boost the level of service they offerand optimize their costs through effective use of the latesttechnology. And as more customers become digitallyfocused across everything they do, banks must reactaccordingly in order to meet consumer demands. How can we sync all of our channels?Yet despite the advantages that digitization can bring, fewAnswering these questions effectively means puttingdigitization at the core of all elements of a bank’s business.Organizations must develop a holistic picture in orderto build a digitally-focused business that is responsiveto the market, and customer needs. To do this, an agiletechnology infrastructure that is able to adapt to emergingtechnologies such as mobile, AI, virtual reality, chatbots andbiometrics is essential.retail banks have yet to fully embrace this. As I explain inthis whitepaper, there are several key issues that preventbanks developing a fully digitized business strategy. Theseinclude a reliance on legacy IT infrastructure, a siloedorganizational structure and the lack of a comprehensivevision and plan for making the transition.However, tackling these problems is vital, as a strong digitalstrategy plays a vital role in building an effective omnichannel business.Transforming customer outcomesFrom an omni-channel perspective, one of the key benefitsof digitization is its ability to greatly improve outcomesfor end-users—both employees within the business andcustomers. This will come about as a result of betterautomation and efficiency, leading to improved decisionmaking processes and, in turn, higher revenues.“We found that companies that had 50 percent or more oftheir revenues from digital ecosystems and understoodtheir end customers better than their average competitorhad 32 percent higher revenue growth and 27 percenthigher profit margins than their industry averages.”8To do this, businesses must recognize that digitization isn’tjust about the technology. Throughout the process, banksmust ensure their focus is on the business and customeroutcome. This means asking questions such as:8 Weil and Woerner, MIT Sloan Management Review9 Big Data: Profitability, Potential and Problems in Banking—The Financial BrandMaking Omni-Channel a R

the dream of genuine omni-channel banking into a reality. In this whitepaper, I introduce the Omni-Channel Wheel of Fortune, a representation of the six key areas where— based on my past experience with NCR's retail banking customers—I believe banks should be focusing their efforts in order to make a holistic transition to omni-channel.