I read with interest a post pointed out to me by @JenRBoyd posted on Mobile Commerce Daily highlighting a recent Celent report comparing US and EU investment in multi-channel. The problem here is that the conclusions of the report are correct, but even the report itself suffers from an old-school view of the banking arena, that is, we are still asking the wrong questions...

The Generational Gap in Management
If you've read my posts previously you'll know that I'm particularly critical of the branch-centric organization structures that dominate retail banking still today. The shift to 'multi-channel' has been a long and hard road, and is far from over at this stage.

The problem intellectually is that it is fundamentally, virtually impossible to get a banker of 30-40 years experience to think in truly innovative ways about reinventing the way we engage customers in banking. We see this embedded in banking from terminology, to metrics, to budgets, to organization structure, to philosophy. Many banks still call their multi-channel practice "Alternative Channels" - indicative of the fact that most bankers still view multi-channel as an alternative to the branch, i.e. the 'real' bank. The problem with that strategy is customers just don't think like that.

If you had a Y-Gen or Millennial on the board of the bank today, his or her first three priorities in channel investments would be in the arena of mobile payments, social media and mobile banking. In Celent's report (link above) indicative of the generational gap, even prevalent in the research, is that we aren't even asking the right questions yet. Celent's report doesn't even include the areas of mobile payments and social media engagement as 'channel priorities'.

Re-imagining the organization
So in an ideal bank of today, what would the channel priorities and organization chart look like?

Here's a few key elements:

1. Complete Channel Agnostic Approach
The first thing that needs to happen is losing the bias in the organizational structure toward branch, from a budget perspective, from a leadership perspective, and from a philosophical view. It would help to create a Head of Channels that manages branch, internet, mobile, self-service (ATM, etc), and other channels together. There should be an acceptance that all channels are created equal in respect to their ability to engage customers from a revenue and service perspective.

2. Seed strategy teams with Y-Gen/Millennials
You can't change the way that old banker's think. Remember the joke...Old Banker's never die - they just lose interest.

Seriously, we need aggressive new thinking, and we aren't going to get that from those who've been brought up on a staple diet of traditional approaches to banking. We need to create energy for new initiatives. Most commonly when I propose this to banker's they say "But, we need people with banking experience!" I cringe at that...you can't inject new blood and thinking into the system if you insist on only using those who are already preconditioned to the world of banking.

If you must, use the kids and grandkids of the board members themselves so you can keep it in the family. But get some new thinking into the organization ASAP.

3. Customer Dynamics and Engagement Banking
We need to start thinking about re-inventing the role of banking in the lives of our customers. This is not just building new Apps, new websites, or sticking up a page on Facebook - this is thinking about the contextual use of banking, and how to reduce friction for our customers.

Realistically if we think about the way banking works today, usually it is a 'wait for the customer to come to you' scenario. We assume that when a customer needs a loan, a new bank account, or to invest some money, that he'll come to the bank. If we understand the context of those products or services, we'd see that if we could take those elements to the customer, and better engage them, that banking would truly become a service, instead of just a function. The organization chart of the future will have a customer engagement team that dominates the marketing and product functions of the bank, both from a retail and wholesale banking perspective. This is because we are going to have to reinvent the way we engage customers with our products or services, taking banking to the customer.

Conclusions
We have to start asking the right questions. Those questions start with how is the behavior of our customers changing, how can we better engage them, and how and when does that engagement occur?

Patently, the use of mobile, social media, contactless payment technology built into the handset, geo-location capability, targeted 1-to-1 marketing offer management (beyond groupon), and other such capabilities should be an absolute priority for bankers today - but we aren't even talking about these priorities properly yet...