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Digital Channels

Digital Channels – What should banks do?


In the past, banks have taken inside out approach towards customer. They expected customers to know bank’s internal structures and reach out to bank’s respective unit in accordance to that.

Banks have various internal units divided between deposits, loans, cards, payments etc. which are further subdivided as home loan, personal loan, auto loan, credit card, debit card and so on. To add to this, different channels also were working in isolation. Branch, Internet, ATM, all are different channels which are run by different divisions in a bank. In short it was a maze, which was difficult for a customer to understand. But customer was expected to know if he needs to transact.

Over the period of time things started changing, banks started focusing on customers and we had CRM era. During this time, CRM systems pulled out information from different data warehouses, did number crunching, pattern analysis and customers were categorized into different category platinum, gold silver, depending upon their life time value for the bank. To differentiate among customers differential pricing and other benefits were also offered. It was driven to identify cross- sell / up-sell opportunities and retain customers.

This is followed by Digital Devices era, where customers are using different mobile devices (like mobile / tablet etc.) to access bank. All these different channels were disjointed and provided different information and variety of processes to customers. Among the better lot, banks could provide same look and feel according to their brand guidelines. However it highlighted the gaps in offerings and made everybody realize - how bank’s internal structures act as a constraint in customer experience. This led to initiatives like consistent customer experience across channels, referred as multi-channel. Many banks saw it as a good opportunity to improve customer experience. Roll out of multi-channel was not even over, Omni-channel wave came and banks got busy with preparing their Omni –channel strategy. Looking at the speed of change, one would not be surprised if next wave might be just round the corner.  Would next wave be Omni – presence strategy?

What is Next?

When we analyze evolution of Digital Banking, it is clear that bank’s focus on customers is increasing day by day. Banks are shifting its approach from ‘Inside- Out’ to ‘Outside- In’. To improve customer experience, banks are committing a lot of dollars toward this. Reasons of these changes are many – competition among banks, reducing customer loyalty, entry of non-banking players, availability of technologies, demanding customer and so on.

Banks are trying hard to make customer feel that customer delight is their priority. However decades of legacy make this attempt feel halfhearted. Banks are trying to learn and emulate from other customer focused (non-banking) companies, but execution is still driven from inside banks. Banks internal structures are still leaving its impression on final blue print of digital channels. Banks are trying to improve user interface and overall experience of customers. Many provide various features for customers to customize their own page, choose from various widgets, pay from facebook etc. but it is not enough. Most of the digital channels are still categorizing and grouping links / structures / menu options as per banks internal structures and not as per customer’s requirements.

One needs to analyze how each customer navigate through and what is of his interest. Pages of each customer should be created for his requirements and not for that customer category requirement. Customer focused companies are expanding its foot print in new areas, which were once strong hold of traditional brick and mortar companies. These non-traditional players like Facebook, Amazon etc. have advantages over banks like -

  • No legacy: It enables these companies to put systems in accordance to customer’s requirements.
  • Customer Focused: These organizations have been listening to their customers for long and have significant experience in this area.
  • Lesser regulations: It may provide a better framework for innovations.

And this seems to be a threat to entire banking industry. Even though banks are trying to come out of legacy and have started focusing on customers; they have a long way to go.

What should Banks do?

Banks can do multiple things to retains their customers and become more profitable. However the biggest challenge is - change of mind set.

  • The people, who hold the strings of wallet, would like to make changes their own way. They influence what changes are to be made, thinking that they know the best what their customers required. However it’s not always the case. Customers are changing and their preference too.
  • Bank should spend efforts in finding out “what would customer like” and not go with the approach “what we think customer would like”.
  • Digital Channel strategy has to adopt Outside – In approach without influencing and imposing bank’s internal structures. One has to think if a new customer focused bank is created, how would it look like.
  • Digital Channel strategy should be agile enough to adapt to customer’s preference dynamically. Banks should spend wisely and not create another monolith to chase customer’s preference.

In entire gamut of things, one thing which is certain amidst all this turmoil is – “Uncertainty”. Customer’s preferences have changed over time and would change even more rapidly going forward. If banks need to survive, they need to have a Digital Channels Strategy which is highly flexible and agile. It should be able to change and respond quickly in accordance to social and behavioral dynamics.




Note: This is author’s own opinion and not of his organization.


Comments: (7)

Raghavendra Rao
Raghavendra Rao - Independent ConsultantConsultant - Bangalore 18 July, 2014, 06:40Be the first to give this comment the thumbs up 0 likes Interesting and challenging times ahead indeed!
A Finextra member
A Finextra member 18 July, 2014, 07:29Be the first to give this comment the thumbs up 0 likes

Nice and crisp, made things easy to understand. Good job.

A Finextra member
A Finextra member 18 July, 2014, 14:55Be the first to give this comment the thumbs up 0 likes


I think you've hit on perhaps the key driver of change for all industry: presence. 

My old manager used to say that 80% of sales was being there at the right time.  I think he was right: timing, talent, and territory are key. But timing is most critical.

Omni-present is what Amazon and Google are.  I think institutions like these are MUCH better positioned to understand what a customer's financial needs are and where they are in their financial lifecycle.  Google knows when you research homes, cars, stocks.  Amazon has similar information.  Hence they will be positioned to leverage that information to support the need, desire, or demand. 

Imagine the power to be always be present when needed.  Omni-present.  Let it be known, I read it here first! 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 July, 2014, 19:26Be the first to give this comment the thumbs up 0 likes

With 65% market share in USA, 35% of online users don't even use Google Search to do their searches. Of the 65%, many people head straight over to purpose-built platforms without using Google e.g. etrade for stocks, Expedia for flights and hotels, TicketMaster for live shows. Of the people who do use Google Search, Google itself has clarified that, unless a user is logged on to Google - and most users are not - Google does not associate search keywords or results with individual users. In over 10 years of using Amazon, I haven't searched even once for homes, cars and stocks on Amazon. Which is but natural since, when I last checked, which was 2 days ago, Amazon didn't sell homes, cars or stocks. So, can someone pray tell me how Google and Amazon know when I research homes, cars and stocks? As for "No legacy: It enables these companies to put systems in accordance to customer’s requirements", ha ha. When was the last time Google or Facebook changed their platforms in accordance with a single customer's requirements or even took a call from a single customer? Forget omnichannel or omnipresent - omnipotence is the word here and I'm sorry if I can't get myself to bestow that capability on Amazon, Google et al. 

A Finextra member
A Finextra member 18 July, 2014, 19:36Be the first to give this comment the thumbs up 0 likes

I would suggest that I would use Google to compare morgage providers and rates, real estate agents, and school districts.  I would shop for another hose, ladder, or more furniture using Amazon.  I don't think it's so far-fetched.  I might write a Gmail with a trigger word like move, real estate, zillow, etcetera.  I also might put Zillow on my phone, which could be a give-away to my intentions.  I think the omni-present big brother is watching more than you think!  ;)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 22 July, 2014, 08:21Be the first to give this comment the thumbs up 0 likes

If all these things happen, and inside the Google walled garden, I agree that Google gets to play Big Brother and can use all the person-specific insight to display ads on its SERPs. But a mere 1% average CTR for Google Ads suggests that all the Big Brother stuff doesn't touch 99% of the online population. That doesn't sound like omnipresent to me! I'm not sure if Amazon's reach is even as wide.

A Finextra member
A Finextra member 24 July, 2014, 07:18Be the first to give this comment the thumbs up 0 likes

Interesting read Neeraj.

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