Source: Angus Hislop, Cisco
Is multi-channel service quality within reach for all, asks Angus Hislop, head of European financial Services, Cisco Internet Business Solutions Group
In 1997,Coopers&Lybrand's international banking practice produced some seminal research 'Tomorrow's Leading Retail Bank' predicting that the effective management of multiple distribution channels would be the key challenge for retail bankers in the first decade of the 21st century. They forsaw an era in which all of us could gain access to the right financial expertise 'anytime, anywhere, anyhow'. But still in 2004 only the wealthy with 24 hour access to their private banking team benefit from such a vision. The rest of us must put up with unanswered phone calls and e-mails, constant handovers to see the mortgage or investment expert, or waiting to be put in touch by phone or e-mail to "somebody who can help".
Why has there been so little progress towards joined-up, 'anytime, anywhere, anyhow banking' and is it about to change? Are we about to move from strategic management of multiple channels to real cross-channel collaboration aimed at meeting customers' growing expectations?
Progress has been slow for a number of reasons. We have taken to multiple channel banking faster than expected but have hardly reduced our use of the branch - over 50% of us use three or more channels on a regular basis and only 10% never use the branch. But the infrastructure and applications supporting these channels across the various products are different and expensive to link together. These difficulties have been compounded by an obsession with cost reduction which has driven a wave of domestic mergers adding further complexity and putting service enhancements lower on the agenda.
Three things are now changing. Service quality is back at the top of the CEO's agenda as the 'easy' sources of cost reduction disappear and the potential for large, transformational domestic mergers recedes in most countries. Leaders(Wachovia amongst them) are making customer satisfaction and loyalty key drivers of their future investments as they gain more information on the strong link between such measures and incremental revenue.
Secondly there is a growing realisation that more and better customer contact translates into improved satisfaction and loyalty and can thus drive customer revenues. For example, BNPParibas estimates that an increase in proactive customer contact from annual to quarterly leads to a six point improvement in customer satisfaction ratings.
Furthermore recent data from US research firm, Portland Research Group, calculates that customer purchase intentions plummet from an average of 64% to 48% once more than one handover is made either in the same channel or between channels. Unfortunately experience with two major UK banks reveals that about one third of calls are not dealt with immediately or at first handover and branch staff estimate that some 40% of leads are lost if customers are asked to return to see a specialist or are promised a follow-up call.
Finally a new communications technology has emerged which, when combined with changes in process, enables much more effective customer contact both within and between channels. IP telephony allows convergence across networks voice, data, video, storage at a cost which can make 'anytime, anywhere, anyhow banking' a reality for most of us. Linked to these developments is the rapid take-up/reduced cost of broadband whose speed makes the wider use of functions which demand high bandwidth such as video so much more practical than in the past.
As a result of these changes, retail bankers across the world are beginning to recognise that networks matter. In the past, business leaders did not care too much about the networks used as long as they worked and IT managed them at low cost. Now they are beginning to realise that policy decisions on future networks can have a great impact on the functionality, revenue potential, complexity and costs of their operations. As a consequence network decisions are too important to be left to IT or the outsourcer.
Banks throughout the world are at various stages of implementation, conscious of the need to prove robustness, scalablity and security before full roll-out. In the US, JPMorgan Chase is at the forefront, in the UK it is Abbey - and more recently LloydsTSB - which is investing most heavily and in France BNPParibas and Credit Agricole are taking the lead.
How in practice does this help banks manage multiple distribution channels more effectively and ultimately achieve full multi-channel collaboration? Let us look at some examples. Now if you go to a branch or call your bank to ask for advice about a mortgage or investment, you would be asked to set up a separate appointment, probably in another branch - or you would be promised a call later. But if the bank were enabled with IP telephony and the processes adjusted, the bank worker could simply put you through to an expert who would speak to you on video in a private room with all your relevant data already in front of him/her. And if you were particularly valuable, you would be allocated the most experienced advisor. Credit Suisse are already using this technology to great effect to support credit sales in car showrooms and Credit Agricole uses it in country branches where access to face-to-face expertise is difficult or expensive.
There are other ways in which service can be hugely enhanced. Cameras in branches linked to the same single network can be used to observe queuing patterns and adjust staffing or to support sales training as is common amongst retailers. Call centres need no longer be the same monolithic, conveyor belt operations with high staff turnover and generally poorly paid/trained staff that are typical today.
In future simpler queries may be directed to offshore centres with other calls and e-mails dealt with by much better trained staff able to resolve immediately or at one handover in virtual contact centres. These can be a network of smaller units or operators working partly from home or the branch-all using the same converged network and with access to the same customer data. When a call is received at the branch, home or call centre, the phone rings and displays relevant customer data based on the ID/account number. Calls need no longer go unanswered; the customer is always dealt with in a manner consistent with the business value/priority which has been assigned.
Compliance can also be enhanced since more sales and service conversations will be digitally recorded, allowing easier and less expensive retrieval and access. Retrieving details of conversations - who said what to whom, when and with what data - will be no more difficult than retrieving old emails. Since banks typically are unable to provide incontrovertible proof of correspondance or conversations in 30-40% of complaint cases, there can be considerable benefits in reducing the cost of complaints or proof of compliance with regulations
Of course not all banks understand the critical importance of such communications technology. Many have only recently invested in traditional PBX networks or are locked into leases and baulk at the cost, even when recognising that total cost of ownership is 10-20% less than the old separate networks.
Others have vested interests in the different channels and networks fighting to retain their independence; in such cases there will be references to service standards and uncertain reliability in IP telephony. As experience is gained, such concerns diminish and it is now generally recognised that voice quality is similar to traditional standards and flexibility and resilience very much higher.
Finally, some banks are concerned about the cost of training staff and reengineering processes which are required if the business wants to reap the benefits of this improved telecommunications capability. Or they may have lost much of their ability to influence outcomes because network management has been outsourced without due regard to safeguarding innovation potential.
However those banks which realise that strategic management of multiple and separate distribution channels is simply insufficient for today's customers are finding ways to overcome these challenges. They realise that real cross-channel collaboration in the interest of the customer can only work when converged communications networks are in place. They are becoming an essential prerequisite for success in retail banking.