Better cooperation between branch and online is top priority for European banks

Better cooperation between branch and online is top priority for European banks

Improving cooperation between branch, Internet and call centre channels is the top strategic priority for nearly half of Europe's retail banks in 2011, according to a report from Efma and Finalta

Banks are targeting a step change in direct channel sales and to achieve this they anticipate significant use of differential pricing, says Efma (European Financial Marketing Association).

This will bring to a head a conflict between branches and direct channels that most banks have been trying to avoid for some time. Branch sales have decreased from 82% to 78% since 2007, whilst those made via the Internet have nearly doubled, to almost 10%. By 2013, the report predicts, this will be 19%.

Meanwhile, transaction migration is also a high priority for 2011, cited by 31% of respondents. Pricing differentials and education are the most commonly used techniques to move over customers. Banks reported counter transactions down by 3.5%, self-service up by 11% online by 15% over the last year.

The report also finds 29% of banks are prioritising improvements in mobile Internet banking. SMS alerts are the most common service offering but 58% of banks have mobile Internet services and a further 27% plan to join the rush.

However, banks do not see mobile banking as a direct revenue generator and 62% say this is holding up change. The biggest benefits are expected to come from reaching younger customers and improving service.

The growth of online channels is expected to result in a slight reduction - two per cent - in branches by 2015, with staff levels down 3.5%. With fewer tellers, branches will become much more sales oriented and the proportion of staff working as advisors and sellers is expected to rise from just over a third in 2010 to half by 2015.

Christine Johnston, director, Finalta, says: "If direct channels grow as anticipated, it is will be difficult for banks to maintain branch networks of the size forecast. Most banks plan to convert surplus branch capacity into additional sellers, but it is hard to see how this could work. In mature markets, there simply will not be sufficient customer demand to utilise them if the predicted sales growth in direct channels is also achieved."

Comments: (3)

Jan-Olof Brunila
Jan-Olof Brunila - Swedbank - Stockholm 19 January, 2011, 07:18Be the first to give this comment the thumbs up 0 likes

It is natural that banks with vast branch networks seek to improve the integration between online banking and branch service. It gives these banks an advantage over online only banks - local physical presence to be used to enhance the customer relationship. If you as a customer have a difficult problem you can walk into the branch and resolve the issue by conversation instead of calling "a nice man in Bangalore" and try to explain your issue over the phone since the online service does not seem to have a form for the matter! Also the bank can sell more complex services to its high net worth customers in the branch environment. This possibility does not exist for online only banks and it would be unwise for multi channel banks to compete on a more level playing field with online only banks.

A Finextra member
A Finextra member 19 January, 2011, 08:16Be the first to give this comment the thumbs up 0 likes

It is enssential that there is more collaboration between the branch channel and the internet channel if the multi-channel banks are to provide a superior customer experience. The reality is that increasingly customer transactions, particularly the purchase of financial products do not take place in only one channel.

The challenge for banks is with their organisation structure. Typically the branch channel reports to one executive and the call centres and internet channel report to another executive. This causes internal conflict and competition. Banks need to move to a model where one executive is responsible for all channels and be the single point of accountability for the customer experience.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 20 January, 2011, 08:03Be the first to give this comment the thumbs up 0 likes

In an ideal world, it should be possible to walk into the branch and resolve a tricky issue quickly. However, for around five to ten years, branch staff has been trained to divert customers visiting the branch to call centers or Internet Banking websites. As a result, while they might be able to offer a more conducive environment, it's questionable whether they have the tools and expertise to resolve issues any better than the nice men (or women) in Bangalore (or Dundee or Glasgow).

At this juncture, it would be going against the tide to try and do more via the branch network. Instead, banks should leverage Rich Internet Applications and other contemporary technologies as a more pragmatic way of enhancing the customer experience via Internet Banking and Contact Centers.

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