Banks that invest in ensuring a consistent customer experience across all channels may be wasting their money, according to an analysis by CEB TowerGroup.
The achievement of an integrated multi-channel approach to customer engagement strategies has been something of a holy grail in bank and vendor circles over the past decade.
However, CEB TowerGroup suggests that the effort might be misdirected, achieving only high maintenance costs, convoluted management, and little increase in customer satisfaction.
"Instead, CEOs are realising that channel investments should be tied to specific experience goals and customers should be guided to the channel that best suits their needs," says the analyst group, in a report that outlines executive views from 25 of the biggest banks in North America.
As disenchantment with multi-channel banking grows in the C-suite, the industry is instead beginning to get to grips with the implications of a mass consumer migration from bricks and mortar branches to digital points of contact.
CEB TowerGroup points to an estimated $10.1 billion gap between the income from annual service charges on deposit accounts and the expense of maintaining branch premises and equipment. In addition, non-interest income consistently remains well below pre-crisis levels.
Says CEB TowerGroup: "The branch isn't dead, but the profitability of the network, as well as individual branch footprints, need to be reevaluated."
The move to digital banking platforms is also throwing up new problems, as customers who rely primarily or exclusively on digital channels for their banking needs are up to 30% less engaged than those who rely on the branch.
"In order to prevent a growing portion of the customer base from first switching channels and then switching banks, CEOs are determined to create a distinctive and engaging digital experience," says the analyst house.
With costs rising and profit margins shrinking, banking executives are additionally becoming more picky about the type of customers they want to service.
"The mass affluent comprises 16% of the US population but its total footings exceed those of the mass market by nearly $200 billion," says CEB TowerGroup. "A growing number of retail banking CEOs agree that banks need to shift their focus to this more lucrative customer segment, providing more tailored service for the mass affluent while automating a greater portion of mass market transactions."