by Alex Yeo
The increasing use of digital channels in banking raises questions about the future role of the bank’s nondigital channels. Are branches and call centers going to be lynchpin capabilities of the future digital bank? Or will they be antiquated options for a small segment, the banking equivalent of the landline telephone? In our latest comprehensive benchmarking, 51 percent of customers say they use digital channels to interact with their bank, up slightly from 48 percent in 2014. Some 19 percent of these active digital customers have stopped using branches, and that number is climbing.
Despite these trends, we believe that physical channels will still have a significant role to play for any retail bank, both for sales and service. In a recent blog post, my colleagues Ajay Gupta and Vik Sohoni shared that a massive 79 percent of consumers in an annual survey conducted by McKinsey say they need a branch close by in case they want to talk to someone (a number that has remained stable since 2014).
Even among digitally enabled interactions, the physical channels remain critical. While 95 percent of sales in deposits and cards that originated in digital were completed through digital, only 50 percent of mortgage sales originated in digital were completed in digital.
Straightforward transactions, such as opening a credit-card account, require less judgment, and problems raised tend to be simpler to resolve. By contrast, mortgages are complex and are often a significant turning point in a consumer’s financial journey, and in-person advice is more necessary. While this may seem obvious, in their charge to become more digital, retail banks may be tempted to overlook the real value of in-person interactions.
But even if physical channels are here to stay, they also need to evolve their capabilities to remain relevant.
With bank branches, the penetration of digital tools will enable branches to pivot away from day-to-day transactions towards the cultivation of primary relationships. For example, with the introduction of simplified onboarding tools, we have seen banks move simple sales (e.g., credit cards) away from the financial advisor and assign them to other personnel, such as a lobby ambassador. This then frees the financial advisor to concentrate on relationship building and selling more complicated financial products.
Management systems should be used to drive adoption and continuous improvement around the use of digital tools. For example, branch manager KPIs should focus on how the use of digital tools is translating into additional sales capacity (e.g., number of leads, meetings, etc.), and a branch manager should be spending a significant amount of his/her time coaching staff on skills and capabilities related to digital tools.
Digital has become even more relevant as sales practices are under increased scrutiny. A newly redesigned digital process can incorporate checks and balances around sales while providing management with a dynamic, cross-channel view of ongoing sales practices. Such a view, combined with advanced analytics, can provide an early warning signal and allow for early detection in high-offender populations, products, or channels. Indeed, digital offers an opportunity for retail banks to re-establish trust with consumers by providing greater transparency into the sales process and by incorporating sophisticated management systems to help guide and encourage more productive and effective behaviors from sales staff.
The role of call centers will similarly evolve as customers use digital tools to resolve simpler issues. Call centers will now play the role of “back-up channel,” handling increasingly varied and complex queries. This will require a more dexterous and flexible agent team—multiskilled and able to handle a variety of queries and products to minimize handoffs. Agents will also need to manage channels not just with the phone, but through web and video chats. The agent is thus no longer a simple order taker but a multiskilled intermediary who is comfortable across channels and able to act in a comprehensive remote advisory capacity.
This development will have implications for how banks select and train call-center agents and will require better digital tools to support them. Sophisticated routing, which ensures that callers are matched with agents who have the right characteristics to serve them (e.g., background, personality) can reduce costs while increasing effectiveness (especially where call centers are maintaining differentiated service across different customer segments). Speech analytics can also provide agents real-time, detailed insights during a call, or across calls to detect larger-scale patterns or issues.
As call-center queries become more complex, management systems and KPIs will need to evolve; for example, there might be less emphasis on average handle times as agents handle a greater number of “needs-based” conversation, and far more emphasis on resolution effectiveness.
Focusing on the important questions
To address this complex issue, we recommend banks focus on answering three big questions:
- Where do the sources of value exist for those customer journeys that will still require heavy interaction with the branch or call center?
- What digital tools and processes will the branch and call center need in order to exceed expectations for these omnichannel customer journeys?
- What talent, capabilities and management systems will have the most impact in supporting omnichannel experiences that drive the most value?
Alex Yeo is an associate partner based in our Toronto office.