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Here, There, Everywhere: The Rise of Omnichannel Banking Chris Fleischer Market Research Manager D+H [email protected] @ccfleischer
Here, There, Everywhere:
The Rise of Omnichannel
Banking
Chris Fleischer
Market Research Manager
D+H
@ccfleischer
Omnichannel is more than a buzzword �
Omnichannel is more than a buzzword �
Consumers are doing “omnichannel” already �
What Has Become of Our Channels?
Anyone think it’s getting easier?
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Stop the Craziness!
• Chris Skinner, “Financial Services Club Blog”
– April 2012, “Never Mind the Channels”
– “Mobile is not a channel. Internet banking is not a channel. Nothing is a channel! We don’t think, ‘I’m on my mobile channel and I shall switch to my internet channel later. I’m doing digital stuff and will soon be doing physical stuff’. My digital stuff IS my physical stuff”
It’s time to rationalize our channel strategy and understand that members use multiple channels – the rise of omnichannel banking
The evolution of channel management
Agenda
• Channel Activity – Trends and Growth
• Branch Banking
• Online Banking
• Mobile Banking
• Rise of Omnichannel Banking
• Recommendations / Concluding Thoughts
• What’s Next?
Channel Activity - Trends
• Online banking of the late 1990s spurred
“the end of the branch”
• While online banking grew in the 2000s, it was matched
(precipitated) by growths in broadband availability and
consumer acceptance of online payments
• Online banking users are still growing at a 2-4% CAGR,
but expected to flatten out by 2015
Channel Activity - Trends
• With the maturation of online banking and the rollout of “Mobile 3.0”, some are suggesting that “the end of the branch is here
• � really, this time”
• Rather, we’re more likely in an era of change embracing “the end of the branch � as we know it”
– Transactions are declining
– Non-interest income is being attacked
– Average transaction costs are rising
– Self-service channels are taking up the decline and more
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Channel Activity – Growth
Source: CEB TowerGroup
Channel Activity – Growth
13Source: CEB TowerGroup
Channel Preferences
Branch
Banking
Branches get a bad name in non-
Financial Services news, too!
Strong divide in consumer usage of branches
Pressure to reduce expenses
Branch Banking
• Important channel, still influential,
but under attack as the “costly
alternative channel”
• Trends declining:
# of branches
# transactions, and
% of new accounts
• Startups (Simple, Moven, GoBank) claim the branch
model is dead
• Yet, branch is still the channel of choice for opening up a
new account
Branch Banking
Branch Banking
Branch Banking
Branch Banking
Branch Banking
• What is growing in the branches?
– New technologies• Back Counter Check Capture / Teller Capture
• Cash handling / dispensers
• Staff Management / Workforce Automation
• Video conferencing for member contact with remote SMEs
• Scheduling branch visits online or via mobile
– Sales & Service culture (sales through service)• Business Intelligence technologies are coming to the front lines;
Combined with CRM tools to better understand the member relationship
• Account opening processes have become more efficient with stronger
cross-sell results
• Use of tablets in the branch for product introduction and account
origination
Branch Banking
PNC’s “Pop Up Branch”
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Branch Mobility
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Question?
How many of you are planning to grow your
branch presence over the next 3-5 years?
How many of you are planning to shrink your
branch presence over the next 3-5 years?
FIs are planning for growth
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Branch Banking
32 Synergistics, 2013
Branch Growth correlated to CU Growth
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Branch – Summary
• Strengths:
– Member acquisition, cross sales, retention,
personalized member service, presence in the
community, reputation
• Weaknesses:
– Highest cost channel, not considered a “green choice”,
Gen Y utilizes less than other generations
• Opportunities:
– Branch re-design and use of newer technologies
• Threats:
– Direct banks, Pre-Paid Debit Card Services
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Online
Banking
Online Banking Today
The prospects remain strong
• 80 million users (US)
– 2-4% annual growth
• Consumers value convenience
However ...
• Consumers don’t want to pay for it
• Demand for more functionality
• Demand for better experience
– Comparing to Amazon, Facebook, etc
Online Banking
• Online banking users growing at CAGR of 2.0%
• Online banking transactions are growing at
CAGR of 4.0%
• The number of transactions online account for as
many transactions occurring in branches and at
ATMs � combined
– Over 30 billion transactions
Source: TowerGroup
Online Banking
Online Banking
Online Banking
Online Banking
Growth in new lending accounts online
Online Banking
• New Technologies & Features
– Expanded payments – Bill Pay, A2A, P2P, Presentment
– Remote Deposit Capture
– Personal Financial Management
– Targeted Marketing
– Online Account Opening and Funding
– Account Alerts
– Rewards
– Live Chat
– User Experience – Simpler views / Dashboard / Widgets
• However, be aware of personalization / customization that might lead to member service issues
• Table Stakes – Security and Fraud Prevention
Online Banking
Source: Celent
Online Banking
Online Banking – Summary
• Strengths:
– Lower cost, member acquisition, “green choice”, targets
Gen Y
• Weaknesses
– Less “face time” with member
• Opportunities:
– Improvements in cross selling, retention, reward
recognition
• Threats:
– Mobile is overtaking online for some functions such as
P2P and remote deposit capture46
Mobile
Banking
Mobile Does Everything � Even an ATM!!!
Mobile is Fun! And Intense!
Mobile Banking
Google Vice President Vic Gundota:
“’Mobile First’ … when we announce new services for
desktop computers … we will debut an equally
powerful mobile version”
Mobile Banking
Mobile Banking
Mobile Banking
Mobile Banking – Voice Banking
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Mobile Banking
• New Technologies & Features– Expanded payments – Bill Pay, A2A, P2P
– Remote Deposit Capture
– Personal Financial Management
– Targeted Marketing
– Account Opening & Funding (or w/out funding .. ex: Citi)
– Account Alerts
– Click to Call
– User Experience – Simpler views / Dashboard
– Pre-staging ATM visits (to access ATM without a card)
– Augmented reality for branch / ATM location
• Table Stakes – Security and Fraud Prevention
Mobile Banking
Source: Celent
The State of Mobile Remote Deposit Capture
• US FIs offering mRDC to grow from 2,300 to 6,000 in 2016
• 700 FIs deployed mRDC in the first six months of 2013
leading to 10 million new users
• End users to grow to an estimated 60 million in 2016
• 77% of respondents reported no RDC losses in 2013
• 9% said they had a single loss incident
• Chase notes that mobile deposit costs about 3 cents per
transaction vs. 65 cents per transaction through a teller
• B of A notes 10% of deposits coming through mobile
Mobile Only consumers don’t really exist
• Myth: Gen Y is Mobile-Only (Javelin)
• “Mobile-only” consumers don’t really exist. Although 41% of Gen Y consumers are active monthly users of mobile banking, very few avoid other banking channels. Not only are mobile-only consumers scarce within Gen Y, but also among all age segments. Today, only 2.4% of Gen Y consumers are mobile-only bankers vs. 1.4% across all other segments of the population. Millennials still turn to a variety of channels to manage their finances. Although adoption rates among mobile/smart-device users are rising, the reality is that most consumers aren’t yet ready to commit to a banking experience that is exclusively phone and tablet based.
Mobile Banking – Summary
• Strengths:
– Lower cost, retention (me, too), “green choice”, targets Gen Y, alerts
• Weaknesses:
– Not ideal for member acquisition and cross sales, lacks human touch
member service
• Opportunities:
– Mobile usage across other industries will help drive consumers to
consider managing their finances via the same device they use for
shopping;
Mobile Payments!
– Pricing – Fees for P2P / A2A payments, POS payments, remote
deposit capture
• Threats:
– Lacks 1 to 1 relationship building59
Concluding
Thoughts
“If you believe branches are dead, then so are you.”
(Chris Skinner)
Rise of Omnichannel
• Members are using multiple channels
• Consistency
– For employees – 360 degree view
– For consumers – user experience, 360 degree view
– For marketing – relationship management
– For security and compliance
• Products and Pricing
– How many have relationship or packaged pricing related to channel
usage?
– How many are considering it?
Concluding Thoughts
• All channels are becoming “alternative”
• Branches have dipped (in number), but mostly due to large
bank consolidation
• Online banking is reaching a maturity point in usage, but
with great opportunity to enhance functionality and user
experiences
• Mobile banking is the “New, New Thing” in Financial
Services, with tremendous potential to be materialized once
mobile payment functionality is achieved
Concluding Thoughts – What’s the next channel?
• Is it here
already?
Wearables
Wearables
