By Jim Neckopulos
As technology continues to have an impact on all aspects of our lives, banks must continue to develop and evolve their strategies for customer interaction and experience. In addition, the distinction for small businesses between their personal and commercial activities is increasingly diminishing.
A key reason for this development is that individuals and businesses want an enhanced capability for “anytime, anywhere” access to get information, conduct transactions and interact with other parties. And, given the fine line between small business personal and commercial activities, this access needs to span and integrate both sets of activities.
As a result, banks must adopt or develop omni-channel strategies that both facilitate this need for existing customers and becomes part of their ability to find and attract new customers.
While the concept of an omni-channel capability has been around for several years, it has gained increased focus over the last few years for three key reasons:
- The rapid growth and adoption of mobile and digital technology.
- The need to reduce operating costs due to compressed margins.
- The role of social media to influence opinion.
For banks, particularly those that serve small businesses, these considerations are critical to their ability to succeed and grow their market share.
Remain relevant and meet customer desires
Over the past several years, our lives have been dramatically changed by mobile and digital technology. The result is that both individuals and businesses expect all activities to be supported by technology that is intuitive, fast and safe.
Banks must understand and accommodate the desire of their customers to interact with them no differently than they can other businesses. Therefore, banks need to support customer needs related to this channel and how to support other “traditional” channels to include branches, ATMs, telephone and on-line banking. This poses a key dilemma for each bank: “How much should each bank invest of these channels?” This approach also requires a development of strategy based on desired and measurable outcomes.
For banks focused on small businesses, an omni-channel strategy must address several other considerations: a seamless ability to interact across their business and personal accounts along with a clear understanding of channel preferences based on the nature of the interaction or the products or services accessed.
Rebalance channel blend and investments
The challenge posed above is made even more difficult given today’s interest environment resulting in some of the lowest margins/spreads in banking in years. The squeeze on profitability requires banks to be even more diligent as they develop or update their omni-channel strategies. The trade-off is what return on investment is needed to justify further investments in any or all of these channels to support a bank’s overall strategy.
Related to small businesses specifically, the considerations are both defensive—to maintain market share—and offensive, in terms of growth via new customer acquisition. It is therefore important to understand the cost and benefit of each channel and to periodically review the omni-channel strategy to determine if and when to “rebalance” these investments.
Engage and influence customers and prospects more effectively
A third factor that can significantly impact a bank’s ability to keep and attract customers is their social standing. For many years, banks have relied on word of mouth or the referrals of advisers such as CPAs and lawyers to acquire new customers.
While these sources still are important, social media now also influences how customers and potential customer think about their relationships—both on a personal and business level. Customers share their thoughts and feelings, good and bad, with postings on Facebook and other social media sites. This media can be enormously helpful in providing insights into how customers want to interact with their bank(s), who they relate to in terms of a “community” and the strength of their affinity to this group and what factors would might be helpful to finding and attracting other businesses with similar values.
The last point is critical to both being more efficient and effective in finding new customers, particularly those who may be looking for a new banking relationship to serve both their personal and business needs.
The payoff for a well-developed omni-channel strategy
As indicated above, the rapid growth of and adoption mobile and digital technology, the need to reduce operating costs due to compressed margins and the role of social media to influence opinion all point to the need for a omni-channel strategy. Moreover, for those banks looking to grow their small-business market share, a focused omni-channel strategy can facilitate this objective in many ways to include finding potential new customers more efficiently and with a greater likelihood of conversion based on shared values and affinity relationships.
The bottom line is successful growth in today’s anywhere/anytime environment requires development and periodic rebalancing of well-developed omni-channel strategy.
Jim Neckopulos is an executive director in Ernst & Young’s (EY) Banking Practice and is based in San Francisco.
John Hansen, who is a senior manager in Ernst & Young’s (EY) Financial Services Strategy Practice, San Francisco, contributed to the article.
