For some time, the argument has run as follows. Banks need to achieve revenue growth and reduce their cost-income ratios: this has however to be accomplished in a multi-channel world. Branches and the staff who man them are expensive in contrast to digital channels: so transform the branch into a channel focussed on selling and customer service as opposed to its historical transactional focus, writes Douglas Blakey
Increasing numbers of customers like using the digital channels so migrate low-value transactions to the internet and more recently, mobile and tablet channels.
As more customers become comfortable with digital channels, look to shrink the size of the branch network: Barclays and Bank of America have been high profile advocates of this approach in their markets, not to mention the major retail banks in Scandinavia and the Netherlands.
As regards new branch openings, look to shutter traditional sized outlets
with, say 11-15 employees and replace with self-service focussed neighbourhood branches with 5-6 employees (for example, BMO Montreal, Royal Bank of Canada and Wells Fargo).
Multi-channel could be summed up as the drive to ensure a consistent customer experience across all channels.
That was not an easy goal to achieve: the silos mentality ruled.
In many cases banks were handicapped with outdated legacy systems.
The concept of single customer view and know your customer were trooped out ad nauseam at banking conferences around the world.
Almost every retail banker with whom one spoke claimed that they were enthusiastic evangelists to be customer-centric.
A goodish number of well meaning and brilliantly talented retail bankers were actually convincing: they genuinely did want to offer customers the level of service customers have come to expect from leading retailers.
Just as long as it did not involve something expensive that many customers might like: such as a return to the days when customers were able to telephone their local branch rather than a general enquiries number to speak to a call centre operator.
Or doing anything that would be popular but cost a bank money for example speeding up cheque clearance.
For example: paying in a cheque drawn on one brand of Lloyds Banking Group to an account with a different brand of LBG: 3 business days clearance: customer-centric? You’re having a laugh.
A report from Tower Group recently challenged the notion that the multi-channel approach was the correct approach.
The report is one of the more memorable ones of 2013, and suggested that the multi-channel strategy may result in high maintenance costs, convoluted management, and little increase in customer satisfaction.
So if not multi-channel, what?
One argument is to recognise that consumers use channels in quite different ways, to achieve different goals and at different times of the day.
So banks need to adopt quite distinctive digital strategies – arguably- to the extent that they pursue digital only strategies.
As for the buzz-word to describe such a policy: that is up for grabs. I hear of Tailored Services and Tailored Solutions. Somehow I suspect we will continue to hear the words multi-channel and omni-channel for some time to come.