Banking on Digital: The largest branch

By Dinesh Lal Kumar July 29, 2013

Today’s customer expects a lot more, including a seamless online and mobile banking experience to manage all their banking needs
When banks simply mirror the experience of other channels in their digital channel, they’re not fully exploring the possibilities

Banking on Digital: The largest branch WHILE the digital channel has the well-known potential to be a bank’s ‘largest ‘branch,’ it is still the less-utilised platform for a bank to directly influence customer choice, drive sales acquisition and grow revenues.

Today’s banking customers already expect:

TO get information, perform product comparisons, queries answered, activate new services and manage their current banking services in a self-service manner without being forced to an alternate channel to have their intent served. And they will insist that all channels work together harmoniously with the same level of privilege and customer care accorded them on other channels.

COMPANIES they do business with, and in particular their banks which are endowed with the most trusted of personal financial information, to know them as individuals, anticipate their needs, recognise them at each touch-point and actively preempt them with solutions they may be contemplating.

A seamless online and mobile banking experience to manage all their banking needs. With the 30% smartphone penetration rate in Malaysia growing exponentially, the ability for customers to easily perform these transactions through mobile sites and smartphone and tablet applications will be an all-the-more important consideration as they look at committing to their banking partner of choice.

The shift from over-the-counter branch services to self-serve digital channels will thus lead to digital touchpoints becoming the primary retail interface a customer has with the bank.

This offers not only a reduction in operational costs and greater convenience to customers, but also a wider opportunity for digital to drive sales and acquisition across all customer segments.

A typical approach to serving digitally though is characterised by efforts to replicate access of banking services currently available at branch and call centre channels to online and mobile digital channels.
Banking on Digital: The largest branch
There are a couple of dimensions of going digital however that are typically missed or underserved when banks simply mirror the experience at existing channels, leading to digital strategies where even social media engagement tactics and a volume of likes alone masquerade as cornerstone digital initiatives.

This is especially the case if a bank allows itself to be led like a dog on a leash by one of its appointed creative digital agencies. The lesser of digital agencies pitch ‘engagement’ as being the number of Likes a brand’s Facebook page receives or the volume of visitors who go to a specific campaign site to interact with the bank in some frivolous way.

In reality, converting customers to the site is just the start, and metrics from this part of the conversion funnel pales in importance with how many of these visitors then go on to eventually become customers who generate recurring revenue for the bank, i.e. converting customers at the site.

Adopting an emphasis on channels being integrated and working harmoniously together to serve an individual customer based on their personal intent (yes, CRM or customer relationship management, and analytics) are thus critical to the success of an aspiring digital bank of choice in the future.

Banks thus need to quickly overcome grappling with how digital channels are harmonised with other channels and quickly move towards digital channels being re-assigned as profit-based retail centres – driving sales and revenue acquisition – rather than cost centres of the business involved solely in account management, communication and support functions.

Within the context of any major bank in a largely Internet-penetrated market, if it spends less on 'digital' nationally than the cost of deploying just one branch in an urban centre, then this bank may not be fully optimising its marketing and infrastructure spend.

While financial service providers here are just starting to invest a larger portion of their total adex (advertising expenditure) to online channels, this still only amounts to about 1-5% of a local FMCG’s (fast-moving consumer goods company) total adex spend compared with what is spent on offline media.

In matured online commerce markets like Australia, the United Kingdom and the United States, where Internet penetration has surpassed critical mass for over a decade, we have seen the financial services category of related adwords and pagerank scorings being extremely sought out by financial service providers hungry to compete and capture customer share amidst an already busy marketplace.

Display advertising, SEM and SEO (search engine marketing and optimisation) are much more expensive to run dollar-for-dollar there than they currently are in Malaysia, which has only achieved critical mass in Internet penetration over the last three to five years.

Therein lies the immediate opportunity for the bank which is quickest to the chase. To capture a larger share of a connected customer’s wallet, the current reach and favourable cost‐benefit ratio of channeling acquisition and retention spend through digital channels should already have long been unquestioned.

Dinesh Lal Kumar is a former telco executive. An entrepreneur at heart, he is currently in transit to new ventures. In the early days of the dotcom buzz in KL, he was part of a promising startup that eventually flamed.

Banking on Digital Part 1: The confluence of IT and marketing