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Omnichannel Banking and Other Myths

By Rodney A Nelsestuen, SVP & Chief Information Officer, Merchants Bank NA

Rodney A Nelsestuen, SVP & Chief Information Officer, Merchants Bank NA

For years one of the foundational courses in any MBA program had to do with “channels of delivery”. It made sense. Every product or service needs to get to the end-user or consumer and needs a methodology – or channel – to get it there. As digitization began to grow in earnest, the internet was quickly recognized as a new channel and those who forecast its prominence in business today may not have gone far enough in describing the impact the internet has on our lives.

"The concept behind omnichannel business today is to provide customers with a seamless and uniform experience across channels and not only for services but for parts of services"

With an increase in the number of channels of delivery came the concept of multi-channel integration. The idea was to bring products and services through all channels, whether direct, indirect, online, remote or in person. In short, multi-channel thinking was built around the delivery of a full service. For example, if one shops for a Certificate of Deposit (CD) online it can be applied for and obtained through the online channel. But if the applicant stopped halfway through the application and went to the bank, he or she would usually need to start over with the banker and complete a fully new form. This was soon recognized as being sub-optimal. So multi-channel thinking had to change again.

Hence, the term “omnichannel” came into being as banks sought to improve customer experience and enhance the brand experience. After all, if a customer has varying degrees of quality in interactions with their bank, there’s a loss of brand to the bank which then leads to confusion, and quite possibly lack of loyalty - or the ability to build loyalty - in that customer. But the term omnichannel also expanded. While there are variations on the definition, the concept behind omnichannel business today is to provide customers with a seamless and uniform experience across channels and not only for services but for parts of services. Taking our CD example, a real omnichannel experience would allow the customer to begin an application online through a computer, move to a mobile device to continue it, and go to the bank to finish the form with a banker, and never have to repeat any step. In technology, this means using a system that maintains “state” – keeping track of where an application is in the process regardless of the channel interface used, and with the ability to pick up where one left off in the previous channel. Thus, the problem of consistent customer experience and brand appreciation is solved. Or maybe not.

Focusing on a “seamless omnichannel delivery” actually misses the point, and the term “omnnichannel” has run its course and can be counterproductive when seeking to gain customer loyalty across multiple bank products, services, and channels.

Today’s sophisticated digital native is not looking for delivery. They are looking to accomplish a task that is part of their daily lives. Going to the bank or ‘banking’ in any manner is not an objective. It’s a need and a utility on the one hand, or a part of their day on the other. Banking must be built around the day to day activities of the user. In short, products and services need to be made in a manner that focuses on access and ease of use, and not on “delivery.”

The word delivery connotes the bank getting something to the user. It is driven from the inside and not from the user side of the equation. Digital visionaries understand this. Steve Jobs did not start with engineering to offer a product but instead began with an unmet need in the emerging digital marketplace. The design and build process was not from the engineering to the customer, i.e., not from the inside to the outside. Instead, those processes were built from the end-user back into the engineering, i.e., from the outside in.

So perhaps the new term-of-the-day should be “Omni experience” or “omniease-of-use.” Or better yet, maybe there should be no term-of-the-day. Maybe the future should focus on how people live their lives, how they go about their day and what needs they have that can be provided anywhere, anytime, and in any way they choose. That is, begin with the end in mind, start at the outside, and rebuild banking around the dynamic, unique, and changing lifestyles of those banks seek to serve.

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