If you are a bank that believes in either the omnichannel or mobile-first view of the future, then you need a five-year roadmap to achieve the transformation. If you are a closely held bank that is $500mm in assets or below and do not have the need to grow, then it’s possible that you can skip this strategic step and take your chances. Other than that, not having a clear transformation roadmap within your strategic plan is asking to be sold at just slightly above book value. In this article, we break down the seven functional elements that compose creating a virtual bank.
Setting Up Your Roadmap
It is likely that your bank already has many of the products web/mobile enabled. If you don’t already have a branch transition or transformation strategy within your strategic plan, now is the time to conduct a gap analysis to see what products have already been digitized, what products are partly there and what products you need to build out. Next, the goal is to prioritize the below products over the next five years according to your customer base, product profitability, vision and efficiency of execution.
Finally, a bank needs a plan to either transition customers from one channel to your mobile platform or, if you believe in an omnichannel future, then how to introduce and incent customers to use any given channel.
A Transition Plan and The Challenge With Omnichannel
This transition plan highlights the key challenge of being an omnichannel bank – not only do you have to guess right on which channels you will support, but you have to allow your customers to crossover and jump channels at their desire. Your customer has to be able to access a product on mobile, online, through a branch, by a call center, possibly on an interactive teller and whatever other channels your bank decides to leverage in the future such as voice, wearables or similar.
If that wasn’t challenging, and expensive enough, you have to load balance each channel, so you are optimizing your investment. Make a channel too robust, and your return will suffer. Make a channel not robust enough, and your customers will potentially go elsewhere.
Banks that have rolled out interactive tellers (ITM) are experiencing this very problem. Many banks are not finding the adoption they were targeting due to an ineffective transition plan. Moving a customer from the lobby to the ITM is challenging. This not only mostly takes an in-person education but it takes several prompts to keep the customer on the channel, so they are comfortable enough to use.
Banks that adopt a mobile-first strategy, escape the bulk of this risk as all new products are rolled out on mobile, and the rest of the physical bank (call-centers, branches, ITMs, etc.) serves to support mobile. Channels like voice and wearables are built off a bank’s mobile platform thus making channel maintenance much less expensive.
No matter which path your bank chooses, below are eight major functions that should be considered for your bank’s roadmap to build the bank of the future.
Each component of the eight functional areas are laid out below, in order of importance, from top to bottom and from left to right:
- Transactional: Remote deposit, ACH, wires, foreign exchange, investments/wealth management, and asset management/trust.
- Account Maintenance: Alerts, controls, balances, funds transfer, statements, card management, rewards management, and identity.
- Payments: Person-to-person, business-to-person, and remittance.
- Account Opening: Retail, small business, and commercial.
- Lending: Mortgage, consumer, commercial, and specialty.
- Treasury Management: Merchant services, remote safes, lockbox, cash management, sweeps, and payroll.
- Problem Resolution: Customer service, and issue tracking
- Education: Product education, best practices, and strategy.
Getting A Plan Together – Bank and Customer
No matter what your view, bankers have to have a fully thought-out plan on how to architect their bank for the future and what business model they want to follow. This also means thinking about how banks can take a leadership role in moving their customer in the direction they want. Banks that believe in the mobile-first view will want to help their customer move away from checks and currency sooner.
However, those that believe in the omnichannel model might want to incent their customer to continue to use checks and currency to add fees and volume to their physical platform.
Restructuring your bank will likely take at least five years to pull off the bulk of this strategy. Making sure you have a clear vision now and then starting on your contracts and vendor selection is the next step to accomplish for 2019.
Like many things in banking, doing nothing and being passive about your future is likely the riskiest step of all.
Submitted by Chris Nichols on September 26, 2018