Multi Channel Finance – the path to customer loyalty

Are you delivering the kind of experience your customers demand in return for their loyalty? Call centre, ATM, Internet or branch? Whichever channels your organisation uses to interface with its customers there is an overwhelming need to integrate them in order to provide a consistent, branded, multi channel proposition.

Your customers are insisting on it. Your shareholders are demanding it. Your people should be delivering it.

The retail sector is well ahead of the game when it comes to providing a seamless multi channel experience and the financial services sector can learn from its successes. Providing consistency across channels will be a key differentiator, enhancing customer perception of your brand and increasing your understanding of your customers’ individual needs.

In an era of diminishing customer loyalty, maximising value from channels has become a business imperative. Yet, while already operating disparate channels, most financial services organisations are struggling to establish where and how they should begin integrating them. Many are constrained by organisational structures, business processes and technologies that are neither flexible nor scalable, and are finding it difficult to gain executive sponsorship and accountability for driving change.

Delivering consistency across channels
Faced with underlying pressures such as diminishing customer loyalty, brand cannibalisation, low levels of product cross-selling and competition from low-cost direct providers, many businesses have responded by chasing efficiency at the expense of customer value. The result? They have lost their differentiating value proposition and eroded their brand.

Multi Channel Finance (MCF) presents the financial services industry with a unique opportunity for ensuring customer retention and value. Multi channels are an essential element of the consumer experience: According to the 2006 World Retail Banking Report (produced by Capgemini, ING and EFMA) remote channels – mostly web sites and call centres – will deliver 33% of banking sales by 2010, up from 6% in 2000. In addition, 70% of mortgages are researched online before buying in-branch (Capgemini research 2006).

So, as consumers increasingly use a range of channels to learn more about, and buy, financial products and services, the organisation that gets its multi channel strategy right will secure lasting competitive advantage and increased customer loyalty.

Building a more customer focused and flexible organisation, and thinking differently about how you organise and operate channels, will be key – as will taking a more integrated approach to the end-to-end management of sales and service processes across channels.

How you use channels strategically to deliver distinct, high value customer experiences based on the selective strengths and weaknesses of each channel will not only define how you drive real customer loyalty and value, but it will also determine true differentiation.

Those retail banks and insurers who have understood the value of integrated channels and delivered capabilities that add real customer value will stay ahead of the competition. They will reduce costs by rolling out consistent processes across disparate channels. They will share customer intelligence across channels and they will implement service oriented architectures that maximise reuse so that effort isn’t duplicated time and again.

Importantly, the financial services organisations that are perceived by their customers as giving value and delivering great service will have a crucial sales tool: the customers themselves.

Rising to the multi channel challenge
There are a number of other challenges that both retail banks and insurers should address relating specifically to Multi Channel Finance. For example, how best to use technology to generate a single view of the customer, and then how to ensure that staff know what to do with that information. Can they use it to cross sell, for example?

In financial services, far more than in the retail sector, there is a struggle to achieve a balance between advisory-based selling of financial services products, such as mortgages, and automated transactions. In addition to this, there is the added pressure of ensuring that the numerous regulatory demands are met.

Playing the multi channel card effectively to enhance the customer experience will help offset some of the pressures that banks and insurers are currently contending with. For example, in opening up new opportunities, direct providers such as Churchill, Esure, First Active and ING Direct have almost doubled their share of the market since 1990. They have used their lower cost structures to drive prices down on behalf of customers, increasing pressure on industry margins.

Elsewhere, business growth has come in the guise of affinity groups such as supermarkets and utilities, which now account for 6% of sales. Financial services businesses have also opened up new markets through channel innovation using non-financial organisations, such as airlines and car manufacturers, to offer their financial products.

The financial organisation that implements an effective multi channel strategy will achieve competitive advantage by:

• driving enhanced customer loyalty and brand equity by delivering a seamless and more compelling experience across channels
• enhancing revenues and optimising sales and marketing activities by having a single view of the customer across channels
• achieving higher conversion rates by becoming ‘relevant’ to their customers via needs-based offer optimisation and cross-channel delivery
• reducing operational costs, achieving economies of scale and driving greater value out of existing assets by streamlining processes, increasing people effectiveness and integrating key systems across channels
• offering an ‘all in one’ portfolio of products and services to meet a customer’s every need, when they need it

For over 30 years Capgemini has been solving banking, wealth management, insurance and payments challenges for its customers as they face up to a rapidly changing financial services environment. We have worked with some of the world’s leading financial services organisations to address their multi channel issues, helping them to: integrate their proposition across channels; support standard sales and services processes; build capability by aligning people and processes; create incentives and cultures that support collaboration; integrate key systems and infrastructure; and prioritise investment in new technologies.