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Does Your Banking Channel Strategy Address COVID’s Impact?

By Michael Horney | June 15, 2021 | 0 Comments

Financial ServicesFinancial Services Client Experience and Journey TransformationFinancial Services Go-To-Market Strategy and ExecutionFinancial Services Operational Excellence and Cost Optimization

It should.

Given the significant changes in channel usage over the past year, customers need guidance and navigation to the channels most effective at supporting their financial needs. Your peers in retail banking are often too branch-focused, failing to properly assess how their bank can deliver a holistic omnichannel experience. It’s time to evaluate what changes in customer channel usage are permanent, what’s temporary, and how your firm can address COVID’s impact.

Evaluate Your Channel Strategy Before It’s Too Late

When customers have access to more channels, they use them. Post-pandemic customer activity is expected to increase from pre-pandemic levels for nearly all channels. But when customers use more channels, not only does it cost your bank more money, it also decreases customer satisfaction.

In the past, customers have become comfortable using certain channels, like the branch. But as the pandemic demonstrated, with the right incentive or urgency, customers will switch channels very quickly. Of the 55% of customers who previously preferred the branch, 68% used a different channel during the pandemic, and an additional 16% tried to use the branch but ended up switching to another channel.

The pandemic accelerated the trend of declining branch transactions and increased customer activity on nearly all self-service and remote channels. 

Assess your bank’s channel strategy before customers revert to old channels or get too comfortable with new channels. The last thing you want is for customers to flood back into the branch for simple transactions. Or maybe even worse – customers become so comfortable with digital channels that they forget about the value of face-to-face relationships.

Assemble Your Strategy Team to Get Everyone on the Same Page

Building an effective and efficient channel strategy is a cross-functional effort. Leaders across your branch network, digital strategy, operations, IT, risk and compliance, marketing, and sales should all have input into creating a dynamic omnichannel experience. 

Achieving an effective post-pandemic channel strategy is not simply about efficiency or providing the best possible customer experience; it’s about meeting organizational goals. Your cross-functional team should orient its strategy to a specific set of goals and metrics. For example, if your firm’s strategic goal is to increase revenue growth, your team’s new strategy should aim to grow customer relationships. If your firm uses NPS or CSAT to measure improvement, all functional leaders, including operations and IT, should be able to articulate how changes will grow the customer relationship. And everyone should be accountable to the same set of metrics.

Seven Questions to Balance Costs and Customer Experience

Since customer activity is expected to increase across nearly all channels, your strategy team must consider customer needs and business constraints. Even if your organization’s goal is to grow customer relationships, don’t put so much effort into improving customer experience that you lose sight of the cost-to-serve. When analyzing the suitability of channels for serving different types of interactions, you should not only consider customer experience, segmentation, and functionality, but also the cost-to-serve and staffing and workforce implications.

Here are seven sample questions that your team should ask when analyzing the suitability of each channel:

  • What experience do we want to offer in this channel?
  • How will this impact our cost-to-serve?
  • What types of customers use this channel?
  • Can we successfully navigate customers to a more efficient channel?
  • Does this channel serve its intended purpose?
  • Do we have the staffing resources to support fluctuations in channel activity?
  • Are channel inefficiencies creating more interactions than necessary?

Since early 2020, customers learned how to use many new channels, but it’s time to make sure those changes best support your customers and your business.

The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.

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