Mercator Blog

The March Toward Omnichannel Banking Continues: Observations from BAI Retail Delivery
Date: November 19, 2014
Ed O'Brien
Director, Banking Channels Advisory Service

The fact that omnichannel banking was chosen as a central theme at the recent BAI Retail Delivery event is a good indicator of the interest of financial institutions. The event had a main track devoted to the topic of omnichannel banking with at least 10 sessions, and there were complementary and overlapping themes in other presentations and keynote speeches.

I particularly liked the keynote speech by John Mackey, co-founder and co-CEO of Whole Foods, about social responsibility and achieving a higher personal and organizational purpose. He also shared his vision of hiring the right associates to foster high levels of customer satisfaction: “We hire for attitude—other skills can be learned,” he said.

“Omnichannel” is an overused and often misunderstood term. It is widely believed to convey something important beyond multichannel banking, some value that adds to the overall customer experience and places an institution in a central position with respect to a customer’s financial needs.

Banks, credit unions, and other financial institutions continue to transition (or consider transitioning—with some further along than others) from siloed banking channels to some form of a coordinated effort to synchronize and display customer data in real time or near real time, with insight into customers’ likely future needs and desires.

From Mercator Advisory Group’s perspective, true omnichannel banking is a vision FIs are aspiring to. We see most FIs as being at the beginning stages of a journey that will take at least a half-decade, and perhaps longer for some institutions, with results delivered in segments and with partial successes. We foresee the end state as having a coordinated, real-time view of customer transactions and activity as well as the ability to predict banking customers’ future behaviors with the use of integration and/or native interoperability and predictive analytics.

We have observed that an increasing number of FIs are reviewing their retail operations in great detail, including branch reconfiguration efforts, investments in digital banking, data management, interoperability, and analytics, and eyeing their needs for the near to intermediate term. Many, if not most, are conducting environmental scans to determine the best path(s) for their institutions.

If the presentations at BAI are any indication, this approach seems to be expanding across a wide variety of institution types and sizes. Such topics as “Making the Omnichannel Experience a Reality,” “Optimizing Omnichannel Analytics,” and “Creating the Right Structure to Deliver the Omnichannel Promise” are but a few examples of the depth and breadth of the presentations at the event.

As we transition from the “discover and define” phase of omnichannel to the “test and learn” and implementation phase, it’s important for FIs to continue to assess market innovations from competitors inside and outside of banking in order to meet—and hopefully exceed—customers’ and members’ expectations.