As the online universe continues to expand and evolve, the digital customer journey has also in turn become increasingly complex. Today, interacting with a brand across multiple channels when making purchasing decisions has become more of a norm rather than the exception.
In the banking sector, this shift has fundamentally transformed the way banks are engaging their customers. In fact, banks are already fighting a battle on at least two fronts -- differentiating themselves in an increasingly commoditised market, and defending their payments business against agile new competitors such as PayPal and Google Wallet.
New Banking Channels & Change in Customer Transaction Formats
The multichannel revolution has been underway for some time in the banking world. In recent years, newer channels such as e-mail and online banking are being rapidly embraced as extensions to traditional banking operations.
Indeed, CIOs in the financial industry are boosting their IT spending on next-generation banking platforms, which provide faster time-to-market to roll out new revenue generating services. The platforms also adhere to new compliance standards and enable fast and reliable processing of large amounts of data.
Nevertheless, multichannel banking is still at a nascent stage in Asia Pacific. The reality is that banks are unsure of this approach and are still trying to determine the cost-to-benefit ratio of building beyond core transactional functionality. In order to be effective, banks must deliver a seamless customer experience across all touch points such as email, web and mobile.
As face-to-face service declines, most services will transition to alternative or online channels. While the smoothness of the customer's experience may not be obvious when choosing a bank initially, it can become a major factor impacting their decision to stay.
How Can Banks Transition to a Multichannel Model?
The concept of revamping banking infrastructure to meet changing business environments is nothing new. The drivers extend beyond providing customers with innovative ways to interact with financial services providers -- for example, legacy systems can have slow response times, and the resources required to maintain them may escalate to unacceptable levels over time.
The net result is too much gets spent on IT management -- almost 80% of IT budgets, while innovation suffers.
So, what is the first step for any bank transitioning to a multi-channel model? The answer is that they need to find a way to unlock the power of their existing core banking solutions.
This can be accomplished by adding a layer of integration software that connects the disparate systems. This middleware or service-oriented architecture (SOA) solution allows the bank access to common business functions to easily create new capabilities or product offerings. For example, adding a mobile payment capability to funds transfer capability produces a new product - mobile transfer - that can then be offered to customers.
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