Financial institutions in the United States are increasingly moving towards providing their clients with online services and self-service and making use of social networks.

US Banks Have Begun Switching to a Multichannel Approach

Though as recently as 2010 US banks still seemed reluctant to adopt solutions which would enable them to make use of a multichannel environment, this attitude now appears to be changing. In a survey among US financial institutions (FIs), entitled Emerging Technologies in Retail Banking, research and advisory firm Celent found that a large number of banks have set in motion significant technological and structural changes in their organisation and ways of working. The majority of the FIs surveyed now see the online channel – as opposed to the branch network – as the most strategically important. So what do the banks hope to gain from this change of direction? Their priority goals depend on the size of the organisation, with 45% of the FIs surveyed betting that their investment in banking services will produce increases in sales long-term, 30% aiming to improve customer relationships, and 12% calculating that their multichannel investments will help reduce operating costs.

Banking on the web and mobile

Online and mobile services will help the FIs first and foremost to increase overall availability to their customers and also improve the quality of the services they offer – such as providing loans, money transfers between two individuals, and online discussions with an adviser – without requiring the client to go into a branch. And we can already see these changes happening. Most FIs now offer web and mobile platforms which provide customers with access to a range of services. Some 38% of them also offer tablet-based access and just under half of those polled said they were planning to do so. In the same vein, the majority now see mobile as a must. More than 80% of the banks surveyed and over 90% of all FIs agree that mobile services are a priority which they need to come to terms with. The responses regarding social networks were also surprisingly positive. Almost all the FIs surveyed say social media are the most important channel from a strategic point of view. While so far it is mainly the larger banks that have actually made the breakthrough, 80% of the respondents reported that their company was active on these platforms.

Customer-centric strategy

However, while two thirds of the FIs said they track their reputation on social networks on a regular basis, only 42% actually use social network platforms for marketing purposes and a tiny 5% of those polled said they had incorporated these social tools into their Customer Relationship Management and business management systems. Moreover, on the whole, this area of operations is more likely to be run by the Marketing department.  And that, warns Celent, is where the problem lies. As long as financial institutions believe that social media belongs with Marketing, they won’t be able to make a real switch to using social media and the multichannel approach, because they won’t be able to really engage customers on an individual basis and in a relevant manner. Celent argues that one of the obstacles to switching from an organisation based on products and branches to a genuinely customer-centric structure is the fact that organisational silos still abound. In this respect, smaller, more flexible organisations have progressed further than their larger rivals, Celent points out.