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How Internet Technology Can Deliver 21st Century Banking?
Bankers who dismiss the Internet as last year's hype risk missing a major opportunity for improving their operation and nurturing their customers.
Lately, bankers have been known to heave a weary sigh when the Internet is mentioned. At this point, they are experiencing disillusionment about the Internet as a business channel, because the savings once promised from "e-banking" have largely failed to materialise.
To paraphrase Mark Twain, announcements of the death of the branch network have proved to be greatly exaggerated. Banks have found that, attractive as their Internet banking capabilities may be, they in no way replace the branch network. Meanwhile, "virtual" Internet banks - those with no bricks-and-mortar element - have struggled to establish their presence. Some have capitulated and set up branches or at any rate ATM networks of their own to create a physical "footprint". Others, such as Wingspan.com of the US, and First E in Europe, have closed down or significantly scaled back their operations.
Bankers who have seen Internet technology as simply another way of getting new customers are understandably disillusioned. But this disillusionment could play into the hands of their competitors who have realised that this same technology provides the architecture for giving better, more targeted and more effective customer service .
Through astute use of internal IP (Internet Protocol) networks, retail banks now have an opportunity to transform themselves into "virtualised banks": organisations which transcend geography to optimise their use of all their resources, but particularly of information and human expertise, for the benefit of both themselves and their customers. The virtualised bank can offer each customer a service tailored to their needs, whether they choose to make a phone call, go on the web, or drop into their local branch. This way, customers will feel valued, because at last they really are being treated as individuals.
In this way, banks remove the barriers to providing customers with the best possible service, and do so at the lowest possible cost. Every member of branch staff becomes part of a "virtual call centre", and every call centre employee is part of a "virtual branch".
Banks are already getting a small taste of the benefits of virtualisation with their existing contact centres. These allow customers to access the bank's; its agents and advisors; regardless of where the customer is at the time. Instead of duplicating those resources at every branch, the questions and requests are fielded by those at the centre.
The disadvantage of today's contact centres, though, is that they tend to place too many resources at the centre. It's notoriously hard to retain call centre staff: annual attrition rates there can be 30-40% or higher, whereas in branches it can be 3-4% or lower. So staff in branches are typically not just more loyal, they're also more experienced. In fact, they're the type of people that customers love to deal with. But, at the moment, customers are usually discouraged from speaking to these people, certainly on the phone. Typically, the only time they're allowed to speak to them is when the call centre agent can't answer their call; perhaps because it concerns a regulatory or international matter. Then the customer is sometimes given contact details of someone at the branch, with whom they have to place a separate call. All of this can create the impression that the bank puts its own convenience above the customer's.
Meanwhile, resources at the branches are not being optimally used. Personal bankers in branches often spend less than a quarter of their time dealing with customers, and the rest either in administration or, more likely, in waiting for their next client. Yet these are highly-trained and well-paid people, employed specifically to deal with clients. What a waste.
virtualisation makes the most of resources
The strength of virtualisation is firstly that it gets work done by those best equipped to do it, and secondly that it avoids waste when resources are idle or used inappropriately. You can still have your contact centre fielding basic enquiries and transactions, but more challenging ones can be passed directly to a branch staff or product specialist without the need for the customer to call in again.
Making it easier
for the customer to buy
That barrier to closing can be removed by integrating web services with telephony. Suppose that after researching the product, the customer can press a button and hold a telephone conversation with an expert adviser: they are then much more likely to buy on the spot. This technology can already be seen in a non-bank context on www.landsend.co.uk where you can click a button on the web page and get a call from an operator who is looking at the same page as you. The operator can manipulate the web page and even send new information to the customer in real-time over the web.
Financial institutions will soon be adopting similar modes of "web collaboration"; and IP networks make it much more feasible to have the right person on the end of the phone. This technology already exists; and as bandwidth prices come down it will be feasible to substitute a videoconference for the telephone call; more persuasive still. Offering web site users the possibility of human interaction is a critical weapon in making customers feel that their individuality is recognised and valued by the bank.
The beauty of virtualisation is that customers can "come in" whichever way they like; in person, by phone, over the web; and still be given access to the same knowledge and capabilities. Allowing them to use multiple channels simultaneously, such as the phone and the web, makes for an intrinsically preferable experience, since customers are known to like mixing and matching channels. And integration between channels allows the bank to show it knows exactly what business the customer has done to date, regardless of what channel they used, leaving the customer with a much better impression; delivering, in fact, some of the benefits promised, but not always delivered, by CRM.
Why it has to be
Summing up the
And most of all, it makes for happy customers. They no longer feel they are being fobbed off with a call centre agent when someone in their branch would deal with their query more efficiently: they automatically get to talk to the best-qualified person for any given topic. And because their query is accompanied by all relevant information about them and their dealings with the bank, they feel they are being treated as human beings.
It's also possible to differentiate the level of service that a customer receives according to their importance to the bank: technology makes it possible to ensure that if there should be a telephone "queue" to reach a particular resource, the high-value customer goes to the front of it.
Time to act
So why aren't banks already taking action on virtualisation? The early adopters are, in fact, just starting to, with US banks like Wells Fargo and American Express actively developing integrated IP networks, and a number of large European banks also in the early stages of deploying the basic infrastructure required. The Spanish giant BBVA is rolling out internet technology throughout its 9000-branch Spanish and Latin American network, whilst in France BNP Paribas is installing Cisco's intelligent routing software Intelligent Contact Management (ICM). ICM will work with the bank's CRM systems to send customer calls over its IP network to the most appropriate agent, whether this agent is located at the local branch, in a specialised group within a call centre, or even in an outsourced service provider.
It's understandable if other banks are hesitant: they have a lot invested in the last generation of telephony equipment and may take some convincing that upgrading to IP is worthwhile. This is a reasonable stance if you think of an IP network as just a "better mousetrap". It's only when you realise how far virtualisation is going to transform business that delay starts to seem less reasonable.
The trouble is that installing an IP network takes time. To stay abreast of the competition, banks need to get started now. This time, they can't afford to wait and see what everyone else is doing.
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