Banks Must Combine Strength of Humans With Power of Technology

The most progressive incumbent financial institutions are focusing on digital banking transformation that will empower new and existing staff with the tools to deliver a differentiated customer experience.

To consumers, the concept of “banking” is blurring. They are increasingly willing to use whichever product or provider best meets their needs and ease-of-use expectations. In this far more complex competitive environment traditional institutions have an advantage over digital-only competitors: Their customer-facing staff.

That could be a significant differentiator, but to capitalize on it, banks and credit unions must focus on building a distribution network that combines the qualities of human interaction with the power of new technologies. The result will be new business models that can improve productivity, enhance customer experiences, and deliver new solutions at ‘digital speed’.

In a banking ecosystem that is shifting to digital delivery, it is imperative that legacy financial institutions use data, analytics and modern technologies to empower customer facing employees with the tools to personalize customer experiences and make decisions quickly. To accomplish this, new platforms must be created that allow teams across the organization to have access to data, insights and tools to serve the customer better. Employees must also be provided the training required to deliver on the promise of a hybrid delivery network.

Read More: Digital Transformation Requires More Than Technology Upgrades

Building a Competitive Advantage With Hybrid Distribution

Delivering products and services using both digital and physical channels is not new to banking. The shift to digital, while retaining in-person engagement options, has been offered by the vast majority of financial institutions for much of the past decade.

The difference going forward, however, is that consumers are expecting a much better experience however they choose to engage. They want a much more seamless experience on digital channels, where everyday transactions can be executed in an instant. They also want proactive advice on how to better manage their financial lives and the ability to open new relationships fast and easily.

Differentiate with Tech-Enabled Humans:

A hybrid distribution model combines the best of physical and digital distribution to deliver differentiated customer experiences at scale.

For more complex needs, consumers usually have preferred to interact in person, while a shift to digital alternatives is increasing. What is emerging is a hybrid distribution model, where a combination of human and digital options work seamlessly without the need for a branch visit. Using virtual engagement tools like video conferencing, supported by digital forms, the automation of the majority of the engagement provides more time for highly personalized human interaction.

Beyond more complex interactions, the hybrid distribution model is also a way to enhance digital engagements. For instance, after a consumer opens a new account digitally, the use of human engagement as part of the onboarding process is indispensable. Supported by data, analytics and decisioning tools that can provide valuable offer recommendations, the bank employee (potentially an underutilized branch staff member) can reach out to new customers in a manner that is more effective than traditional marketing. Most importantly, this engagement can be done almost instantly, improving the experience for the customer.

Read More: Digital Banking CX Boils Down to One Word: Speed

Hybrid Distribution Can Leverage a Flexible Workforce

The hybrid distribution model of the future will require fewer employees to be stationed at a physical branch where visits continue to decline. This will allow branch footprints to shrink or branches to close altogether. Instead, tellers, relationship managers and product specialists can work remotely where they are most effective. This could be a central location or even from home, using both full-time and part-time employees.

Without the constraints of traditional branch hours, these employees can work hours that are aligned with the needs of the customer. The combination of reduced branch costs and staffing that is more aligned with demand for services brings efficiencies to financial institutions that are required to compete in the future.

New Model Requires Enhanced Skills

While many existing employees have the personal skills needed to deliver an empathetic experience to customers, most will need training to leverage the tools at their disposal to deliver a differentiated experience. A hybrid distribution model of the future is not just a shift of channel options — it’s providing a personalized experience that would not have been possible in a branch or across digital channels alone.

Customer service teams will need to be comfortable with virtual interactions, understand the dynamics of time management and be able to access and use data and insights in a manner that benefits both the customer and the institution. More importantly, the power of a hybrid distribution model is the shift from a model where the employee is responding to customer requests to one that proactively is reaching out to customers with solutions.

New Workforce Opportunities:

Hybrid distribution provides the combination of flexible hours with greater responsibility and potential for increased income.

The good news is that a hybrid distribution model can focus on engagements with the highest potential financial return. The challenge is that not all existing employees will be equipped for this new hybrid model. Even with training, many organizations may need to hire new employees who are aligned with the required skills.

Data and AI Power the Hybrid Engine

For a hybrid distribution model to work, providing the customer experience needed to differentiate from both legacy banking organizations and fintech firms, data, analytics and distributed insights are required. Customer support teams will need real-time insights that will empower them to deliver proactive, personalized solutions to customers. These insights will also need to be delivered in a format that is easily actionable since every engagement will be customized.

The power of today’s technology platforms also allows for ongoing enhancement to models based on the success of daily interactions. As engagements across the organization increase, models can be refined in real-time to reflect the impact of every interaction. This not only improves the effectiveness of the hybrid distribution model, but also the confidence of staff.

An Improved Foundation for Innovation

While the hybrid distribution model will alter the traditional organization structure of most institutions, it will also serve as the foundation for increased innovation. The combination of data, analytics, applied insights and new engagement models will open the door for an exponential increase in ideas and innovations for new products, services, engagement options and communication strategies.

Multiplying the number of more complex engagements with customers will also have a positive impact on the speed and scope of changes to back-office processes that have hampered the delivery products and services to customers for decades. As inefficiencies are discovered (and addressed), the friction in customer journeys will be reduced, with customer and employee satisfaction improving.

The benefits of these innovations, combined with the efficiencies and effectiveness of the hybrid distribution model, will significantly impact the bottom line of financial institutions. According to BCG, banks could increase pretax profit by as much as 45%, assuming constant product margins. The cost-to-income ratio, under the same assumptions, can be improved by 15% to 20%.  This does not include the potential cost savings possible if branch footprints and/or branch networks are reduced.

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