Digital Retail Banking Imperative

by Brad Arnold

Many hours of research has been published presenting evidence that ‘omni-channel’ and ‘digital’ initiatives should be at the forefront of retail banking transformation programs.

Presenting a seamless client experience across channels and enabling banks to interact with customers through progressive digital means offers revenue growth and cost reduction opportunities.  These include cross-selling products, new fee-based budgetary services, resale of non-banking products, marketing technology system consolidation, de-duplication of promotional strategies, and digital asset reuse to name a few.  But how do banks get there?

Our experience has shown that retail banks (and retail organizations in other industries) taking an ‘outside-in’ approach that focuses first on customer interaction have a lower probability of a successful transition to omni-channel than banks that balance ‘outside-in’ with ‘inside-out’ initiatives within their digital transformation program.  Consider this simple logic:

  • Customer interaction enablement increases the volume and rate of transactions
  • Each transaction spawns a set of operational processes
  • Each operational process is designed from a people, process and technology perspective to support specific service levels related to quality and timeliness
  • Widening the service demand (outside) without increasing the service supply (inside) constrains service delivery and lowers quality
  • What begins with growth and cost reduction goals produces a contradictory effect of service delivery performance

Mortgage loan application processing provides a great example of an ‘outside-in’ approach.  Digitizing the customer experience without digitizing and automating the process across the ‘inside’ loan officers, underwriters, insurance partners, and other participants produces a contradictory outcome.  In this example, organizations create efficient processes to allow ‘outside’ customers to submit loan applications quickly and easily, but keep the ‘inside’ operational and technology processes the same.

The digital program model we find that has a higher probability of promoting success is one in which Operations, Marketing and Technology are aligned into a program design that promotes enterprise transformation through a prioritized set of investments that balances growth aspirations with service delivery capability. The key words here are alignment, priorities and balance

Getting there requires the establishment of a Digital Program Management Office (DPMO) and Collective Intelligence Design; a model that institutes governance and design that:

  • Creates alignment of priorities and balance between front-office and back-office service capability and capacity 
  • Embraces an openness towards agility and pivoting to respond to a dramatically changing competitive landscape
  • Establishes a clear engagement model for digital initiatives with teams across the enterprise and manages expectations and promotes transparency of business decision making
  • Sets boundaries as to what is considered a ‘digital’ initiative and what isn’t
  • Launches new services in a way that brings the organization and its customers along with the program

In effect, digital is more than an enterprise renovation project focused on customer experience with online and mobile services.  It should be viewed as a way of running the business from identifying demands for new product releases and product enhancements to enterprise resource planning, balancing ‘outside-in’ with ‘inside-out’ approaches to be successful.

Asset 7
  • Washington, D.C.
  • Berlin
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  • London
  • Los Angeles
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