How quickly do you start to worry when a deposit doesn't appear in your account? In a world where omnichannel banking is the norm, it takes just five minutes for a customer to feel uneasy and confused. Omnichannel is an approach to financial software development that seamlessly synchronizes data and interactions across all channels without any disruption or confusion. This approach has become a necessity in banking software development services over the last decade due to its ability to boost customer satisfaction and improve operational efficiency. Let's look at the benefits and challenges of omnichannel banking.
Benefits of omnichannel banking
What is omnichannel banking is best defined in contrast to other models. Traditional banking confines all transactions, customer interactions, and services to physical branches. This limits customer accessibility and convenience. Some banks utilize a multichannel model, where each channel operates independently, potentially leading to inconsistent customer experiences and fragmented information across channels. Integrated banking is a combined approach, partially integrating multiple channels without full synchronization. For instance, a customer might see consistent product and basic information across online and physical channels.
Meanwhile, omnichannel banking provides a seamless and consistent experience across all channels. This model integrates all channels to function cohesively, allowing customers to switch between channels mid-transaction without losing progress or information. So, what are the advantages of this approach over all others?
Increased accessibility
Customers can choose their preferred channel based on convenience or necessity, whether it's speaking to a bank representative in person for complex services or using an app for quick transactions. Online banking is the preferred channel for 72% of customers, but the remaining 29% are split between ATMs, bank branches, and phone calls [1]. However, this does not mean that customers will only ever use their one preferred channel. Around half still make serious decisions, such as applying for a loan in the branch [2]. This is why smooth transitions are crucial in shaping customer experience.
Improved customer insight
Cross-channel integration allows customer service representatives to access a unified view of each user’s history. This means that when a customer contacts the bank, the representative can immediately understand their current issues and potential needs without requiring them to repeat information. People increasingly expect their banks to recognize them and their preferences no matter how they choose to interact. 70% of consumers expect customer support to have the full context of their situation [3].
This expectation extends to personalization, where banks use the data they have to make relevant suggestions or streamline processes. For example, if a bank notices that a customer frequently makes international transfers, it could use this data to personalize its services by offering the customer a specialized international transfer package. Even simple personalization can greatly relieve the pressure on customers to filter complex information into relevant and non-relevant ones.
With better data analytics, banks can proactively address customer needs by offering pre-approved loans or advising on investment opportunities based on the customer's transaction history and savings patterns. Personalization is an incredibly powerful tool for cross-selling, upselling, and improving customer loyalty for banks.
You may also be interested in: A guide to personalized banking implementation
Enhanced customer satisfaction
80% of customers pointed to inconsistent experiences across different communication channels as a primary source of customer frustration [4]. Cross-integrated systems allow customer service to address queries and resolve issues much more quickly. Omnichannel experience in banking increases the efficiency of the service team, allowing them to handle more inquiries in less time.
Operational efficiency and cost savings
Unified systems reduce the need for redundant processes and data entry across channels, decreasing the likelihood of errors and operational costs. For example, a unified customer service system means that information given by a customer to a call center can immediately facilitate a transaction in a branch without re-verification.
Key challenges in implementing omnichannel
While the transition brings substantial benefits, shifting from a legacy software architecture to an omnichannel digital ecosystem also presents significant challenges. These are the main three:
Integration issues
Legacy systems often operate in silos with proprietary technologies that are not designed to communicate with other systems or newer technologies. Integrating these with modern, API-driven platforms necessary for omnichannel operations involves extensive middleware development or complete system overhauls. For example, integrating a traditional banking system with a decades-old database system and a new mobile banking application requires complex data mapping and transformation techniques.
Data formats, validation rules, and storage methods can vary widely between legacy and new systems, necessitating significant data cleansing, matching, and testing efforts. For instance, customer records in an old system might not include email addresses, which are crucial for digital channels.
Read more: Achieving digital transformation in banking one step at a time
Organizational challenges
Shifting to an omnichannel ecosystem requires changes in technology, but more importantly, it requires changes in organizational structure and culture. Employees should be trained to use new technologies; new positions should be created to oversee the integrity of the processes, and so on.
Establishing roles such as data stewards or digital transformation managers can help oversee the integrity of data processes and ensure that the transition maintains alignment with business objectives. These roles can act as bridges between IT and business units, facilitating smoother integration.
Read more: Data governance in banking and finance: a complete guide
Regulatory compliance
Legacy systems may operate under older compliance frameworks. Updating them to meet current regulatory standards while transitioning to an omnichannel approach can be complex and costly. Implementing state-of-the-art security measures and privacy controls as part of the system upgrade can ensure the protection of customer data and compliance with laws. Encryption, access controls, and regular security assessments are vital components of this strategy.
Our take on omnichannel banking
N-iX believes in the power of omnichannel banking to provide easy access to all services across all devices, 24/7, and enhance the customer experience. We have extensive experience in developing omnichannel solutions for banking and finance. These solutions integrate all communication channels to collect valuable customer data. For instance, N-iX collaborated with Cleverbridge, a German company specializing in subscription management solutions, to transition their desktop-based software to a web platform, create a fresh user experience design, and increase their customer value by developing BI reports. The introduction of a new web-based application, compatible across various operating systems, browsers, and mobile devices, enabled Cleverbridge to broaden its market presence and enhance customer loyalty.
References:
- Consumer Survey Banking Methods, American Bankers Association 2023
- Cisco
- Customer Experience Trends Report, Zendesk 2023
- The future of omnichannel banking, Talldesk 2024
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