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The Multichannel Challenge

Multichannel Strategy for the Financial Services Industry

The idea behind multichannel strategy is not new. As companies increase the channels in which they interact with customers, those customers expect a consistent experience across those channels. Many companies have invested in infrastructure to deploy multichannel initiatives, most notably in the retail industry. Yet multichannel strategy has largely been considered a technology issue. For many companies, it's about usability and functionality around marketing activity. This approach misses the deeper customer strategy inherent in multichannel, particularly around sales and service. And because of its technical nature (e.g., integrated databases), multichannel activity is often considered from a cost perspective, not as a potential revenue generator.

It's time for companies to shed their preconceived notions of multichannel strategy and see its true potential for:

• Providing a consistent and positive customer experience

• Generating revenue while decreasing costs

• Serving a variety of industries

The banking sector is ripe for true multichannel customer strategy, for instance. Faced with changing customer behavior and market conditions, banks have invested heavily in multichannel distribution in recent years. However in several cases, channels still operate as silos so banks can't offer a seamless experience to their customers.

Banks should be able start a sales process in one channel, for example, and take it to others for closure, and this process should be differentiated for different segments. Additionally, banks should be able take a customer inquiry in one channel and pass it to another channel for proactive lead management.

Banks must treat different channels as one and integrate them in an intelligent manner to provide a seamless customer experience. If not planned strategically, multichannel efforts can lead to suboptimum and in some cases problematic conditions for banks.

A strategic approach to multichannel customer experience begins with a bank analyzing customers' channel behavior across segments and products, defining channel value proposition for different customer segments, and designing high-level sales and service processes across channels to enable a seamless customer experience. Every bank must find its own customized solution for multichannel strategy; there is no one-size-fits-all approach. But commonalities do exist. Before embarking on any strategy, banks need to answer the following questions:

• How do our customers view and use our channels?

• What is the value proposition of each channel for our customers?

• How can we position and manage all channels in a coherent and smooth way?

By understanding the needs and expectations of each bank's specific customers, banks can create a multichannel strategy for different customer segments based on a consistent, positive customer experience in preferred channels that will build loyalty and profitability. To do this, Peppers & Rogers Group suggests approaching multichannel banking with a strategy that focuses on channel value propositions, the distribution model, and the design of principles around the strategy.

Set multichannel strategy objectives     

The objective of multichannel strategy should be to redefine the distribution model based on customer insight. This doesn't automatically mean a migration strategy to remote or cost-efficient channels. It requires an understanding of different customer groups and how they prefer to interact with the bank.

For instance, companies need to understand how customers perceive the different interaction channels, such as the branch, website, mobile, or call center. How is each channel viewed, and what would drive a customer to choose one over another? Also, what are the needs and expectations of customer groups within each channel and across channels? Customers may expect a high-touch, personal interaction in the branch, but want a quick and convenient experience online, for example. With these questions answered, a company can explore the value proposition of each channel for different customer segments.

In addition, banks should identify gaps in efficiency and the customer experience. They must improve existing channels while deciding which new channels to add. If valuable customers don't care about a dedicated relationship manager in the branch, for example, then it makes sense to eliminate it.

When deciding what to keep and what to eliminate within the multichannel strategy, it's critical to create targets and timeframes in which to achieve them. This keeps the focus on the right activities, and helps measure the program's success along the way.

Create channel value propositions

No multichannel strategy can be complete without a clear understanding of the benefits and attributes of each channel, as well as how they coexist and serve different customer groups.

Banks should develop customer insight about channel expectations and the financial value of their customer segments. Sample data to collect includes channel usage, channel needs and expectations, channel value perceptions, customer profitability per channel, channel transition figures, and potential customer values within alternative channels.

Let's take the hypothetical "Internet lovers" customer group, for example. They are young, well-educated, and have high potential value. They want the ability to conduct transactions remotely and expect access to product expertise in multiple channels. Therefore, their suggested channel priorities should be online and mobile. Meanwhile, the "cash transactors" group is made up of older, long-time customers who have low potential value. They have a high service orientation and prefer a human touch for support and aid. The bank should direct these customers toward the low-cost ATM channel first, then to the branch

Insight such as this can be used in deciding how much and where to invest in each channel. It can also be used to identify gaps in meeting customer expectations with the current channel offerings.

Map out a channel distribution model

This prioritization of channel investments will shape the strategic direction of the channel positionings of the bank. A distribution model can map out how different groups will interact with different channels by stating the target positioning and shape of the channels in a bank. It will be a blueprint to reflect the new positioning of the channels based on customer expectations, the bank's overall strategy, and competitive forces.

We recommend companies develop a "segment-channel-product matrix" to highlight the gaps between current functionalities of the channels and the functionalities derived in the distribution model blueprint. These gaps will be resolved through multichannel banking initiatives.

As with the other parts of the strategy, quantifiable targets and time plans must be assigned to the distribution model to keep the project on track. For example, if a bank wants to introduce new service-to-sales techniques in the branch, it may set related, specific targets such as enhancing its existing branch format to engage service requestors more in sales or creating appointment management programs for in-branch complex sales activities.

Set channel priorities

The success of the distribution model depends on the ability of each channel to play to its specific strengths. The goal is to determine general and channel-based priorities. Banks need to identify the realistic capabilities of all possible channels to realize the channel value propositions and execute on the distribution model. These principles will guide the design phases of the program. Take three of the more popular communication channels: online, social media, and mobile. Each has strengths and weaknesses that must be considered to optimize each channel interaction.

Online: This channel traditionally works best as one that focuses on investigation and sales. However, tools like live chat and online communities are adding customer service capabilities and a lower cost to serve. It's a one-to-many relationship channel. The company controls the message.

• Social media: The strength of social media is in its ability to create interaction and impact. Companies need to monitor what's going on, activate when needed, and interact with customers, the public, and employees. It's a many-to-many relationship channel. The company participates, but doesn't own the message.

• Mobile: This channel is about convenience and engagement with the brand. It's a one-to-one relationship channel. Customers can have direct interaction with a bank via text, voice, or apps that allow the user direct control over aspects of his relationship with a brand.

 Garanti, one of the largest retail banks in Turkey, takes advantage of the strengths of different channels by following a holistic approach to engage customers. It has more than 850 branches and 3,000 ATMs serving 10 million customers. Not satisfied with only serving customers through traditional channels, the bank expanded the breadth of channels it uses. It created multiple accounts on social platforms such as Facebook and Twitter. Each account is targeted at different customer segments, such as music fans or loyalty program members. In addition, the company sends information and alerts via text messages directly to its opt-in customers' mobile phones. Customers can check their account balance, request a loan, and even transfer money via the mobile channel. Marketing, sales, and service interactions happen across channels.

In the past five years the bank has sustained a 24 percent average growth rate in loans and boasts that it is Turkey's most profitable private bank with a 31 percent average growth rate in net income in the same timeframe. The company doesn't specifically correlate this with its new multichannel efforts, but the figures coincide with them.


A multichannel strategy for sales, marketing, and service is critical to the banking sector, but it also has an impact on every industry. Like it or not, customers rule the channel relationship. They will decide the best way to interact with a brand. This requires a better understanding of customers' channel behavior and a better alignment between customer preferences and the business model.

The reality is that a poorly executed multichannel strategy may be worse than none at all. If not planned strategically, multichannel efforts can lead to subpar customer experiences that will potentially drive customers to a competitor. Competition is too fierce, customers are too scarce, and the ease with which customers can switch banks is too easy for any customer experience to be unsatisfactory. Done well, it can save costs and generate revenue. But without a commitment to a comprehensive, integrated, enterprisewide plan, customers will simply take their business elsewhere. The choice is yours.