When was the last time you visited your local bank branch? Physical banking seems to have become something of the past for most millennials, or 25% of the US population. According to the industry data, the majority of customers visit their physical branches once every six months. Moreover, over 80% of customer interactions are performed through self-service channels. The statistics show us that most consumers today prefer to interact through an online or mobile platform, instead of recurring to more traditional face to face alternatives. In principle, this would seem to benefit financial institutions as new technologies enable them to increase their efficiency. However, without the feedback provided by frequent interaction, banks are prone to lose touch with their customers and become detached from their most basic needs for banking products.
Customers also have little attachment to their banks and focus more on the products that suit their specific needs. Consequently, capabilities such as ATM locations and online or mobile banking features (“transactional” features) become the drivers of profitability. Even with the recent increased users in mobile banking (see related article here), customers may still easily move to another bank without much loyalty. So how can retail banking become relevant again? The answer is a seamless customer experience amongst all channels –we call it “omnichannel.”
Umpqua Bank is one of the pioneers in redefining customer experience in retail banking. Umpqua was first founded in 1956 in Oregon with $75,000, 6 employees and 1 branch. The revolution did not come until the bank was threatened by expansions of ATMs in 1995 (see article here). Ever since, they have grown from 4 branches to 400 branches. Each branch is called a “store,” and has a look and feel of a local cafe. See picture below.
(Photo source: Forbes Article )
Their online presence is also anything but conventional for banks:
The local “store” offers yoga nights or local events to the community, and each store may tailor their events to the local community. The bank also monitors social media very closely, especially Twitter. Any customer complaint on Twitter is immediately addressed by an associate.
The seamless customer experience doesn’t just stop at Twitter and the stores. Umpqua Bank continues to improve the typical pain points for customers. Most people avoid going to their branches because it’s such a mundane task involving paperwork and standing in. Umpqua attempts to make even the most mundane task a treat (see article here). For example, customers who make cash withdrawals with the tellers get a piece of chocolate with the receipt. Umpqua also goes to great lengths to reduce the time and form filling related to obtain a mortgage – typically an agonizing activity. Moreover, there are employees who are in the branch walking around with an IPad (what they call “mobile concierges”) who can address your questions right away, like the Genius Bar at an Apple Store. Finally, each “store” prominently displays a phone that goes directly to Ray Davis’s desk, CEO of Umpqua Bank. If he is at the desk, he would answer the call. Many have tried, but usually to test whether the line is genuine.
For all the revolutionary changes Umpqua is doing, it seems to be working. It allows the bank to pay lower interest rates on deposits and charge slightly higher interest rates on loans. Moreover, cross selling has been driving the bank forward as more customers “hang out” in their stores. A recent acquisition of Sterling Bank, a bank of its equal size, has increased its assets to $22B.
Other banks have also made investments to enhance omnichannel customer experience. CitiBank has deployed several innovations such as sending fraud alert texts to customers at the point of sale and deploying smart ATMs that can interact with customers by videoconferencing with live support. Additionally, some Asian banks have innovated personalization features such as Shinhan in South Korea by sending “smart letters,” via the mobile app. The smart letters content ranges from birthday greetings to coupons for higher interest rates.
So how do you create such a unique banking experience for your customers? In the second part of this blog, we will discuss the challenges most banks face in the journey to achieve an omnichannel experience, and the steps that you should take to make it a reality for your customers.