Think Lean When Considering Omnichannel Banking

by Edward O'Brien 0

As banks and credit unions strive to become more efficient and productive, they must balance their desire to be “lean and mean” with demands for a superior customer experience. For today’s financial institutions, this balance is increasingly difficult to achieve.

With customer and member satisfaction and offering an outstanding customer experience being top-of-mind, banking is more competitive than ever. The current banking environment is increasingly challenging because of the current arms race to offer the latest technology in mobile and digital banking and branch reconfiguration initiatives. Consequently, costs for equipment, networks, and supporting technologies are on the increase for many FIs planning for omnichannel banking deployments.

At the same time, the role of banking channels, and specifically branches, are being redefined and reconfigured. And with branches increasingly being used primarily as information and advice centers, there is now more complexity present with new processes and devices to deliver a combination of full-, self-, and assisted-service options.

Interestingly, in some cases, a more digital and hands-off approach may actually be desired by some customers, including Millennials and tech-savvy users, And while it might seem peculiar that digital and virtual interaction can offer more personalized service than traditional teller-based interaction, such communication methods are preferred by some clients on occasion because many are no longer making traditional branch visits during regular business hours.

All of this complexity amid numerous industry changes has prompted many FIs to design a more structured way of weighing process and product choices. Consequently, some of the more progressive institutions are following a similar path that many manufacturing companies began following several decades ago — introducing continuous improvement and lean initiatives into their business processes. We call this process “lean banking,” which takes its cues from lean manufacturing, and is based on achieving continuous improvement by chipping away at inefficiencies throughout an organization’s processes.

This use of lean banking typically includes wringing out efficiencies across channels, from highly personal (and more costly) in-person branch interactions, to less personal and less costly self- and assisted-service transactions. For example, some institutions are evaluating their ability to be lean by comparing the outcomes of various process improvements. Often a key metric is the ultimate cost per transaction when servicing customers.

These lean evaluations often include analyses of projected process improvements across channels and lines of business. Analyses include an iterative process that examines opportunities to reduce waste and inefficiencies during each step of a process.

For example, in traditional branches, teller and customer/member interactions are reviewed, and are part of an ongoing process to reduce the cost per transaction from about $4 to $3 or less. In other reviews, branch interaction with a remote teller or contact center representative may be modeled and analyzed. This options can provide a balance, offering live (albeit from a distant location), and potentially efficient process, offering the potential to have sub-$2, or even sub-$1 transactions costs in higher-volume locations. In other reviews, heavy use of digital banking and intelligent deposit ATMs can bring the average cost per transaction to $.50 or less.

Ultimately, FIs must balance efficiency opportunities with customer satisfaction and customer experience needs. They must keep in mind that customer satisfaction and loyalty are critical to long term growth and success, but new omnichannel concepts based on reconfigured branches and digital banking in a lean banking can help create an ideal situation, one where outstanding customer service can be provided in a lower-cost, highly efficient operation.

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