Banking

Banks, Omnichannel And The New Commerce 'Nirvana'

The COVID-19 pandemic is changing the way financial ecosystems are evolving — and the speed at which they are changing.

To that end, as Sherif Samy, senior vice president, North America at Entersekt, told Karen Webster in a recent Masterclass, it’s time to move beyond the transaction to focus on the interaction — and, in doing so, exceed consumer expectations.

Done well, it can be a form of commerce nirvana.

To get there, it’s important to focus on just what omnichannel is, said Samy.

As he told Webster, taking an individual’s relationship with their financial institution (FI) as an example, an omnichannel experience (at a high level) offers the ability to interact with the FI in the physical or digital realm using any device.

“Those channels could be the mobile device, the online device, the ATM, the call center or even in-branch,” said Samy.

The transactions span payments, of course, and transferring money from point A to point B, or processes that include opening accounts or applying for loans.

The advent of the digital age means that, say, a millennial opening that bank account can receive products or services from their FI that touch on financial well-being and educational services.

Those services can take into account that the individual is just starting out on their financial journey and could likely use some guidance, bringing another set of offerings that can complement what would have been a standalone process or transaction. FIs can craft a richer, more meaningful experience for the individual.

Mindset and Technology Shifts

Enhancing those interactions with the FI requires a mindset and technology shift on the part of the bank, maintained Samy. Traditionally, FIs have done a good job of promoting such services in the physical/branch setting, he said. That’s because there’s a level of trust that’s inherent in the brick-and-mortar realm, where FIs can ascertain that the people with whom they are transacting are who they say they are.

Tellers and mortgage bankers are able to sit face-to-face with their customers, look directly at documents, and open accounts and lines of credit in a controlled environment. The flip side is that it can take hours to get things done, where there are several touchpoints in the process.

For FIs, the challenge lies in transferring the same face-to-face and trust-based advantages into the digital setting, which has the inherent benefit of helping to streamline processes.

“The technology is there, the data capabilities are there, but we need to ensure that we can alleviate the trust in the digital ecosystem so we can offer more substantial services,” Samy said.

The Challenges Of Digital

As Samy told Webster, there are obstacles in crafting a smooth digital experience that replicates the physical interactions with banks. First and foremost is the fact that banks have higher hurdles in authenticating and verifying consumers.

Banks must build an ecosystem that uses the consumer’s perspective as a starting point and leverages technology to establish security and deliver new services.

After all, the mobile device, the desktop and the laptop are constant companions, more so than ever during these days of pandemic.

Banks must be sensitive to the technological preferences of different demographics and geographies. For example, older consumers in developed economies such as the U.S. may be more comfortable with desktops, Samy offered.

By way of contrast, younger consumers in developing economies that have leapfrogged legacy infrastructure and embraced mobile devices may feel most at home on smartphones and tablets.

“We have to cater to a true omnichannel experience, because consumers are demanding what’s convenient to them, not only what’s convenient to the bank,” said Samy.

Regardless of the technology being used, that “entry point” needs to be well-known and established, he noted. For the bank, the hardware can be a “security mechanism” that is used to communicate with consumers once “trusted” status has been cemented for that device, ensuring that it is free of malware or vulnerabilities that can lure hackers.

Fraudsters, after all, are stepping up their phishing attacks as card-not-present transactions gain ground.

But banks can wage an effective battle against the bad actors if they create a profile that shows a consumer has a trusted device in hand and a well-established digital identity, even as an individual might start a transaction on a mobile device, shift to interacting with a call center and then finish the transaction on a laptop.

As for the bad guys? Well, they’d have to be sitting right where an individual is trying to transact – and thus, they are ultimately thwarted.

“When you put the three things together and you leverage, for example, the mobile device and the online channel and the fact that I will always have my mobile device with me, the fact that the location and the devices are known for secure transactions — and you consolidate all of these things — this provides much more control for the bank and for the consumer,” said Samy.

Against that backdrop, he said, FIs can outsource at least some security functions and ask consumers to verify that they are transferring funds or buying items – an especially valuable service in the age of faster (and irrevocable) payments.

This adds a level of security to everyday commerce, while personalizing the dialogue and boosting revenue streams through cross-pollination — and reducing costs, too.

In one example, Samy noted, a consumer who hypothetically hits a credit utilization limit of 30 percent with a large-ticket item may appreciate financial education that explains how that (relatively) high utilization rate can adversely affect credit scores.

“Digital is going to become the new norm, and financial institutions and other organizations need to be able to adapt to that,” he told Webster.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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