Weekly Business Insights from Top Ten Business Magazines | Week 297 | Strategy & Business Model | 1

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 297 | May 19-25, 2023.

Integrated channels: The next frontier beyond omnichannel distribution

By Ashwin Adarkar et al., | McKinsey & Company | May 4, 2023

Listen to the Extractive Summary of the Article

While Sacha is casually browsing mortgage deals on her bank app, the chatbot sends an alert asking, “Did you know that 80 percent of customers who have recently taken out one of our mortgages would recommend us to a friend?” Sacha types, “Tell me more,” and receives a link to a mortgage calculator that helps her understand what she can afford.

Not long after, Sacha finds her dream home and needs a mortgage to seal the deal. She opens the bank app, scans in a code from the real-estate listing, and clicks “Get mortgage options.” She sees three personalized offers and clicks on one of them. A human-like conversational chatbot asks whether she prefers to submit her application online, video-call a remote adviser, or meet an adviser in person. Using the app’s live calendar, Sacha books an appointment at her nearest branch and receives a confirmation with a photo and profile of her adviser, Steven.

Two days later, Sacha checks into the branch via the app and meets Steven, who shows her a digital simulation of the mortgage journey and answers her questions. Happy with the process, Sacha e-signs the mortgage application using the app’s biometric verification. Next day, Stephen messages her with great news: her application has been approved. Soon after, the bank sends her discounts for three local moving companies and a click-and-go home insurance offer that exactly fits her new living situation.

This smooth and swift journey exemplifies a new distribution model for retail banking: one that positions mobile as the orchestrator promoting conversational customer engagement and integrating digital and human interactions so seamlessly that channels as we have always known them cease to exist. Taking their inspiration from consumer companies and retailers, banks experimenting with this model have seen impressive early results, including a doubling in digital sales, a threefold increase in cross-sell, a 40 percent rise in customer activity, and the elevation of customer experience from a middle ranking to top quartile. And in an industry where distribution accounts for a hefty 20 to 25 percent of operating costs, there are considerable savings to be made.

Achieving such dramatic performance improvements is attractive. To do it, banks need to break free from legacy biases and take a clean-sheet and customer-centric approach, leveraging new technologies such as artificial intelligence, to radically rethink their customer interactions, reimagine the role of mobile, reevaluate bankers’ roles, and redraw their channel landscape.

3 key takeaways from the article

1. A new distribution model for retail banking is paving its way: one that positions mobile as the orchestrator promoting conversational customer engagement and integrating digital and human interactions so seamlessly that channels as we have always known them cease to exist. 
2. Taking their inspiration from consumer companies and retailers, banks experimenting with this model have seen impressive early results, including a doubling in digital sales, a threefold increase in cross-sell, a 40 percent rise in customer activity, and the elevation of customer experience from a middle ranking to top quartile.
3. For this transformation a bank needs to consider the following four shifts:  make the mobile app the core customer interface for everything; rethink human interactions, bankers’ roles, and physical locations; embrace smart data enablement; and adopt a customer-centered operating model.

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Topics:  Finance, Technology, Data, Customers’ Experience, Marketing