Achieving an Omni-Channel Digital Business Model in Financial Services
by Barbara Solomon
Even though it is one of the oldest industries in the world, the financial services sector has not experienced a lot of change, especially at once. But with the advent of digital, the industry has suddenly found itself facing unprecedented shifts in the way it needs to operate in order to keep up. As a result, it has changed more in the past 10 than it has in the previous hundred.
The rapid proliferation of digital and mobile channels has not only pushed a huge share of transactions and communication online, but has transformed the very nature of the business. Most know the story of more and more consumers disrupting the single channel model of brick and mortar by conducting some, if not all of their everyday banking online or through mobile devices. Even more interesting, sub-sectors such as insurance and retirement planning who were once relegated to a B2B model with brokers and employers, are now suddenly finding themselves in the B2C business with the proliferation of mobile and web portals that can reach the end customer. An employee who used to get only quarterly statements from his or her retirement plan in the mail now can check their account’s performance at any time, research fund options, change allocations, and manage disbursements and personal loans against the account, all from their phone, day or night.
Virtually every corner of the financial services industry has been touched: banking, investing, loans and credit services, insurance, etc. This upheaval creates significant pressure on financial companies to stay competitive, as customers expect and demand ready access through multiple channels.
Further, deeper research into consumer behavior also reveals two important trends.
First, the growth in digital channels is not simply a shift away from more traditional channels. As it turns out, the addition of online and mobile capabilities is driving more activity overall; especially with successively younger generations, customers simply are conducting more transactions and engaging in more communication, through all channels.
And second, consumers are increasingly shifting between channels to complete tasks—perhaps starting online and completing at a branch, or getting a text alert and responding via mobile app or ATM.
These trends are important factors behind the shift from a merely multi-channel business model to what is being called an “omni-channel” model, in which customers can move fluidly between channels, across all products and services, and expect a consistent, integrated, user-friendly experience. If you don't believe me, check out what Citibank is doing with digital to enhance the customer experience.
The problem with this vision for an omni-channel offering, unfortunately, is that it requires a level of integration and adaptability across technological and physical assets that may seem impossible to achieve. Many institutions have legacy systems that offer some services, but they don’t talk to each other, so creating a seamless package is prohibitively complex. Or, a bank or brokerage may have invested heavily in a proprietary technology platform that provides many services under one hood, but these platforms are notoriously slow (and expensive) to adapt to changing demands.
Open source software environments, like Drupal, have matured to the point where they enable rapid deployment of highly functional, reusable components that are also highly customizable. In the open source model, features and functionality are developed around a common architecture that allows these components to be added to a single platform and configured easily. In the case of financial services, virtually every capability that an institution may want—including the ability to integrate with legacy data sources—already exists and is fully supported and market-tested.