U.S. Retail Banking: Prescriptions for Channel Integration and Beyond

To achieve the dual goals of satisfying tech-savvy customers and boosting the bottom line, banks must first lay the foundation for integrated channels and fulfillment processes. Here is how they can embark on this two-laned path.

cognizant reports | December 2013 Executive Summary channels to fulfill nearly all their banking needs. In the age of consumer-centric banking, the Research shows that customers prefer digital absence of integrated channels and fulfillment channels for routine transactions but opt for high- processes can adversely impact banks. Consider touch personal interactions for complex financial the following scenarios. decision-making. While there are generational differences in channel preferences, the consumer Emma, a longtime customer of a leading regional universe unequivocally demands superior service, bank, comes across a new product advertisement lower fees and charges and, most importantly, online and attempts to talk to a call center repre- security of their sensitive information. sentative to obtain more details. She finds that the representative is unaware of the advertise- The biggest impediments to creating a seamless ment and ill-equipped to meaningfully answer her multichannel experience that meets customer questions. She drives to the branch the next day expectations and drives business objectives and interacts with a branch manager who helps include the following: her understand the offer and terms of the loan advertised. However, the branch informs her that • Traditional business models dating back to back-office documentation could take one to two the branch-dominant era, and the operations, weeks before the deal can be closed. Emma gives goals, metrics and processes built around up and begins to look elsewhere. them. • The burden of legacy systems, with their inher- Sarah, a customer of another large bank, stum- ent integration and migration challenges, inhib- bles upon a similar online campaign. While she is iting movement to the SMAC StackTM (social, in the midst of exploring the online campaign, a mobile, analytics and cloud technologies). bank representative appears online and invites • Ubiquitous security concerns, such as vulner- her to a video chat. Over the chat, the rep clarifies ability to fraud caused by proliferating use of her doubts, offers a discount because of her ongo- multiple channels. ing relationship with the bank and guides her to a • The need for additional new channels to meet one-click option. The system presents Sarah with customer demand, even while the issues asso- an application form pre-filled with Sarah’s data ciated with integrating traditional channels and asks her to answer a minimum number of have not yet been addressed. questions. The application then notifies the back- • Inability to recoup the added cost of address- office systems, which trigger documentation pro- ing all these issues by monetizing the added tocols and run automated risk assessment pro- convenience that multiple channels provide to cesses. The deal closes within a few hours. customers.

These contrasting scenarios highlight the oppor- Banks can counter these multichannel transfor- tunity that channel integration and fulfillment mational challenges with carefully calibrated can introduce to banks. By instilling a customer- moves. To stay ahead, we recommend that banks centric culture across the institution, and apply- consider the following steps: ing existing insights about customer behavior and preferences, banks can drive more streamlined • Involve top leadership in adopting the and efficient operations. change to a customer-centric culture. Develop a multichannel strategy, and redefine An era of digital transformation is rising across structures, operations, goals and metrics to the banking industry, with customers leading the ensure execution. (See sidebar, page 5.) change. For many banks, responding is easier said • Make appropriate choices to ensure success- than done. They are caught in a tangle of tradi- ful channel integration and employ advanced tional business models, structures, practices and analytics to make meaning from data distilled systems that conspire to prevent true multichan- from customer behavior. (See “Prescriptions nel strategies from taking hold. for Successful Multichannel Integration” section, page 6.) As the bulk of routine transactions moves to • Use the foundation of channel integration digital channels — including mobile — the number and analytics to inform and then elevate of transactions on all digital channels is rising customer experience; apply these learnings significantly. In fact, most consumers use multiple to also drive operational efficiency to new

cognizant reports 2 heights. (See “Prescriptions for Enhancing Consumers are also becoming increasingly reli- Customer Experience” section, page 7.) ant on multiple channels. According to Tiffani • Find and adjust revenue enhancement and Montez, a principal analyst at Forrester Research, cost reduction levers to drive profitability (See Inc., multichannel customers currently account “Prescriptions to Drive Profitability” section, for 88% of today’s customer base, and that is page 7.) expected to grow as more people move to mobile- and tablet-based banking.4 Rise of Digital Channels U.S. consumers have been quick to adopt digital Amid this shift to digital channels, the behavioral banking channels to fulfill their routine transac- patterns of the millennial consumer segment are tions. Branch use is gradually declining, accom- of particular significance to banks. This demo- panied by marked growth in mobile and online graphic is the most tech-savvy segment, and it channels (see Figure 1). expects banks to be equally tech-savvy, too. These consumers are 15% more likely to be influenced According to a recent survey by Cisco Systems, by bank Web sites and online communities and Inc., a majority of customers prefer the branch to 29% more likely to test new tech tools.5 This rep- address activities that require personal attention resents an untapped customer base for banks.6 and advice (83% of survey respondents). More- over, 26% of respondents said they would leave Despite their penchant for technology-aided ser- their bank if it removed advisory services from vices, millennial customers are also keen to visit the branch. Another interesting finding is the will- branches, with an average of 2.5 branch visits per ingness of customers to accept virtual delivery month.7 This apparent contradiction can be attrib- of advice in the branch in lieu of the traditional uted to their need for guidance on establishing person-to-person model, provided it is offered in a a financial foothold.8 way that doesn’t undermine personalization.1 Even as they embrace digital channels and exhibit The convenience of digital channels appeals to generational differences in their channel pref- wealthy consumers as well, a segment that was erences, all consumer segments seem to agree traditionally considered a high-touch category on three critical needs: customer service, lower that preferred intensive face-to-face contact.2 rates and fees, and superior protection against The mass affluent consumer group wants the identity fraud9 (see sidebar and “Prescriptions for convenience of both virtual and physical worlds Enhancing Customer Experience,” pages 5 and 7). to meet its needs. Increasingly, it seems that the preferential treatment and high level of care that According to research from Fifth Third Bank,10 this category expects can be met without physical mobile-wielding consumers are most likely to be interaction.3 multichannel users.11 As this tribe grows, banks will

Digital Rises, Face-to-Face Declines Consumers are increasingly choosing digital delivery channels.

40,000

30,000

20,000

in millions) 10,000 (Transaction volumes, 0 2011 2012 2013 2014 2015 (projected) (estimated) (estimated) Online Branch Mobile Contact Center Source: “Rethinking Multichannel Strategy,” April 2013, CEB TowerGroup Retail Banking. Figure 1

cognizant reports 3 Bank channel be compelled to enable mul- necessary precondition for using various levers tichannel access through that can increase revenues, reduce costs and integration successful channel integra- boost the bottom line. Regulations have con- initiatives must tion efforts. Bank channel strained fee-based income generation avenues also factor in integration initiatives must and are compelling banks to rethink their busi- also factor in consumers’ ness models.13 The impact is being felt on prof- consumers’ accelerating use of mobile itability — the industry’s return on equity (RoE) accelerating use of devices and social media. stood at roughly 10% in 2012 compared with 15% mobile devices and While the always-on, any- earned during 1993-2007 (see Figure 2). where-anytime availability social media. of mobile devices offers Against this backdrop, measures such as chan- exciting opportunities, mobility also exposes the nel and fulfillment integration promise greater need for enhanced security to safeguard con- customer satisfaction and loyalty, as well as sumer information. increased efficiency and opportunities to boost profitability. Similarly, banks must respond to the growing use of social media and its influence on consum- Channel Integration ers’ banking decisions by integrating channels to Remains Elusive for Many In addition to enable more effective and consistent communi- Even as consumers rely helping banks cation. Channel integration ensures availability more on technology and use adapt to changing of customer information from all sources. Armed multiple channels, channel with these insights, banks will be better equipped integration still eludes many consumer behavior, to resolve issues before they escalate. Banks can banks. Forrester notes that channel integration also convey a more technologically advanced “cross-channel measure- fulfills a necessary brand image – a critical factor in gaining the con- ment is a distant reality, and fidence of all demographic segments. Banks also channel silos continue to be precondition for need to be aware of emerging regulations sur- the multichannel albatross” using various levers rounding their use of social media. Guidelines and attributes this to decen- that can increase from The Federal Financial Institutions Examina- tralized decision-making.14 tion Council (FFIEC) highlight the legal, privacy, The lack of an enterprise revenues, reduce reputational and operational risks involved in strategy prevents banks costs and boost banks’ use of social media.12 from delivering a seamless, the bottom line. integrated channel experi- Challenging Operating Environment ence to customers. Independent silos require In addition to helping banks adapt to changing banks to develop the same products and services consumer behavior, channel integration fulfills a separately for each channel or unique device,

Profitability Dip at U.S. Banks

20%

15%

10% RoE % 5%

-5%

-10%

Jan. 1, May 1, Sept. 1, Jan. 1, May 1, Sept. 1, Jan. 1, May 1, Sept. 1, Jan. 1, May 1, Sept. 1, Jan. 1, 1984 1986 1988 1991 1993 1995 1998 2000 2002 2005 2007 2009 2012

Source: Federal Reserve Bank of St. Louis Figure 2

cognizant reports 4 Quick Take Prescriptions to Overcome the Challenges Banks’ channel integration endeavors must be accompanied by efforts to overcome the three key challenges of strategy, legacy systems and security. Such efforts are critical to removing the roadblocks to multichannel transformation.

Rethink the Strategy On the business model and strategy fronts, banks’ digital transformation efforts are impeded by the lack of an enterprise strategy to meet the technological and process demands of the multichannel era. A Forrester survey15 found that fewer than one-third of respondents had crafted a multichannel strategy that was well-coordinated across business lines, as well as a dedicated team.

Multichannel integration needs to go beyond providing a seamless customer experience. Each investment in multichannel integration must address one or more of the following objectives: improve customer loyalty, increase revenue and reduce costs.

Managing change can be a daunting task, given that entering the multichannel era involves reori- enting banks’ organizational structures, performance metrics, processes and systems. Multichannel success requires a channel-agnostic and customer-centric approach. Given the scale of change, channel integration efforts should:

• Involve top leadership and embrace a customer-centric culture that permeates from the top and extends throughout the organization. • Encourage changes to the organizational structure that collectively foster a We believe an customer-centric culture focused on dismantling channel siloes. We believe an effective way to do this is to organize channels as a shared service used by all effective way business lines, led by a channel czar. to do this is • Identify areas where channel conflicts exist and replace them with an to organize operating model that rewards customer-focused behavior that is in line with multichannel goals. channels as • Establish enterprise multichannel goals, operating models and metrics to a shared service ensure an effective transition. Banks should avoid the traps associated with used by all business the legacy of earlier branch-centric models. They can leverage cross-channel customer data to measure customer contributions to profit against the cost of lines, led by service. Doing so also enables them to appropriately price products and services a channel czar. based on insights derived from each customer’s unique data.16

Address Legacy Systems Issues On the technology front, legacy systems appear to be obstructing most banks’ multichannel initiatives. It can become too costly to replace legacy systems such as core banking solutions because of the capital investment required, as well as fear of conversion risk and customer impact. These systems address various components, such as lines of business, geographies and front-, middle- and back-offices. Banks can use middleware to connect core systems with multiple channels to deliver services consistently across all touchpoints.

Confront Security Challenges On the security front, the proliferation of channels has begun to impact banks in at least two ways. First, it has increased the vulnerability of individual channels to fraud. Second, consumers are sub- jected to multiple identification and authentication routines, requiring them to use different passwords and PINs. Banks can address these issues by adopting a channel-agnostic, multifactor authentication process that employs biometrics, in addition to other security measures.17 They can employ any two of the three factors from the FFIEC recommendations:18

cognizant reports 5 1. Something the user knows (e.g., password, PIN). 2. Something the user has (e.g., ATM card, phone). 3. Something the user is (e.g., biometric, fingerprint).

While consumers are rapidly adopting mobile banking, they remain wary of its security implications. A survey19 we conducted with Monitise found that 70% of respondents considered security a major concern; 68% prefer biometric features, and 35% are inclined to pay for such protection. (For more detail, read our white paper, “Segment-Based Strategies for Mobile Banking.”) Banks embarking on a channel integration initiative should consider tightening their security measures to reinforce the safeguards offered by a unified cross-channel banking experience.

thereby hurting efficiency, time-to-market and • Align operations, business and IT. Without the bottom line. this alignment, it will be impossible to deliver a consistent customer experience. While IT Prescriptions for Successful integration is a major challenge in itself, the Multichannel Integration critical success factor for successful channel To fulfill consumer needs while providing a seam- integration lies in successfully aligning opera- less experience across channels, banks should tions with channel solutions. This alignment focus on ensuring cross-channel consistency must take place in both the design of IT solu- and creating a set of predictable outcomes. This tions that enable ease of operations and the is predicated on integrating channels, devices, successful training of operations personnel products and functions across all touchpoints. who can use technology tools at their disposal. Banks can choose to either integrate all channels • Consider integrating sales and service on a single platform or use a common set of ser- across the five key delivery channels: vices on each platform to branch, contact center, online, ATM and Banks can choose perform similar functions, mobile. Banks can accomplish this by ensuring supplemented by additional the convergence of processes focused on cus- to either integrate services that are unique to tomer interaction and back-office fulfillment. all channels on a a channel. This needs to be supplemented by levels of single platform or support appropriate to each channel, such as use a common set Successful channel integra- “click to chat” and context-sensitive help. tion will provide banks with • Provide operational enablers to equip the of services on each unprecedented data and front-office staff (such as the branch and call platform to perform insights to understand the center) with information from multiple dispa- full spectrum of customer rate back-end systems. Such systems include similar functions, behavior. Armed with these CRM and all product systems of record. supplemented by insights, banks can struc- • Use a service-oriented architecture (SOA).21 additional services ture products and services By doing so, banks can reap three major aligned with such behav- advantages: improvement in time to market, that are unique to ior. A study by Thomas H. data consistency (which is critical to ensur- a channel. Davenport, author and the ing a seamless customer experience through President's Distinguished cross-channel consistency and enhanced regu- Professor of IT and Management at Babson Col- latory compliance) and overcoming limitations lege, and Jill Dyché, Vice President of Best Prac- imposed by legacy systems.22 tices at SAS, observes that some major banks are • Reengineer core business processes now using structured and semi-structured data by developing a set of standard services to monitor customer movements across chan- and back-office processes. Doing so enables nels such as Web sites, call centers, tellers and transactions such as opening an account, bal- branch staff. By doing so, they are learning how ance inquiries and bill payments to execute such paths influence purchases and attrition.20 effectively over multiple channels. Such trans- To ensure successful integration, we recommend actions can go a long way in supporting banks’ that banks: channel integration endeavors. For banks whose operating departments rely on manual processes, increased volumes and different

cognizant reports 6 sources of information proliferate. Such banks product applications with available customer can make use of workflow engines and -busi data to reduce customer effort as much as ness rules to ensure consistency regardless of possible.25 the channel from which transactions originate. • Optimize devices for attitudes. Customers’ • Leverage advanced analytics. Understanding attitudes can vary from quick, to casual, to customer behavior and preferences and using focused, to physical.26 Multichannel experi- them effectively lies at the core of multichan- ences can delight customers when banks focus nel transformation. When channel integration on customer attitudes is combined with analytics, it can enhance first and then on devices. While consumer customer experience and efficiencies, in addi- Smartphones may be tion to revealing revenue growth opportuni- best suited for those with technologies ties. This also marks a shift from the era of a “quick” attitude, tablets have taken “studying a sample” to “studying the individ- for “casual” customers, convenience to new ual consumer,” empowering banks to person- and personal interaction alize products and services. Banks can track for physical customers.27 heights, banks are and analyze all of a customer’s multichannel Banks can achieve this by still struggling to interactions with the bank and use that data optimizing mobile apps keep pace. to inform appropriate service and marketing and Web sites for differ- interventions. ent attitudes. Also critical is the need to link • Leverage social media. Banks’ ability to apps related to different channels to enable listen to their customers’ voices on social the flow of information across channels. This media sites and respond can be strengthened ability is key to providing a seamless journey, a by integrating their social media approaches goal of multichannel banking.28 with their contact centers.23 Armed with • Enhance usability through consistency. consistent customer data across channels, Usability is a key component of customer banks can engage with their customers effec- engagement and experience. To provide a tively on social media sites. seamless experience, banks should aim to create a consistent look and feel on user inter- Prescriptions for Enhancing Customer face screens across channels – online, mobile Experience and ATM.29 Channel integration is a valuable means of enhancing customer experience – a necessary Prescriptions to Drive Profitability condition for satisfying increasingly tech-savvy The potential gains of channel integration are so consumers and keeping disruptive nonbank significant that continuing the status quo is an competitors at bay. Yet, while consumer tech- unacceptable option. Failure to adapt jeopardizes nologies have taken convenience to new heights, customer experience and can lead to a loss of banks are still struggling to keep pace. Given its market share to aggressive competitors. However, phenomenal growth, the online channel is the banks’ channel integration endeavors are sustain- main entryway to shaping customer experience.24 able only if they simultaneously contribute to the When consumers enter through this door to open bank’s profitability, either by growing revenues or accounts, they are often required to e-mail the by reducing costs. application or are directed to other non-electronic channels. Add to this the absence of integrated By integrating channels and fulfillment processes, fulfillment processes, and the result will not meet banks will have laid the foundation necessary to customer expectations, given how accustomed improving the customer experience. Enhanced consumers are to real-time processing and fulfill- experience can arrest customer attrition and ment of nonbanking transactions. Therefore, we improve the prospect of cross-selling. Also, social recommend that banks: media-savvy consumers can potentially become the banks’ brand ambassadors, helping them • Make available a 360-degree view of grow market share. When channel integration customer data and activity, to leverage is coupled with automation and efficiency cross-channel data while upselling and cross- improvement initiatives, banks can yield a mate- selling to customers. Banks can auto-fill rial reduction in costs.

cognizant reports 7 The consumer shift to digital channels for routine capabilities can enable banks to offer targeted banking transactions has been accompanied by a products and services specific to each cus- significant increase in the number of transactions, tomer, delivered through customers’ preferred as well (see Figure 3). channels. By taking a strategic approach to segmentation, banks can equip frontline staff We recommend While transactions com- with insights to facilitate effective channel pleted on digital chan- management, marketing and sales efforts to three sets of levers nels cost much less than drive revenue growth. (To learn more about that enhance high-touch transactions, segmentation, see our white paper, “The New revenues, reduce they are not free (see Banking Consumer: 5 Core Segments and How Figure 4, next page). More- to Reach Them.”) costs or achieve over, banks have yet to • Leverage multichannel capabilities. Doing both revenue growth recognize the true total so enables banks to derive insights from cus- and cost reduction. costs of servicing the tomer data and preferences gathered across growing volume of digital channels, lines of business and the front-, mid- transactions and passing on those costs to con- dle- and back-office, as well as bring new and sumers. The inability to charge consumers for personalized offers to market much faster. convenience necessitates that banks consider • Cross-sell using cross-channel customer targeting their channel integration efforts at data. Sales channels can leverage customer driving profitability in every way possible. data, insights about their activity and usage patterns to cross-sell products relevant to We recommend three sets of levers, consisting of each customer.30 drivers that enhance revenues, reduce costs or achieve both revenue growth and cost reduction. Cost Reduction Levers • Drive channel optimization: Steer trans- Revenue Levers actions to the channel best-suited to that • Combine channel data with other client transaction to provide better customer service information to understand customers’ and reduce costs. Costs associated with purchasing habits. This includes channels providing services through digital channels are where customers previously purchased or significantly lower than traditional channels inquired about new products, as these insights (see Figure 4, next page). can be used to maximize the effectiveness of • Periodically analyze call center usage to marketing efforts. identify high-volume and low-value transac- • Use customer data modeling with tions that can be directed to digital chan- segmentation and real-time profiling. Such nels. Banks may also consider new account

Growth of U.S. Banking Transactions by Channel

All channels

Mobile

Online

ATM

Call center

Branch

-10% 0% 10% 20% 30% 40% 50% 60% CAGR Note: CAGR computed using underlying data derived from Bofi Holdings, Inc. presentation on the SEC site, http://www.sec.gov/Archives/edgar/data/1299709/000129970913000026/bofiholdingincinvestorpr.htm. Source: Cognizant Research Center Figure 3

cognizant reports 8 pricing structures for low-value clients to the requirements of each silo. The costs and encourage them to migrate to lower cost chan- time to market associated with such silos can nels or opt out of the bank. be improved when banks integrate channels. • Provide high-touch interactions such as video chat through non-branch channels. Levers that Increase Customer Doing so can yield savings while satisfying Retention Rates customer need for personal interactions. A multichannel strategy can also increase cus- • Facilitate consistent cross-channel tomer retention and eventually boost the bottom messaging and functionality through SOA. line. For example, by arresting attrition, revenue This enables banks to use the same services can be better protected. Also precious capital across all channels, optimizing costs. can be preserved by avoiding the high costs of • Adopt common engines for similar tasks attracting new customers. across all channels and product silos. Satisfied customers also The inability to For instance, putting all consumer loans on make good prospects for charge consumers a single application platform will help to cross-selling and act as the minimize costs. bank’s best brand ambassa- for convenience • Use business process management (BPM) dors, with acquaintances in necessitates that solutions. Such solutions can help banks both the physical and virtual banks consider automatically integrate supporting customer worlds, contributing to prof- information with a sales or service request, itable revenue growth. targeting their determine the support group to which the channel integration request should be routed, generate any forms • Use multichannel inte- efforts at driving or correspondence required, and receive gration capabilities to inbound materials from the customer or improve customer ser- profitability in every support group. These solutions can reduce vice. A more consistent way possible. turnaround time, improve customer profitabil- user experience and ity and reduce operating expenses. enhanced functionality in both self-service • Improve operational efficiency by bridging and assisted interaction can help improve cus- automation gaps. Additionally, banks should tomer retention rates. Additionally, consistent standardize based on best-in-class practices service delivery through a channel-agnostic across different channels and product lines. back-office can minimize errors and enable • Improve the product development process. faster resolution of customer issues. Such When each channel is managed separately actions can lead to increased positive interac- on different platforms, every new product tions that can have a long-term impact on cus- or service the bank wants to deliver across tomer retention. multiple channels must be redesigned to meet

Digital Channel Costs: Lower But Not Free

$4 $3.75

$2 $1.65 $1.34

$1 $0.60 Cost per transaction $0.29 $0.16 $0.16 $0.13 $0.14 $0.10 $0.09 $0.04 $0 Branch Teller Call Center ATM Call Center Mobile Online Agent IVR Banking Banking (U.S. banks, 2010) Total costs IT costs Source: Tower Group Figure 4

cognizant reports 9 • Leverage multichannel integration to share • Capture and analyze channel data with information, services and functionality predictive analytics to meet and exceed across channels. Channel integration allows customer expectations and establish lasting customers the flexibility of using multiple customer relationships. channels to complete a task. Similarly, focus- • Record customers’ refusal of offers and ing on customer convenience and simplified their preferences for receiving new offers delivery of products and services can result in or information. Customers’ rejection of an increased customer retention rates. offer, as well as their marked preferences, can

Quick Take

Making Multichannel Meaningful Here’s how we are helping a major U.S. banking client deliver a consistent customer experience across all touchpoints.

The Challenge The bank — headquartered in the midwest region of the U.S. — provides investment management, retail and commercial banking, consumer finance and investment banking products and services to individuals and companies throughout the country. It wanted to embrace a relationship banking model to enable more effective cross-selling and up-selling across various lines of business (consumer, commercial and private banking). To do this, it needed to identify and develop enhanced capabilities to support insight- driven selling and enable better collaboration across its consumer, private and small business segments.

The Approach To meet these goals, the bank wanted to enable cross-channel integration, aimed at improving customer experience by providing end-to-end service request visibility to all bank employees. Our consulting unit provided enterprise business transformation planning that included:

• A complete understanding of the bank’s processes and the design of a business-IT strategy blueprint and roadmap for multiple functions, such as marketing, sales, servicing and origination. • An operational data assessment across all business segments and channels.

Additionally, we deployed our proprietary business-IT reengineering methodology and conducted work- shops with key business stakeholders to elicit and achieve consensus on business requirements. Our team also modeled and documented the bank’s business requirements.

We identified the various gaps and challenges for a complete multichannel business transformation, and followed up by conducting joint requirement sessions to refine the solution model and gather nonfunctional requirements. Finally, we conducted synergy meetings to cross-pollinate best practices in the sales function across different lines of business.

Program Benefits The initiative helped streamline the sales process and increase revenue generation by:

• Improving client insights that enable better identification of sales opportunities. • Improving customer acquisition and retention by better understanding customer needs. • Improving productivity by providing easy access to customer data and better collaboration tools.

Additionally, the program increased customer satisfaction and customer retention attained through enhanced end-to-end service request handling.

cognizant reports 10 be shared across all channels, thus improving networks and introducing high-touch interactions customer satisfaction. on digital channels.

Road to Digital Banking Success in the emerging consumer-centric, digital Channel integration does not lend itself to one- banking era is heavily predicated on successfully size-fits-all solutions. Banks must assess their completing two key steps: Effectively integrating current state and resource constraints to find channels and fulfillment processes; and leverag- the approach to integration that is right for ing the foundation laid by integration to improve them. They can finance a portion of the invest- the customer experience, while pursuing the need ment needed for integration by optimizing branch to reduce costs and grow revenues.

Footnotes 1 Jörgen Ericsson, Philip Farah, Alain Vermeiren and Lauren Buckalew, “Winning Strategies for Omnichannel Banking,” Cisco Internet Business Solutions Group, 2012, http://www.cisco.com/web/ about/ac79/docs/Cisco-IBSG-Omnichannel-Study.pdf.

2 Catherine Palmieri, “To an Analog Banker in a Digital World,” Strategy+Business, Aug. 27, 2013, http://www.strategy-business.com/article/00206?pg=0.

3 Ibid.

4 “CBA/Forrester Survey: Retail Banks Planning For the Age of the Multichannel Customer,” Forrester Research, Inc., Apil 2, 2013, http://www.forrester.com/CBA+Forrester+Survey+Retail+Banks+Planning +For+The+Age+Of+The+Multichannel+Customer/-/E-PRE4844.

5 “Introducing the Millennial,” Credit Union Magazine, Feb. 13, 2013, http://www.creditunionmagazine. com/articles/38267-introducing-the-millennial.

6 “Technology Key to Bridging the Gap Between Millennials’ and Baby Boomers’ Banking Needs, Reports Microsoft Study,” PRNewswire, Nov. 3, 2013, http://www.prnewswire.com/news-releases/ technology-key-to-bridging-the-gap-between-millennials-and-baby-boomers-banking-needs-reports- microsoft-study-68842472.html.

7 “Introducing the Millennial,” Credit Union Magazine, Feb. 13, 2013, http://www.creditunionmagazine. com/articles/38267-introducing-the-millennial.

8 Mary Wisniewski, “Why Some Millennials Still Come to the Branch,” American Banker, Jan. 22, 2013, http://www.americanbanker.com/issues/178_15/why-some-millennials-still-come-to-the- branch-1056038-1.html.

9 “Technology Key to Bridging the Gap Between Millennials’ and Baby Boomers’ Banking Needs, Reports Microsoft Study,” PRNewswire, Nov. 3, 2013, http://www.prnewswire.com/news-releases/ technology-key-to-bridging-the-gap-between-millennials-and-baby-boomers-banking-needs-reports- microsoft-study-68842472.html.

10 A U.S. regional banking corporation, headquartered in Cincinnati, Ohio.

11 Bryan Yurcan, “Life Without Channels: How to Provide a Seamless Customer Experience,” Bank Systems & Technology, June 11, 2012, http://www.banktech.com/channels/life-without-channels-how- to-provide-a-s/240001637?pgno=1.

12 “Regulatory Shocker on Social Media in Banking Coming Soon,” The Financial Brand, Jan. 23, 2013, http://thefinancialbrand.com/27250/ffiec-social-media-policy-guidelines-for-banks-credit-unions/.

cognizant reports 11 13 Daniela Yu and John H. Fleming, “How Customers Interact with their Banks,” Gallup Business Journal, May 7, 2013, http://businessjournal.gallup.com/content/162107/customers-interact-banks. aspx?version=print.

14 Tiffani Montez, “The State Of North American Digital and Multichannel Banking 2013,” Forrester Research, Inc., April 2, 2013, http://www.forrester.com/The+State+Of+North+American+Digital+And+ Multichannel+Banking+2013/fulltext/-/E-RES93502.

15 Ibid.

16 Catherine Palmieri, “To an Analog Banker in a Digital World,” Strategy+Business, Aug. 27, 2013, http://www.strategy-business.com/article/00206?pg=0.

17 Andre Delaforge, “Biometric Authentication in a Multi-Channel Environment,” Banking Strategies, Nov. 19, 2012, http://www.bai.org/bankingstrategies/risk-management-and-fraud/security-and-fraud/ biometric-authentication-in-a-multi-channel-environment.

18 “Courts Ruling Against Banks Not Compliant with FFIEC Regulations,” TrustID, Nov. 14, 2012, https:// www.trustid.com/blog/2012/11/14/courts-ruling-against-banks-not-compliant-with-ffiec-regulations/.

19 “Segment-Based Strategies for Mobile Banking,” Cognizant Technology Solutions, June 2013, http://www.cognizant.com/InsightsWhitepapers/Segment-Based-Strategies-for-Mobile-Banking.pdf.

20 Tom Davenport and Jill Dyché “Big Data in Big Companies,” SAS Institute, Inc., http://www.sas.com/ reg/gen/corp/2266746.

21 Service-oriented architecture (SOA) is a software design and software architecture design pattern based on discrete pieces of software providing application functionality as services to other applications. This is known as service-orientation. It is independent of any vendor, product or technology. For more information: http://en.wikipedia.org/wiki/Service-oriented_architecture.

22 Michael Tevebaugh, “The New Banking Paradigm: Channel Integration in a Customer-Centric World,” CapTech, April 25, 2013, http://blogs.captechconsulting.com/blog/michael-tevebaugh/the-new-banking-paradigm-channel-integration-customer-centric-world.

23 Bryan Yurcan, “Life Without Channels: How to Provide a Seamless Customer Experience,” Bank Systems & Technology, June 11, 2012, http://www.banktech.com/channels/life-without-channels-how- to-provide-a-s/240001637?pgno=1.

24 Catherine Palmieri, “To an Analog Banker in a Digital World,” Strategy+Business, Aug. 27, 2013, http://www.strategy-business.com/article/00206?pg=0.

25 Ibid.

26 Jelmer de Jong, “The Multichannel Banking Challenge,” BankNXT, July 2012, http://banknxt.com/603/ the-multi-channel-banking-challenge/.

27 Ibid.

28 Ibid.

29 Michael Tevebaugh, “The New Banking Paradigm: Channel Integration in a Customer-Centric World,” CapTech, April 25, 2013, http://blogs.captechconsulting.com/blog/michael-tevebaugh/the-new- banking-paradigm-channel-integration-customer-centric-world.

30 Catherine Palmieri, “To an Analog Banker in a Digital World,” Strategy+Business, Aug. 27, 2013, http://www.strategy-business.com/article/00206?pg=0.

cognizant reports 12 Credits

Author and Analyst Rajeshwer Chigullapalli, Cognizant Research Center

Subject Matter Experts Craig Zander, Director Consulting, Cognizant Banking & Financial Services Anirvan Saha, Director Consulting, Cognizant Banking & Financial Services

Design Harleen Bhatia, Design Team Lead Suresh Chedarada, Designer

About Cognizant

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