Anuradha Mallya, senior product
consultant (Product Strategy Group), Finacle, at Infosys
Technologies, talks about multi-channel integration and
transforming channels for profits.

For a long time, banks, for their customers, meant bank branches
only. Then appeared the ATM with its promise of ‘anytime money’.
Online and mobile banking followed. They liberated customers,
enabling them to perform a range of transactions at all hours and
from anywhere. But even as new delivery channels grew in strength
and popularity, the older channels did not die.


Studies conducted by Forrester Research
and the IBM Institute for Business Value indicate that customers
across every age not only still use the branch, but 86 percent say
they visit a branch at least once a month. Some 64 percent apply
for or buy products at a branch because they “want to speak with a

At the same time, Gartner has found that
33 percent of US customers use direct banking services. Expanded
broadband penetration and familiarity with the Internet are
boosting direct banking.

By 2010, the number of direct banking
households in the US will grow to 56.2 million, or 62 percent of
total online households in the US.

According to an American Bankers
Association survey of 1,000 consumers, 32 percent said they used
the branch most often, 26 percent preferred the online route, 26
percent opted for ATMs, 5 percent favoured the telephone and 5
percent said that traditional mail was their choice.

Thus, channels are not an alternative but
a complement, and a customer’s approach to channel transactions is
additive not substitutive. Banks need to transform their channel
strategy around the idea of channel chains, where a combination of
channels performs complementary roles for customers.

That is easier said than done. Banks are
trying to operate in tough times, seeking to increase earnings when
resources are limited, competition is fierce and customers are
demanding. In such a situation, spending money for future returns
may be the last thing on their agenda.

However, bankers must realise that
providing customers a rich, unified and consistent experience is
critical. Managing and integrating disparate channels will also
allow banks to differentiate services, respond to a dynamic market
and increase efficiency. Importantly, in this day and age of thin
margins, banks can achieve between 10 percent and 25 percent annual
cost savings in IT and operations through multi-channel

Seeing its advantages, banks have embarked
on the journey to transform through integration. A Celent survey
indicates that over 80 percent of major banks worldwide are
currently engaged in or planning channel integration projects.

According to a new Datamonitor report,
multi-channel integration in US banking is tipped to become a key
growth story in distribution technology.

Total channel technology spend by year-end
2008 is expected to increase by $3.3 billion over the 2004
expenditure, creating a $16.5 billion opportunity for vendors.

Let us understand why spending on
multi-channel integration is essential and how it will help banks
come out on top.


In an age of instant gratification and
personalised service, customers want access to their money
anywhere, and they want it now – every time they ask for it. They
want exemplary service, tailored products and a rich and positive
experience from the bank.

Unfortunately, it is not the simplest of
tasks to fully satisfy this demanding breed of customer. This is
underscored by a recent survey of customers from the top 32 US
financial institutions which reveals that 58 percent of clients
feel their bank does not do what is in their best interest.

Today, the customer hops between different
channels, depending on her convenience, location, time of day and
the transaction being made. The quality of her experience is
affected by the consistency of service the bank provides.

By ensuring that each channel offers the
same products and displays the same information, channel
integration creates a better user experience.

Integration also provides banks with a
holistic and actionable view of customers, their interactions,
accounts, transactions, and products, by converging isolated
back-office systems into a single hub. This allows banks to mine
customer data and leverage the information to offer customers
tailored financial services that fulfil their needs.

Streamlining the

As customers interact with their banks
over a variety of channels, they demand a consistent experience and
the same information, updated in real time, regardless of the

For instance, a customer withdrawing funds
from an ATM or making a deposit at a branch needs to see those
transactions when she logs into her online banking account.

Banks must offer their customers the right
products and services, integrate products and services across
channels to enable a broader portfolio to customers, deliver
products and services seamlessly through a variety of channels, and
provide high quality, personal service.

Consider the case of a client who fills up
an online form for a loan application, only to be told that she has
made a mistake. She tries again, but is told by the bank that she
does not “qualify”. Growing frustrated, she calls the bank and
repeats her story from the beginning because there is no record of
her application.

If, however, the phone banker knows about
her application or if the bank portal is clearer about the
requirements a customer must meet, she will not feel that the
bank’s service is inadequate – and need not take business to
another financial institution.

A TowerGroup study finds that “consumers
are interacting with their bank more than in previous years”,
regardless of the channel. Every one of these customer interactions
delivers a message about the bank’s competency.

By ensuring uniform information and
interactions across channels, multi-channel integration leads to
customer satisfaction and fosters customer loyalty.

Integration also introduces much-needed
intelligence into the bank and empowers it to provide a compelling
customer experience that strengthens profitability.

With the help of such consolidated data, a
bank can:

• Cross-sell and up-sell: a bank can
present relevant and personalised offerings, thus ensuring higher
acceptance rates, greater share of wallet and new opportunities to
drive organic growth;

• Ensure stronger retention and loyalty:
being able to rapidly identify and solve the problem for a
customer, means that they can be retained more effectively. Higher
customer loyalty translates into greater profitability and higher
customer value;

• Deliver compelling customer experiences:
being able to seamlessly engage the customer across a spectrum of
channels means her experience will be an excellent one. This
contributes to impressive brand identification and referrals.


With intensifying competition and
demanding customers, revenue opportunities have become very thin
for banks. In such a scenario, a bank must adopt a cost-effective
landscape to increase growth and profits.

As bank systems become more complex, the
cost of developing and maintaining multiple delivery systems
becomes more prohibitive. At the same time, banks are trying to
devise cohesive strategies for customer service and sales.

Banks are concluding that multi-channel
integration can address many of these challenges, and many have
initiated long-term projects to enable real-time, uniform access to
data across all channels. A Celent survey indicates that over 80
percent of major banks worldwide are currently engaged in or
planning channel integration projects.

Multi-channel integration can help a bank
lower costs since it involves a scalable technology platform,
automation and cutting of duplication.

Access to up-to-date, centralised
information is essential to ensure cross-selling effectiveness,
since it provides front-office employees the right information.

Additionally, real-time processing of
information allows simplification of many operations required for
reconciliation and should reduce back-office workload.

As products change, a big expense is tied
to rolling out the product separately across channels. However,
integration ensures that the change is made only once across all

Moreover, multi-channel integration
provides customers the option of using more cost-effective channels
which are also user-friendly and convenient. Multi-channel
integration ensures that fewer employees are needed.

And integrating product delivery on
self-service channels such as the Internet ensures that banks can
deliver additional expertise to customers, leaving bank staff free
to focus on customer relationships. Thus expert staff costs can
become a variable cost to the bank branch and such staff can be
sourced from a virtual shared service.

With integration, a bank can market and
sell products, increase revenues, satisfy end users, and build
lasting relationships – all with minimal demand on the bank’s
existing infrastructure and resources.


Banks must balance multiple objectives:
maximise return, mitigate risk and increase agility. All of this
has to be accomplished in the middle of an unprecedented amount of
change and competition.

If banks are to take on competition and
succeed in an unpredictable market, they must anticipate trends and
develop the ability to deliver customised products rapidly. Only
then can they take advantage of new opportunities.

In this era of shifting customer loyalty,
a bank can maximise its competitive advantage by offering
differentiated, customer-focused products. And it must offer these
products before its competitors. After all, a bank is competing in
a world where the competitor can offer a new product to existing
customers in a click.

How can a bank ensure that its offering is
different from the bank around the corner, it is innovative, and it
meets the varied needs of individually diverse customers? With
multi-channel integration, a bank can first understand customer

It can then go a step further by offering
these customers tailor-made services with decreased time-to-market.
This is because the product can be rolled out across different
channels quickly, without many changes.


Aligning the business plan with the right
kind of technology is pivotal to banking transformation.

Thus, as banks move to an integrated
multi-channel architecture from inflexible, siloed-legacy systems,
banks make the most important technology investment. After all,
integration of the delivery channels helps a bank realise its
transformation objectives.

Firms need to build integrated channels
that facilitate customer information and process flows. Only then
will banks be able to achieve the operational efficiencies they had
hoped for. The best approach for this is Service-Orientated
Architecture (SOA).

Leveraging SOA for IT enables the bundling
and cross-selling of products in addition to services
customisation. With SOA, banks can use data mining techniques to
analyse the customer behaviour, thus creating cheaper, innovative
and differentiated products. Not only will this strengthen customer
satisfaction, but it will also increase repeat purchases and
attract new customers.

With SOA, banks can introduce value-added
components to existing offerings. These include personal financial
planning tools in consumer online banking sites, real-time
reporting and analytics for corporate cash management solutions,
and budgeting and forecasting tools to complement their payments
processing businesses.

SOA allows technology integration and thus
simplifies the IT landscape, allowing banks to make their
technology environment more responsive to dynamic business
challenges – either strategic or day-to-day. It helps provide
real-time data, greater efficiency and better risk management and
compliance. Integrated into business processes, these streamline
business processes to allow growth.

According to Celent, banks will spend
between $5 million to more than $70 million on integration projects
that may take one to five years to complete, depending on the scope
of the project and existing infrastructure.

But banks will also be able to achieve a
reduction in costs apart from ensuring customer loyalty, sustained
growth and market leadership.

Banks can choose to take an incremental
approach to channel transformation through integration or adopt a
broader, enterprise-level strategy.

An incremental approach will yield
immediate financial improvements, while the enterprise approach
will result in larger cost reductions over time.


Customers are critical to a bank’s
success. If a bank knows it customers and is able to fulfil their
ever-increasing expectations, it is well on the road to

For that, a bank must have the capability
to serve the customer’s varied needs through a customised and
consistent banking experience at every touch point.

Transformation through multi-channel
integration is key to achieving this. Not only does it help in
satisfying customers, but it also helps to reduce costs and
increase agility, thus helping a bank attain sustainable


1. Branches in Bloom – Will growing
investments in branches bear fruit for banks?
Sunny Banerjea,
Kimberly Hedley, John White, IBM Business Consulting Services.

2. Internet banking goes mainstream in US and UK, Gartner,
20 February 2008;

3. Online Banking: Remote Channels, Remote Relationships?
, May 2006;

4. American Bankers Association/Ipsos poll conducted 10-12 July

5. Celent report;

6. Using Content to Create High-Impact Customer Experience in
Financial Services
, Financial Services Technology;

7. Internet Banking Outpacing Other Channels, TowerGroup,
May 2007;

8. Banking on the Future with Generation Y, Banking
, Nov-Dec 2007;

9. Retail Banking Industry Agenda, TowerGroup and IBM
Business Value, May 2005;

10. Customer Experience: Winning on the Front Line,
, June 2006.


An integrated multi-channel environment