The banker’s definition of a ‘channel’ is notably different from that of the vendor community in general, and this is reflected in the kind of solutions existing today, which claim to solve the multi-channel puzzle.
For a bank, a channel is a conduit to distribute its products and services to customers, either pushed by the former or pulled by the latter. This conduit may be compared to the retail industry distribution network of distributors, retailers and malls. In the retail industry, a product manager is usually responsible for each delivery channel, and each channel comes with its own revenue targets, risks, contracts and so on. Sometimes, a product line manager, responsible for product revenues across all channels in a matrix organization, is also assigned.
Banks have followed the same route while spreading beyond branches. However, the unprecedented growth of electronic channels has posed a challenge of hardware-software misalignment to their channel managers and led to a common tendency among vendors to mix ‘channels’ with ‘devices’.
Let me elaborate this…
Internet banking software arrived around 15 years ago, followed by a barrage of hardware devices. The software designed for desktop Internet browsers could not keep up with the progress in end-user experience ushered in by the hardware industry. Thus, during the last five to seven years, specific software evolved to fit specific hardware, creating new opportunities for banking on USSD, SMS, desktop/PC, Kiosk, Android, Blackberry, WAP, iPhone, iPad etc.
Vendors of different sizes replicated Internet banking software for myriad mobile devices, made their money, and convinced banking product managers to launch a banking solution for the Android, the iPhone and so on.
Initially excited about this wave of innovation, customers woke up pretty quickly to the reality of non-uniform and incomplete experiences across channels. At the same time, the maintenance staff at banks were unhappy about having to repeat business logic, access control parameters and customer data entry in multiple, similar systems.
The ‘multi-channel’ evolved as an absolute necessity for channel transformation.
At this juncture, the definition of the channel became important like never before. It raised questions like, “Is iPhone banking a channel, or another variant of mobile banking with similar risks?” “Can browser-based access to an Internet banking site over a mobile device, be equated to mobile banking or Internet banking?” These questions were underscored by customers’ annoyance with the fact that the context of their transactions, individual preferences and sometimes even identity, on one channel was not available on another channel of the same bank.
This situation necessitated a re-learning of what a channel means to a bank and why so.
When it comes to defining their channels, banks still follow the old parameters, like risk, contractual terms, opportunities, negotiations and revenue targets, with no heed to the device of access or the associated quality of experience.
A customer accessing an Internet site using a browser, whether on mobile, laptop, desktop or IP-TV, perceives it as ONE INTERNET CHANNEL. In contrast, the bank, defining channel by risk (as one parameter) may think of the aforementioned as two unique channels – mobile and internet. Accordingly, it provides special software in the form of a mobile banking app, complete with separate security and functionality, for the mobile channel, and something else for each of the other modes of access. Things get more complicated when the bank offers a different app for each type of mobile phone – Android, iPhone and Blackberry – because of the current lack of convergence among them.
This doesn’t mean that banks are launching as many new channels. A channel can be accessed using multiple devices, but a device doesn’t become a channel in itself. A bank might like to restrict a FEATURE or SERVICE on a certain CHANNEL if it seems risky; or it might pass up the opportunity of a new channel that doesn’t seem secure. For instance, high value international payments via mobile carry the risk of money laundering, and therefore, are not permitted by some banks. However, those that do allow them should buy the right technology to ensure that regardless of the type or make of the mobile device, the user experience auto-adjusts itself depending on the display characteristics of the mobile device.
A device doesn’t make way for a new channel. In other words, user experience on account of technological differences doesn’t define a banking channel; business risks and opportunities do.
Once a bank establishes a channel to distribute its products and services and assesses the risks and returns thereof, only then does the question of user experience flexibility arise. Even when customers on a multitude of devices affording different user experiences access that channel, the business risks and opportunities remain the same.
Therefore, before embarking on their multi-channel transformation journey, banks must understand the decade old debate on DEVICE versus CHANNEL.