Migrating banking customers to digital channels
As banks are moving to new digital channels like the internet banking and mobile banking applications, they’re able to offer better customer engagement while lowering their operational costs. The modern-day customers are inclining towards the online banking channels more than ever. Still, for large traditional banks the penetration of customer based to online banking is still very low. This article discusses strategies adopted to overcome this problem.
Online banking, also known as internet banking or web banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of banking transactions through the Bank's website. The online banking system will typically connect to or be part of the core banking system operated by a bank and is in contrast to branch banking which was the traditional way customers accessed banking services.
Internet banking software provides personal and corporate banking services offering features such as viewing account balances, obtaining statements, checking recent transactions, transferring money between accounts, and making payments.
Digital banking is part of the broader context for the move to online banking, where banking services are delivered over the internet. The shift from traditional to digital banking has been gradual and remains ongoing, and is constituted by differing degrees of banking service digitization.
Major benefits of digital banking for a Bank are operational efficiency, enhanced productivity, cost savings, automated self-service, applications, increased accuracy, improved competitiveness, greater agility and enhanced security. Hence banks must activate their online channels and integrate them with the traditional banking channels. Not surprisingly, 60% of banks are undertaking a transformation of their core banking systems.
The data migration process also bears a significant risk if not carried out effectively. Data migration exercises involve records from different source systems to be integrated and interfaced with a target system in different formats. Once you successfully manage the risk involved in managing the complex data migration process and enable internet banking channel, the next challenge is to drive adoption with customers.
It is very important for banks to encourage customers to migrate from more expensive channels to less expensive online and mobile banking. Every customer has a channel preference to interact with their bank; some may still prefer the traditional branch banking, while others may want to use ATM, online or mobile channel. Channel migration strategies are impacted by this unique channel preference.
What is the current business challenge?
Online banking leads to significant cost-saving as well as revenue generation as a result of a deeper relationship with customers. However, the ratio of online users among the total customer base is around 39%.
What is the goal of this project?
- The goal of the project is to increase the penetration of online banking within the bank by effective use of different alternative channels (cross channel conversion)
- Effective marketing campaigns as well as effective use of branches as the key contact point for the customers to adopt internet banking
- Review online banking conversion activities
- Review Branches’ sales and target structure (for Online Banking)
- Compare and contrast the different approaches
- Make recommendations for online banking conversion by the use of effective marketing activities both 1-1 communication and mass campaigns for customers
- Branch campaigns in order to increase sales, different rewarding approaches for branches, new KPIs and reporting structure
Some other strategies could be
- Offer positive or negative incentives
- Position the new online and digital channels as the ‘standard’
- Provide education to acclimate customers to new channels.
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