What Digital Means In Banking: Brand Experience


Editor’s Note: The following is part one in a series of blogs excerpted from a report published by Celent entitled Defining A Digital Financial Institution by Daniel Latimore and Zilvinas Bareisis . D3 Banking has licensed the content used for general distribution. For the full report contact Celent.

Everybody (almost everybody) agrees that digital is important in financial services. “Customer experience” and “mobile” stand out as defining characteristics of digital in some executives’ minds. However, the range of attributes is broad and goes from omnichannel and social to transformation and efficiency.

Of course, digital is not a new trend. If we take the strict definition of digital as simply technologies that allow manual processing to be replaced by computer processing, one could argue that digital banking has existed since the 1950s, when mainframes started processing banking transactions.

Another milestone was the rollout of electronic banking in the 1990s. The common thread between these two situations is that each was an example of technology taking over where previously people had to perform a task, just as ATMs augmented the teller window.

And yet, we are now in the midst of a perfect storm where at least five different trends are coming together, radically reshaping banking and beyond:

  1. Mobility and connectivity.
  2. Social.
  3. Cloud.
  4. Big data.
  5. Artificial intelligence and robotics.

Collectively these trends represent to the established institutions both a threat and a unique opportunity to redesign their business model. The definition of digital in banking today needs to go beyond “replacing manual labor with technology.”

At Celent, we view digital in banking as much more than just launching a new app or another channel. We believe that digital requires a structural change in the financial institution as depicted in this diagram:


Celent Chart resized 600


Let’s unpack the first statement in our framework: “digital in banking is all about delivering a customized but consistent FI brand experience to customers across all channels and points of interaction.”

Not surprisingly, we begin the definition of digital in banking with the customer. It is all about how the bank interacts with its customers. We believe that banks should be clear what their brand stands for (e.g., superior service, price promise) and seek to deliver a consistent brand experience in all interactions with the customer.

This does not imply that the experience needs to be identical in all situations or that all channels should have exactly the same functionality. However, it is important that the “look and feel” and the values communicated by the experience remain consistent and that the customer’s impression is of the bank brand, rather than channel.

The reader will also notice a phrase “customized but consistent.” Indeed, while the experience should be consistent, the banks have an opportunity to customize it, at least for distinct customer segments if not down to the individual consumer level. For example, BBVA targets young customers with a site that invites them to “join the fun inside,” a very different way from how a bank would approach, for example, private banking customers.

This customized but consistent FI brand experience needs to be delivered in real time “across all channels and points of interaction.” It encompasses three imperatives:

  1. Optimizing each channel individually.
  2. Delivering on the omnichannel promise.
  3. Recognizing that customers engage with banking services in a broader ecosystem.

Channels through which the customer can interact or experience his or her bank continue to proliferate. As new channels are added to the mix, old ones do not necessarily close down. Even branches, written off so many times as heading into extinction, show no signs of disappearing. It is true that the overall number of branches is in decline, but the remaining ones are morphing into sophisticated centers of customer engagement.

The need to optimize individual channels is not new. However, what is new is the proliferation of access points and the imperative to consider how the customer might engage with the bank in the digital world. The complicating factor is also that the transformation of individual channels needs to happen in the context of all channels, so that they collectively deliver on the omnichannel promise — our second channel management imperative. An important component of this is optimizing the mix of channels collectively, at the same time as optimizing them individually. This process may involve conflicts that will need to be resolved (iteratively? Is this the correct word? Repeatedly?).

The third channel management imperative in the digital world is the need to recognize that customers engage with banking services in a broader ecosystem. This requires enabling access to banking products and services via third party channels, possibly through API integration, such as access to payment credentials, financial advice, or lending from within the merchant’s app. Digital is fragmenting and diversifying customer experiences as customers engage with more apps and websites and even use them in physical locations. In order to stay relevant, a digital financial institution needs to go where its customers are and be available when customers need it.

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