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BANKING TECHNOLOGY | Contributed Content, Singapore
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David Batrouney

Optimising for customer value across channels

BY DAVID BATROUNEY

In today’s competitive, cost-conscious and profit-driven economy, Asian banks must continually focus on optimising their distribution channels in a way that allows them to move customers into higher-value relationships.

Cost to Serve is still a consideration but equally is Share of Wallet and Customer Retention when it comes to initiatives to optimise distribution.

How do Banks prioritise their initiatives in optimising distribution and in meeting customer expectations on Price, Convenience and Trust?

Spending on distribution channels continues to be a major expense for banks across Asia and globally. It is also an increasing expense as technology enables more channel options, such as mobile, and more interaction options within existing channels.

Banks are expected to reduce service costs as customers replace branch visits with lower cost-to-serve channel options.

The irony is that most banks are finding that customers have not fully abandoned branch visits, but instead have increased the frequency of their interactions which raises four critical considerations:

  • branches continue to be the focal point for customer activity;
  • multiple channels are not producing the expected cost savings;
  • the convenience of non-branch channels (e.g. 24x7 access, ATM proximity, queue elimination) has raised the bar on customers expectations; and
  • the increase in interactions provides significantly more touch points for banks to market to on-sell and up-sell their customers.


Overall, branch transactions are reducing somewhat, but others, e.g. Call Centre, ATM and Online transactions, are increasing significantly. The higher number of total transactions has led to a higher cost to serve than anticipated.

As distribution and channel options increase, so do the customers demands and expectations. Failure to meet these heightened requirements by some banks has contributed to a sharp decrease in customer satisfaction.

Banks will not only need to continue to invest in alternative channels, but will also need to be smarter in how they prioritise and optimise their distribution capabilities. They must move away from the one-size-fits-all distribution strategy to focus on increasing customer value by improving three key metrics:

  • Cost To Serve: continue to drive channel usage towards lower cost-to-serve channels and educate non-adopters accordingly;
  • Share of Wallet: enable effective cross-sell and up-sell to the customer install base; and
  • Customer Retention: increase customer lock-in to reduce customer churn and migrate longer-term customers into more of a trust-driven (e.g. multi-product) relationship.


Against these metrics, initiatives to optimise distribution must directly address these buying drivers of retail banking customers:

  • Price: exclusively motivated by obtaining the best rates for all of their banking needs irrespective of existing relationships;
  • Convenience: entering into banking relationships that allow them to conduct their personal financial duties more efficiently; and
  • Trust: seeking to develop a relationship where the bank will eventually serve as the primary financial advisor.

Most banks are not starting from scratch, so optimisation involves rationalising distribution across existing assets. Since products and channel networks are essentially fixed, banks must prioritise optimisation across customer segments, and in doing so, focus on several key imperatives, namely:

  • Prioritising distribution optimisation initiatives to high-value customer segments - Which segments will be most responsive to potential innovations and target distribution initiatives towards them?
  • Enabling employees to focus on relationship development - Equipping front-line personnel with the data and systems necessary to service customers, e.g. recommend and drive cross-sell and up-sell initiatives. Enabling relationship capabilities in channels where possible, e.g. enable a customer to enter into an online chat with the bank when on the internet.
  • Ensuring Multi-Channel and Service Consistency across all Channels - Integrating the bank’s channels to ensure maximum efficiency and consistency.

Optimising distribution will eventually allow banks to migrate customers into higher-value relationships.

At the end of it all, these initiatives will help the bank achieve the goals where:

  • Banks can adapt their customer distribution strategies in near real-time by acting on continuously collected data;
  • Banks increase the efficiency of their promotions by designing programmes around the preferences and needs of customers likely to move into higher-value relationships;
  • Banks customise promotional programmes across all of their channels to cross- and up-sell priority customers; and
  • Systems collect historical customer information so that banks adapt their customer strategies to leverage new learning.

David Batrouney, Associate Partner, IBM GBS – Financial Services

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Banking & Finance. The author was not remunerated for this article.

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David Batrouney

David Batrouney

David Batrouney is an Associate Partner at IBM GBS – Financial Services.

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