Banking in the 21st Century: 10 Trends to Leverage in the Retail Banking Contact Center Customer Interaction Management for Financial Services Based on Talisma＊s extensive experience in Customer Interaction Management 每 and research by the top firms in the industry 每 here are Talisma＊s top ten topics for consideration when evaluating a CIM solution for Financial Services. A Talisma White Paper CIM WHITE PAPER FINANCIAL SERVICES BANKING IN THE 21ST CENTURY: 10 TRENDS TO LEVERAGE IN THE RETAIL BANKING CONTACT CENTER CUSTOMER INTERACTION MANAGEMENT FOR FINANCIAL SERVICES EXECUTIVE SUMMARY 1. THE CONTINUAL RISE IN ONLINE CUSTOMER INTERACTION VOLUME. . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. EVER INCREASING SECURITY THREATS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3. PROTECTING YOUR CUSTOMER WITH EMAIL SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4. LEVERAGING THE WEB FOR CUSTOMER SERVICE: KNOWLEDGE MANAGEMENT . . . . . . . . . . . . . . . . . 3 5. USING CUSTOMER VALUE TO DRIVE STRATEGIC DECISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6. APPLYING CUSTOMER SEGMENTATION TO DRIVE REVENUE GROWTH . . . . . . . . . . . . . . . . . . . . . . . . . 5 7. DELIVERING EXCEPTIONAL SERVICE IN A MULTI-CHANNEL WORLD . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 8. GROWING ADOPTION OF ENTERPRISE CHAT AND WEB COLLABORATION . . . . . . . . . . . . . . . . . . . . . . 7 9. IMPROVING THE CONVENIENCE OF THE VOICE CHANNEL WITH VOIP. . . . . . . . . . . . . . . . . . . . . . . . . . 8 10. EMBRACING GEN Y. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 CONCLUSION: NOW IS THE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 CIM WHITE PAPER FINANCIAL SERVICES EXECUTIVE SUMMARY With the commoditization of products in the retail banking industry evidencing itself on a daily basis, banks are making strategic decisions on how to differentiate themselves in an ever competitive market. Many are focusing on bold enhancements to their contact center operations as a primary differentiator. Banks with a strong customer focus are constantly asking how they can simplify the way they do business while at the same time continually striving to improve the customer experience. There are a number of technologies being implemented today by leading banks to enhance customer service. A primary focus has been on enhancing interaction management by employing technology to manage multi-channel communications 每 including phone, email, VoiP, click-to-call, chat and Web self-service. Success is measured by higher customer satisfaction and retention and a growing population of new customers. The effective deployment of a multi-channel communication strategy is the least costly approach to implementing innovative customer-centric strategies. This white paper will explore ten of the leading trends impacting retail banking and how successful banks are leveraging technology to: Achieve exceptional customer satisfaction levels Generate new sources of revenue Grow market share CIM WHITE PAPER FINANCIAL SERVICES With the growing importance of providing cross- channel service, retail banks must provide a consis- tent customer experience 每 regardless of how customers choose to interact with them. To accom- plish this, retail banks are endeavoring to create a seamless experience across all customer-facing groups 每 including sales, marketing, customer service, and branch operations. THE CONTINUAL RISE IN ONLINE CUSTOMER INTERACTION VOLUME With the proliferation of information on the Internet, customers are more empowered and knowledgeable than ever. Because of this, they＊re expecting immedi- ate answers to increasingly-complex questions and want this information to be made available through multiple channels. As their acceptance of various Internet channels increases, their expectations to receive high quality service through every channel intensifies. As a result, both the number and complexity of interactions that banks need to manage are multiplying. According to Forrester Research, 72 million households will bank online by 2011. This represents a potential audience of 20 million more households than in 2007. 1 The explosion in online customer interactions will necessitate a technology transformation to service this new online segment effectively and efficiently. Figure 1: Source - Forrester Research Q107 01 CIM WHITE PAPER FINANCIAL SERVICES There is a fundamental reason banks must think ahead and plan for customer expectations and the projected changes in online banking. In the next ten years, people will be able to share data even more freely, and online banking adoption will continue to increase. Maintaining a secure online environment is crucial. As technology advances, the concerns around unauthorized users decrypting personal information will require retail banks to continually monitor customer data. The desired end result: improved data security and control over confidential information leading to reinforced customer confi- dence in their banking institutions. EVER INCREASING SECURITY THREATS In today＊s highly commoditized banking industry, there is an increased level of focus and effort to attract and retain high-value customers. One of the best ways to achieve this goal is to differentiate your institution by providing exceptional service. Offer- ing more channels of communication, more customer options, and faster responses all have to be achieved in an environment of increasingly sophisti- cated fraud activity. In a recent American Bankers Association poll, 66 percent of customers identified banks as being the most trustworthy holders of personal information when compared to other major US organizations. New technologies must strengthen the bank＊s security, not sacrifice it in the quest to provide exceptional customer service. Banks are driving customers to use online banking via secure portals, which improves customer data security by avoiding potential identity theft issues with postal mail. In addition to security, it also allows banks to consolidate customer data for all banking needs into one area. Recently, banks have made a vast amount of information available regarding security concerns, as generating awareness is a key factor in maintaining trust. In addition, giving customers a secured area to exchange sensitive financial information is vital. The increased adoption of online channels has made servicing the needs of customers online an even more critical task. 02 CIM WHITE PAPER FINANCIAL SERVICES LEVERAGING THE WEB FOR CUSTOMER SERVICE: KNOWLEDGE MANAGEMENT In order to outperform their competition, bank managers and customer service agents need access to the right information and the best tools. Custom- ers want to interact with their bank using a variety of channels 每 and banks have done a fair job respond- ing to this demand by providing access to phone, email, self-service, and, among others, chat options. However, a side effect of this rapid growth in chan- nel availability is having multiple silos of channel- specific customer data 每 with a lack of integration PROTECTING YOUR CUSTOMER WITH EMAIL SECURITY In retail banking, the importance of protecting sensitive customer information is critical. Both customers and governments demand that enter- prises effectively protect information sent over electronic channels. Confidentiality breaches can result in the loss of millions of dollars, negative publicity, damaged reputation and lawsuits. There have been many stories in the past five years on the risks associated with online banking and criminal online activities such as phishing. Banks have been diligent in educating customers on the potential pitfalls that loom in the online environment, but with each passing day a new threat/hoax/scam seems to appear. In fact, some institutions have gone so far as to provide a free identity-alert service that notifies customers by email of changes to their credit file. In North America, only 11 percent of customers use billable credit-alert services, even though they are usually the first and only line of defense against new account fraud. 2 A growing number of policies and contractual provisions, such as the Graham Leach Bliley Act, mandate that sensitive data transmitted across untrusted networks must be encrypted. Since email is the most common way of transferring documents across the Internet, many organizations are looking at more secure ways to provide this service. It is an absolute imperative for banks to adopt a solution that meets regulatory compliance, intelligently routes emails, and leverages automation capabilities while maintaining security. Messages must be sent to a secure customer portal, requiring authentication for retrieval. This layer of security is not only legally required, it also provides confidence to banking customers that they are within a secure environment for conducting their transactions. between the channels as they were independently implemented and are often managed separately. The result is little or no sharing of information across diverse channels, duplication due to channel-specific processes and a disjointed, unsatisfactory experience for the customer. Until recently, customer self-help portals were nothing more than static Frequently Asked Questions (FAQ＊s). The need for providing a deeper search tool with tailored categories of information to customers has quickly evolved in step with the increasing need to provide customer service agents with consistent, up-to-date answers to a wide range of topics. Because of this dramatic evolution, the customer service industry sees agent, employee, and partner portals 每 all powered by robust knowledge management tools 每 as providing quick, accurate, searchable answers to questions. By improving the knowledge management process, retail banks can share critical business procedures across multiple business lines and enable web self service to decrease inbound call volume and increase customer satisfaction. Within a retail banking institution, knowledge is distributed across each and every department. To be successful, it is essential that this knowledge is managed and shared in a way that improves operational efficiency and fosters customer and employee empowerment. Retail banks must be able to leverage knowledge across multiple business lines in order to effectively cross-sell/up-sell products and services and mange customer inquiries effectively. Offering Web self service is key to the knowledge management requirement in the 21st century. CIM WHITE PAPER FINANCIAL SERVICES According to Gartner Research, the top business concern among bank CEOs is organic growth achieved by attracting new customers and retaining existing customers. Until recently, at the strategy level, retail banks have been more focused on selling more products to the existing customer base rather than gaining new customers. The research, however, shows that emphasis should instead be placed on understanding customer value. The existing approach reinforces a product-driven business model where separate lines of business 每 mortgages, credit cards, etc. 每 work independently to secure revenue. By focusing your strategy around selling as USING CUSTOMER VALUE TO DRIVE STRATEGIC DECISIONS The financial services industry has been widely recognized as a leader in customer intimacy. Retail banks in particular are often praised as pioneers in deploying best-in-class strategy and technology to develop profitable customer relationships. Much of this progress has been built on gaining insight into customer value and then leveraging this information for strategic and tactical decision making. Measuring customer value is part of a broader approach to building profitable and lasting relationships. This 3 approach includes measuring and understanding the current and future value of a customer across multiple products, and then acting on that knowledge via out-bound sales and marketing efforts, or in-bound customer service interactions. The goal of customer value management is to align the entire organization to enhance the relationship between the bank and the customer across multiple products. many products as possible, customers end up getting swamped by irrelevant marketing and sales offers which will subject them to poor experiences. Customers want to be understood and valued as individuals. They want their bank to know and understand their needs and interests. Understanding a customer＊s value allows banks to offer relevant products and services at the right time 每 resulting in a profitable, long term relationship. CIM WHITE PAPER FINANCIAL SERVICES A recent study by Forrester Research revealed that online banking customers have an average house- hold income of over $71,000 and investable assets of over $240,000. Conversely, offline banking custom- ers average $33,000 in annual household income with just under $140,000 of investable assets. Why should banks care about attracting high-value customers? According to Acxiom＊s Retail Banking Normative, high-value customers represent less than 20 percent of all retail households, but they control 92 percent of all retail deposit balances, and comprise 75 percent of all retail profits. Measuring APPLYING CUSTOMER SEGMENTATION TO DRIVE REVENUE GROWTH The most profitable and valuable customer for a bank is the one who produces incremental revenue and builds the highest asset base, while consuming the fewest resources. Today＊s leading banks are analyzing the needs and wants of these ※high-value§ customers, and providing service and product offerings to exceed their expectations. High-value customers can be developed if banks are willing to creatively look at how best to serve them. For example, one North American bank that relies heavily on its life-stage segmentation model recognized that some young professionals would eventually become wealthy, profitable customers, and analyzed their data for promising sub-segments. Having identified medical and dental school students as solid growth opportunities, the bank put together a program to address the financial needs of this upwardly mobile segment, including assistance with student and new practice loans. In just a few years, the bank＊s market share among this segment grew from 2 to 18 percent. 4 Many retail banks have initiated tailored service and sales offerings to high-value customers and have achieved great success. But can you achieve revenue growth from the general online retail banking customer base? and managing the profitability of online banking customers will positively impact the profit margin of a retail banking institution. The challenge lies in identifying profitable customers having a clear understanding of what services they may be interested in. In order to offer customized products and services to customers, retail banks must look to expand their online service strategies by enabling proactive sales opportunities. However, this will only be effective if the bank has the most current customer information at all times. More than ever, it is essential to use the technology available to increase market share and improve customer service automation. By providing a complete view of the customers＊ interactions to agents and conducting analytics around the customer history beyond their general banking tial of the high-value Figure 3: Source 每 Forrester Research, ※Meet Your Next Financial Consumer,§ Q107 CIM WHITE PAPER FINANCIAL SERVICES Recent analyst discussion around the popular use of ＆360-degree real-time views＊ of the customers＊ account history and their interactions led to the adoption of comprehensive multi-channel customer service environments. Such technological advances ensure that banks can painlessly switch between channels, providing rapid responses to customer questions 每 no matter what channel the customer prefers. As a result, customers can interact with their bank across email, chat, phone, or in person about the same issue, giving every representative from that bank a complete view of the customers＊ interactions. DELIVERING EXCEPTIONAL SERVICE IN A MULTICHANNEL WORLD Today's banks need to optimize all of the available customer channels while finding the delicate balance between electronic banking and personal service. As banking products reach parity, in-depth knowledge of the customer base to deliver highly-personalized service becomes a prized competitive differentiator. Each customer has a preferred channel of communi- cation and for this reason, increasing numbers of banks are focusing on providing an enhanced multi-channel customer service environment as a separate discipline. It is also drawing their attention to how they allocate budgets 每 and to the technologies they deploy to achieve their customer service and sales goals. Lack of coordination across various distribution channels is still a major cause of frustration for retail banking customers. Customer interaction processes between branches, call centers, the Internet and ATMs are still not fully integrated, resulting in replication (e.g. filling out forms, providing personal details or addressing complaints) and inconsistent communication. This results in customers not feeling ＆recognized＊ as individuals and weakens the bank＊s ability to differentiate themselves from the competition. Consequently, there is an urgent need for banks to standardize processes and access to data across all distribution channels. It is important to acknowledge that customers are becoming increasingly selective when choosing financial products, making sales execution and customer management a top priority for banks. To ensure revenue growth, banks need to gain a complete view of the customer and develop a better understanding of their customers as individuals by consolidating data to enable a ＆360 degree view of the customer＊. Both front-office staff (e.g. branch advisors and customer service agents) and business strategy functions need to be able to understand the full extent and value of every individual customer＊s relationship with the institution. This will require real-time access to customers and product data across various product-silos in the organization, only then will agents be in a position to know which products to cross-sell and up-sell to increase the overall customer value and foster a long term relationship. 06 CIM WHITE PAPER FINANCIAL SERVICES Forrester Research recently published a report showing that 54 percent of online applicants aban- don applications . While this may be a shocking statistic, even more revealing was that 51 percent of the abandoners actually intended to complete the application. This includes credit card, checking, savings/money market, auto insurance, mortgages, home equity, personal loans, and brokerage. Using analytics, banks can better understand where and why the customer drops out in the application process and specifically target that step for a dramatic increase in conversion rates. However, GROWING ADOPTION OF ENTERPRISE CHAT AND WEB COLLABORATION Driven by increasing Internet adoption and the emergence of more technically savvy generations entering the retail banking space, today＊s customers and businesses are more apt to try a new online customer service channel. Offering real-time Web assistance has become a critical requirement for increasing sales as well as post-sales customer service. With the rise in online banking adoption and the enhancements around security, customers are becoming more comfortable servicing their needs 6 7 online. Banks are beginning to realize huge advantages by deploying enterprise Chat and Web Collaboration technologies in the online banking environment. According to Forrester Research, Chat and Colaboration have high customer satisfaction rates in financial services. In fact, the majority of customers find online assistance more helpful than calling the bank directly or visiting a branch. 5 A Talisma Customer and Fortune 100 company surveyed their customers who were presented with a new channel, chat, and received the following response: Over 60 percent rated their chat experience a ※9§; over 90 percent were satisfied or extremely satisfied. Prior to the use of Chat, over 75 percent of respondents listed the Phone as their preferred contact method. Subsequent to their chat interaction, over 70 percent listed Chat as their preferred channel, while the Phone fell to 20 percent. This evidences huge unfulfilled reporting alone on Web activity cannot provide a complete understanding of customer trends. There＊s a human component missing from this process. Traditionally, customers in a branch complete more applications than those online because they have the assistance of a bank representative available to them. By adding an online customer service channel, in particular Chat and Web Collaboration, the ※human element§ can be added back into the evolving online retail banking world. New technology solutions can help retail banks restore the differentiated value of their brand by providing unique, highly personalized customer service that customers increasingly expect. Figure 4: Source 每 Forrester Research, ※Why Financial Shoppers Abandon Online Product Applications,§ Q307 demand for Chat as a preferred method for assistance. CIM WHITE PAPER FINANCIAL SERVICES their costs. And, with the increasing familiarity of customer-to-customer VoIP technologies (such as Skype), customer-to-business VoIP is sure to enjoy the high levels of acceptance that enterprise chat enjoys today. EMBRACING GEN Y As banks strive to achieve the strategic goal of an enterprise-wide account management platform, many institutions are finding that the online channel is a natural place to jumpstart their customer acquisition efforts. As credit card companies and many retail banks have found, online origination can IMPROVING THE CONVENIENCE OF THE be a powerful tool for capturing new customers. In a recent study by Celent, a research and consulting key component in customer service strategies. firm focused on the application of information technology in the global financial services industry, offering ＆Click-to-talk＊ VoIP functionality to both it was estimated that fewer than 2% of US financial institutions are offering automated online account opening capabilities today, a figure that will increase VOICE CHANNEL WITH VOIP Even with the increasing efficiency and flexibility of electronic channels (such as a knowledge base, email and chat), there will always be situations where customers need to talk to a live customer service agent. As broadband uptake continues to gain ground at a global level, voice will continue to be a Currently, the most innovative service companies are retain the benefits of voice interactions and manage VoIP technology combines the personalized service of a phone conversation with the preferred technology adoption of the newest banking customers. Among other things, banks will realize the cost advantages associated with the ability to keep a customer in their preferred online channel and escalate from a chat session to VoIP with one click. This allows the agent to continue the dialogue in a voice conversation over the Internet 每 creating a seamless experience for the customer. For the agent, the result will be enriched roles and greater cross- sell/up-sell opportunities. In addition, using VoIP as an augmentation or an alternative 每 or when more capacity or expansion to a new location is needed 每 is placing the right investment in technology for changing customer expectations and decreasing to between 18% and 20% by 2010. 8 Financial institutions are eagerly seeking the many benefits associated with automated online account management, including the ability to: capture client assets more quickly, increase account opening completion rates, reduce processing errors and costs associated with manual processing, improve cross- sell ratios, and standardize the decision process. It is critical that banks offer progressive online banking technology for new banking customers, especially the younger generations. According to a recent report by Forrester Research, sixty-five percent of online youth own a checking account. 9 From 2006 to 2011, the number of Gen Y (those born between the years 1976 每 1990) online bankers will increase by an astounding 136 percent. 10 The younger generations will propel the need to offer online service technologies. The need to evaluate and adopt these technologies now cannot be overlooked any longer. overall costs of servicing customers through tradi- Figure 5: Forrester Research 每 ※Meet Your Next Financial Consumer,§ Q107 08 CIM WHITE PAPER FINANCIAL SERVICES Gen Y customers are a desired group for retail banks 〞 the median income in this segment of the population will likely to grow with their career paths, and they will develop an increasing need for finan- cial products. Capturing new business by enabling online multi-channel support and service will allow retail banks to lower customer acquisition costs and gain market share 每 thus providing young customers with the technology they are accustomed to 每 while improving the online customer experience for generations to come. EMBRACING GEN Y CONTINUED... Forrester Research found that in 2006, seven out of ten online credit card applications were completed by young consumers (Gen Y). 32 percent of online youth applied for a credit card, and 20 percent opened a checking account during the past 12 months. The vast majority of online youth used the Web to research financial product purchases. 72 percent applied online for a student loan, and 65 percent used the Web to apply for a credit card. Young consumers are more likely to use online service technology, which in turn can create a greater market share if those consumers are 11 captured the first time they apply online Figure 6: Forrester Research 每 ※Meet Your Next Financial Consumer,§ Q107 09 CIM WHITE PAPER FINANCIAL SERVICES REFERENCES 1. Forrester Research, "The Online Retail Banking Forecast," March 2007 2. Bank Technology News, January 2008 3. American Banker.com, ※Building the Customer Relationship for Long Term Profitability,§ March 2007 4. Frost & Sullivan, ※Optimizing the Retail Banking Experience,§ November, 2007CONCLUSION: NOW IS THE TIME With the significant adoption rate of online banking today, and the projected growth rate, the time to invest in the technology to support the growing demand is now. For retail banks to meet critical business objectives of acquiring and retaining customers 每 providing superior customer service and successfully cross-selling products 每 it is imperative they become even more customer centric. To achieve this, banks must first meet operational challenges stemming from the growth of products and channels available to customers. That growth has led to disconnected communication channels, a fragmented view of customers, and inconsistent business processes. Retail banking institutions can address these challenges by making it a priority to implement enterprise-wide systems and processes that enable them to: Prepare for the increased adoption of retail banking service channels Provide a secure and scalable multi-channel technology foundation Understand their customer base and apply cross-sell programs for revenue growth With the proper technology in place, banks can evolve their marketing strategy from mass-marketing to operational market segmentation and sophisticated customer personalization. Banks can present the most relevant offers to customers within the banking portal based on their previous and current interactions. Such customized offers are much more likely to be accepted, thereby enabling banks to increase customer retention and satisfaction and, ultimately, grow their profit margin by attaining a larger market share. 5. Forrester Research, ※Why Financial Shoppers Abandon Online Product Applications,§ August, 2007 6. ibid. 7. ibid. 8. Celent 每 ※Online Account Opening: Raising the Bar,§ July 2007 9. Forrester Research, ※Meet Your Next Financial Consumer,§ March 23, 2007. 10. Forrester Research, ※US Online Banking: Five-Year Forecast,§ March, 2007 11. Forrester Research, ※Meet Your Next Financial Consumer,§ March, 2007 10 CIM WHITE PAPER FINA CIAL SER VICES India Talisma Corporation Pvt. Ltd. 214/6, Ramanamaharishi Road Sadashivanagar, Bangalore 560 080 Karnataka India. Tel (Sales Enquiries): 1800-425-1760 (from BSNL/MTNL landlines only. Toll-free) +91-80-4039 4400 Tel (Board Numbers): +91 (80) 4039 4400 +91 (80) 2361 3377 ABOUT TALISMA Talisma is the leading Customer Interaction Management (CIM) software solution provider enabling organizations globally to deliver an exceptional online customer experience while dramatically increasing their efficiency and effectiveness. Talisma＊s customers include Aetna, AOL, Canon, Citibank, Comcast, Dell, DHL, Ford, University of Notre Dame, Microsoft, Pitney Bowes, Siemens, Sony, and Sprint. Talisma is headquartered in Bellevue, Washington, and has offices located across Asia-Pacific, Europe, and North America. For more information, visit www.talisma.com. World Headquarters 411 108th Avenue N.E., Suite 900 Bellevue, WA 98004 Phone: 425.688.3800 Toll free: 888.462.3484 Fax: 425.688.3899 North America Locations: New York 1121 Old Walt Whitman Road, Suite 204 Melville, NY 11747 Canada 675 Cochrane Drive East Tower, 6th Floor Markham, ON L3R 0B8 International Headquarters Geneva Talisma Limited Boulevard helv谷tique 36 1207 Geneva Tel: +41 22 718 41 60 Fax: +41 22 718 41 61 Asia-Pacic Locations: Australia Talisma Australia Pty Ltd. Suite 1, Level 5, 141 Queen Street Brisbane QLD 4000 Australia Brisbane +61 (07) 3211 1431 Toll free: 1800 825 476 (within Australia) China Talisma Corporation HK Ltd. 20/A 9 Queens Road Central Hong Kong SAR Office: +(852) 3189 7030 Fax: + (852) 3189 7677 Fax : +91 80 2361 8937 European Locations: United Kingdom Talisma Limited King George V Place 4, Thames Avenue Windsor, Berkshire SL4 1QP, United Kingdom Tel: +44 (0) 870 904 1122 Fax: +44 (0) 870 904 1123 Germany Talisma Germany Leopoldstra.e 244 80807 M邦nchen Tel: +49 (0)89 208 039 490 Fax: +49 (0)89 208 039 493 Portugal Consiglieri Park Rua Consiglieri Pedroso, n?1, Edificio D, 4D 2730-055 Queluz Baixo Portugal Tel: +351 21 435 8852 Fax: +351 21 438 1505 Spain Camino de las Ceudas no 2 bis Carretera de La Coru.a Km. 22,300 (v赤a de servicio) 28230 Las Rozas, Madrid Tel: +34 91 555 6238 Fax: +34 91 625 2249 11