Retail bank distribution 2015—Full digitalisation with a human touch

60% Anticipated total sales of banking products transacted online or influenced by online marketing

Without decisive action, banks risk being stuck with an expensive and inflexible distribution set-up.

The digital transformation of retail banking has so far taken place in two stages – but the most exciting and groundbreaking one is only just starting. The old retail banking model, comprising bricks and mortar banking with digital channels for transactions, will no longer work. As a result banks will have to make changes to all their distribution channels. We believe that the key developments will be as follows:

  • Branch networks will be radically transformed into sales and advice outlets – they will be 20 percent more productive than today and their costs will be up to 50 percent lower.
  • Digital channels will be designed to create a “wow” experience for the user, thereby capturing these channels’ full sales potential (more than 20 percent of all product sales at the moment start with an online enquiry or investigation)
  • Call centers will become a profitable, professional channel in which video technology is increasingly used. As a result 15 percent of service requests will typically be converted into sales.
  • Banks will manage these different channels so that service from the customer’s perspective is seamless and ‘end-to-end’ and from its own perspective it captures sales that are currently being lost.
  • Minimum amount of all product sales that start with an online enquiry or investigation

20% Minimum amount of all product sales that start with an online enquiry or investigation

Without decisive action, banks risk being stuck with an expensive and inflexible distribution set-up. To start the journey, top management should look at metrics and governance in a less branch-centric way and should launch a series of multichannel mini-transformations both within and across the different channels.  

An overview of retail banking’s distribution transformation

  • 1980-2000 – Digitalisation of payments: In this period ATMs, cards and tele-banking replaced paper-based payments as banks sought to capture new cost saving opportunities and reach customers previously excluded from the mainstream banking system. All banks have now completed this part of the ‘journey’.
  • 2000-2010 – Digitalisation of basic banking: Over the first decade of the 21st century most customers started being able to access their banks remotely 24/7 for the bulk of low-value added activities. Benefits included greater convenience for them and further cost efficiencies for the bank. This part of the journey is not yet complete but most European players are well advanced along the road.
  • 2010-2015 – Full digitalisation with a human touch: Banks are only just beginning to provide the ultimate client experience, namely digitalisation of sales and after-sales service combined with continued face-to-face interactions for the more complex products. Thanks in part to the development of mobile banking, sales of products either transacted online or influenced by online marketing are expected in the medium term to grow to the point where they represent roughly 60% of the total.