Multichannel Strategies in Financial Services IT: Be Strategic, Tactical and Fast

According to a recent Forrester survey, channels, such as internet and mobile, more comprehensive multi-channel solutions, and even improvements to traditional channels, such as the bank branch, are key for almost two-thirds of financial services firms. In theory, financial services firms should be able to leverage modern technologies, such as business process management (BPM) and service oriented architecture (SOA), to establish multichannel platforms that support cross-channel business processes, as well as obtain a full picture of the customer relationship with the company across all the channels.

The reality is that a surprising number still struggle to support customer interactions across multiple channels. While many firms have pursued ‘multichannel’ for years, the recession has hit hard, driving banks to refocus on the fastest and most cost-effective path to market, instead of working to attain that co-ordinated collaboration that fosters more strategic, multichannel approaches. Moreover, there continues to be confusion regarding what multi-channel really means and how terms such as multichannel, cross channel, and multichannel business processes relate to one another.

What Multichannel Means

Banks have accepted for years – and a few for more than a decade – that they need more multichannel architectures that can adapt to dynamically changing modes of multichannel interactions. Ubiquitous banking will be the norm in the future – and it will need unified management across all channels to drive truly seamless interactions. This approach enables businesses to optimise their people, processes and technology to serve customers across all touch-points.

In many firms, it will be up to application development and delivery (AD&D) teams to plan and deliver the broad and rich cross-channel solutions that the business will need to demand in the future era of agile commerce and ubiquitous banking. To understand how AD&D teams master the technology and organisational challenges in multichannel projects, Forrester recently spoke with executives and managers in banking about their approaches toward multichannel strategies. Adding further discussions with multichannel experts outside of banks, our research uncovered three best practices that can ease delivery and execution of multichannel strategic plans if rigidly applied.

Figure 1: Four Levels of Multichannel Maturity

Source: Forrester Research

 

Prepare strategically: build a multichannel framework

According to one head of a multichannel transformation at a medium-sized retail bank: “The easiest way to arrive at a solid, broad, and rich multichannel solution with differentiating cross-channel capabilities is to use a large banking transformation initiative to put the necessary multichannel platform in place.” To that effect, the more successful and more advanced firms we talked to built their multichannel plans on a sound and forward-looking foundation of technology and basic organisational structures.

The first step is to establish a forward looking, commonly agreed upon, tailor-able multichannel framework. Your framework should define which business units will participate, which channels the organisation plans to support, and which Web 2.0 capabilities, such as widgets, personalisation and personas, the organisation plans to use. It should also define the target level of multichannel maturity, how business processes and point interactions will flow across the channels, how the firm will accomplish integration of back-end systems and data, and which application infrastructure, off-the-shelf-applications and technologies will provide the basis for the firm’s multichannel platform. Start with simple goals, but establish mechanisms to extend the multichannel framework to meet future challenges, enabling fast delivery while avoiding the complexity of too much future proofing.

Participation in building the framework is an essential ingredient in achieving broad acceptance across a large IT organisation, as it leverages developer knowledge of requirements, solutions and existing assets, and helps reduce ‘not invented here’ syndrome. Be sure to achieve buy-in on essential roles and responsibilities (if not yet defined), as this will help ensure crisp execution in defining the multichannel framework.

However, your multichannel strategic plan should be about more than collaboration basics and a multichannel framework – it should also include an action plan. Avoid plans that attempt too broad a scope for initial multichannel projects. Focus on differentiating, executable, short-term plans that deliver business value fast to justify the multichannel strategic plan. An overly broad scope will inevitably cause delays that reduce business acceptance and eventually bring complete failure.

In the final analysis, your multichannel initiative is about numbers in the balance sheet, not a perfect technology strategy. At the same time, manage expectations about the limits of your execution capabilities to ensure that that key executives don’t expect more than you can deliver.

Delivery tactically: focus on one multichannel project

Successful financial services firms build broad and rich multichannel solutions one step at a time. Results from Forrester’s survey reveal that more advanced firms have used existing multichannel assets when possible to execute their project as part of a multichannel strategy (assuming one exists). This enables teams to focus on delivering a multichannel solution instead of just building a foundation with no visible business value. More advanced projects tend to keep a clear focus on their internal customers as well as the needs of the bank’s customers. Business requirements and customer experience – often embedded in a multichannel framework – are key.

Be careful to strike the right balance between business and technology goals. Projects that give too much weight to technology goals lose both traction and acceptance early on. The multichannel leaders we interviewed used a wide range of technical approaches – from off-the-shelf to custom-built solutions, from Java to Microsoft infrastructure, and a variety of technology options – and expressed no clear preference among them. In fact, many project leaders and multichannel managers told Forrester that focusing application architecture on the customer – as represented by data and processes – is more crucial than related technology questions. Tooling to integrate customer data stovepipes along with multichannel platform data is key to achieving a single source of truth across multiple back-end systems and multiple channels.

While successful multichannel projects may be encouraged to go beyond their initial scope, Forrester cautions against this. In the absence of a bank-wide multichannel strategy plan, such projects may develop their own multichannel strategic plan – without the business collaboration needed to clearly scope requirements. Other projects may ‘simply’ extend their scope so that more channels and more business units can benefit from the multichannel platform. While this may offer benefits to a few business units, this approach often takes longer and costs more than planned, ruining the business case. And without good business acceptance and clear requirements, such projects can easily evolve into just another channel island.

Move fast – avoid channel islands

In the words of one multichannel delivery lead: “Preventing channel islands means addressing the most crucial business requirements, not a perfect solution.” While most business requirements are urgent, many AD&D teams will find that channel-related business requirements are often the most urgent.

If there is even more than the usual multichannel time pressure, Forrester recommends delivering in phases as opposed to providing the solution using a big bang, single-delivery approach. For example, don’t attempt to deliver a fully integrated multichannel solution or to design and build a solution with support for widgets, personas, and personalisation in the first release. At the same time, ensure as far as possible that your design won’t create any obstacles for planned and future extensions – for example, within the scope of a given multichannel framework. A big bang approach is attractive because it addresses all the business’ requirements, but it brings a high risk of delayed delivery.

The typical downside of moving fast is the classic problems associated with not having the time to build a more comprehensive solution. Beyond those predictable problems, one of the more avoidable pitfalls of moving fast is often a lack of follow through. Thinking you have an agreement that the team will extend a fast-delivery solution later is no guarantee that the extension will actually happen. The reason? Once a fast-delivery solution is in place, there are often more-important, more-urgent tasks than extending a brand-new, perfectly running channel island.However, the cost of doing nothing, of not upgrading to a higher-level solution, can be significant, bringing a string of channel islands, additional integration requirements between islands and backend systems, and redundant purchasing or building of, for example, mechanisms to support personas and personalisation.

The fast-delivery approach can only live up to its promises if the firm does not encourage a ‘Wild West’ environment where each business unit runs its own little IT shop in a completely unco-ordinated way. Business and technology leaders must establish a structured and right-weight governance approach that encompasses their full span of control. Without such leadership, you will most likely end up with an archipelago of channel islands, with a high cost to build and integrate further level 0 multichannel solutions.

With good governance, it’s more likely that you can evolve a quickly delivered multichannel solution into a level 2 multichannel platform at a reasonable cost.

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