The quest for a cohesive multi-channel strategy has been an odyssey almost as long as Homer's celebrated voyage. Yet, one hopes that, unlike Odysseus, we don't end up alone, washed up on a beach in Ithaca! A lot has been written on the barriers to the holy grail- old systems, failed CRM initiatives, inadequate employee training, missing incentives, ad nauseam. I wonder, though, whether the fundamental issue is a tussle between two important strategic imperatives.
In their excellent, but slightly dated book, The Discipline of Market Leaders, Tracy and Wiersma define value as the intersection of three imperatives:
Operational Excellence, Customer Intimacy and Product Leadership. There are few organizations (perhaps none) that are excellent in all three dimensions. They generally tilt in one dominant direction, with the others playing supporting roles.
In retail banking, Operational Excellence and Customer Intimacy pull in opposite directions. Many institutions built branches to be points of high-touch service, driven by a Customer Intimacy paradigm. But branches are expensive to build and maintain. When viewed through an Operational Excellence lens, the fully loaded cost per branch transaction is significantly higher than ATM, online, and remote deposit transactions. Thus, the soft benefits of personalized service (assuming that it exists in branches in the first place) are unlikely to win spreadsheet wars in institutions driven by an Operational Excellence mindset. It is not clear whether institutions really want customers to visit branches, or whether they would be happy if all interaction moved magically from bricks to clicks.
The challenge is not unlike that faced by retailers that also have an online presence. Yet, many of them seem to maintain the balance between driving foot traffic to their stores and maintaining an online presence. To realize how effective cross selling can be, think of the last time you walked into a store to buy shoes and came out with that tie you really did not need. However, we struggle with cross selling in banking. Is it because these retailers are clear in their driving imperative, while financial institutions are torn between efficiency and service?
Odysseus filled his crew's ears with beeswax so that they would not be lured by the sirens' songs to certain death. We do not have the luxury of simple avenues to clarity. How do you think retail bankers should reconcile the tension between Operational Efficiency and Customer Intimacy? Let me know what you think.
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