Delivery systems upgrade call
United States consulting firm AT Kearney says banks in Asia should think of ways to better use their existing product and service delivery channels before investing in new ones.
Vice-president for financial institutions Thomas Koltz said he believed the issue was even more relevant in Asia than in the US because banks in the region were growing organically while those in the US were growing through acquisitions.
Manager Joseph Morrow said he believed Asian banks were well positioned to adopt a more active approach towards an 'integrated channel strategy', which incorporates corporate-wide objectives and explicitly aligns the strategies of each channel.
In this way the strategy for each channel serves as a business plan to define that pathway with respect to particular customer segments, and in relation to the products and services available through other channels.
The strategy contrasts with the traditional methods used by financial institutions to deliver products and services: through multiple channels run independently and supervised by different senior executives with overlapping or even redundant initiatives.
Mr Koltz said he believed that bank branches would continue to play a key role in customer service but because of the huge operating expenditure involved these branches should be reserved for soliciting more sale opportunities from profitable customer segments.
Meanwhile, routine transactions such as deposit withdrawals or passbook updates should be transferred to low-cost channels such as automatic teller machines, telephone-banking or the Internet.
The consultancy firm estimates banks in Asia on average direct 25-35 per cent of their costs to servicing unprofitable customers.
He believed the strategy was also suitable for medium-sized banks such as those in Hong Kong which did not have the resources to build physical branch networks or other new delivery channels on as large a scale as the giant institutions.
AT Kearney is starting discussions with two banks in Hong Kong, two in Taiwan and three in Australia on the issue.
Mr Koltz said the discussions were not aimed at advocating drastic changes but creating awareness among banks in Asia about the issue and the strategy.