Jeremy Caine and Martin Gale

1. Point of View Paper
IBM Sales and Distribution June 2013
The omni-channel
banking evolution
Architectural trends in multi-channel
retail banking

2. 2 The omni-channel banking evolution
Executive summary
It should no longer be disputed that now, in 2013, the consumer
has been empowered by 20 years of the World Wide Web
and the proliferation of powerful computing devices. In UK
retail banking, there are many innovative services that are
being offered to customers because of this. However, there
are many elements of “traditional” banking that still remain
in the UK market.
Retail banks are evolving their business models and technology
infrastructures to adopt the powerful channel opportunities
that are emerging. Yet they are mindful of their resource
constraints; they are still emerging from the financial crisis,
stabilising their financial positions and facing increased
regulation and compliance.
The demographic of banking customers is now shifting towards
those who expect services based on technology. Traditional
multi-channel strategies that enterprises have pursued will be
replaced by “omni-channel” expectations. Research is showing
that a large proportion of consumers want to conduct business
through a combination of channels and devices.
It is no longer enough to have consistent brand presence
and servicing in each channel: consumers are interacting
and engaging on social media sites about companies and
their products, with or without the companies’ knowledge
or input. Organisations need to be aware of and track customer
interaction, not only in the channels they control (branches,
ATMs, websites, mobile apps) but in the ones they don’t
(Facebook, Twitter, Pinterest, etc.).
Contents
2 Executive summary
3 Channel trends
3 Omni-channel banking
4 Retailing and the role of the branch
4 Mobile, social and video
5 Non-traditional ecosystems
6 Evolution of banking channels
6 Mobile first
7 Single view of the bank
8 The influence of social media
8 Data exploitation
9 Omni-channel architecture
9 Conclusion
10 Authors
11 References

3. IBM Sales and Distribution 3
These are the four pillars of moving to omni-channel banking:
•• The new branch
•• Mobile
•• Social
•• Video
There has been a lot of focus on the rapid rise of mobile
and social in recent years, and these markets remain extremely
fluid and dynamic. The role of the traditional UK bank branch
is slowly changing to satisfy the needs of the tech-savvy, and
video is ripe for exploitation considering the mobility of
customers and the future generations of digital TV. There
is still a need for banks to provide complex product advice,
and consumers have concerns about privacy and how their
information is shared.
A number of technology- and delivery-enabling themes are
shaping new channel architectures, including the following:
•• A consistent and current view of customer information
•• Management of multiple process states
•• Convergence on front-end development technologies
Agility and control of the business process functions and
IT delivery also continue to be crucial.
Channel trends
Omni-channel banking
Most banks have a multi-channel capability of people, systems
and processes engaging customers at different human or digital
touchpoints. The prevalence of channels now available means
that banks not only have to provide a channel, but they also
need to provide a seamless single view of the bank to meet
the heightened expectations of today’s consumers. Banks must
not be just multi-channel in terms of access; they need to be
able to deliver the required outcome by interaction in whatever
combination of channels the consumer chooses to use. This is
a change from the traditional approach of an individual channel
and processes being set in its own context. This omni-channel1
behaviour and consumer expectation both influence new channel
architecture thinking; customers are performing multiple tasks
using different channels and media simultaneously. Cisco has
identified the evolution of omni-channel banking.2
The impact
for banks is keeping track of the customer context – ensuring
all channels have a consistent view of the data in transit,
whether for the concrete transaction or customer sentiment.
Omni-channel banks embrace the digital world and its
disruptive business model technologies. The role of the branch
is evolving and technologies such as mobile, analytics, social
media and cloud computing give new opportunities for the
customer to interact with the retail bank.

4. 4 The omni-channel banking evolution
Retailing and the role of the branch
Customer behaviour in the retail industry is influencing
customer behaviour in the retail banking industry, and this
in turn will shape channel architectures. Retailers have large
branch networks and a large and disparate tech-savvy customer
base, combined with their own online stores and web-only
competitors. The key trends they see include the following:
•• Mirror the online experience
•• Portability
•• Relevance
•• Social integration
•• Personal clienteling3
The retail industry is seeing consumers using their mobile
devices as part of the shopping experience, such as reading
product reviews or accessing discount vouchers. The brand,
services and content need to be consistent across channels.
Although not all transactions are possible in all channels
(particularly mobile), customers will expect them to be.
In the omni-channel world, the customer needs a single view
of the bank – a view of content, services and transactions that
is relevant to them. Face-to-face interaction is much more
personalised and can be enhanced through technology. Branch
greeters, advisors and service staff could use an application
on tablet devices or traditional desktops to access valuable
data about the customer in order to serve them best.
The channels need to be designed to handle interruptions in
customer transactional activities and track the shifting context
and content consumption across different channel end points.
In the UK there is still strong cross-demographic usage of
the retail bank branch network.4
In the UK and USA, IBM
is seeing a focus on operational efficiency with investment
in technology and processing re-engineering. Futures should
incorporate self-service5
and interactive facilities built around
technologies familiar to tech-savvy consumers, combined with
relevant and contextual information for the customer.
Citibank are rolling out future branches based on Apple Store
innovations.6
It focuses on paperless process and an overall
bank-anywhere style. Large interactive tables and informational
visual feeds are prominent. Royal Bank of Canada is also
modelling its new branches around life events.7
The interaction
with the branch is now about “I want to buy a house” as
opposed to “I need a mortgage”. As with other industries,
consumers are expecting a shift from product/transaction
interactions to those based around product/service.
Mobile, social and video
There is explosive growth in mobile and the use of a variety of
form factors. Consumers expect these devices and capabilities
to be part of their daily lives, and consequently there will be
increased levels of transactions against the banks’ core systems.
The shift from the web to mobile as the first priority is at the
heart of digital banking and appropriate channel architecture
is needed to support it.
Despite a low signal-to-noise ratio, social media is increasingly
a place where transactions can be performed and insight gained.
Facebook and Twitter are the strongest brands for dialogue,
along with a number of other social media sites. Facebook
has a simple and maturing web application ecosystem that
enterprises can build into (the bank as a Facebook app), or
out from (bank web applications posting to Facebook).
Social media adoption starts with marketing and advertising.
Banks are now beginning to embed their transactional capability
into the social sites, and use their rich interactivity to drive
customer engagement.

5. IBM Sales and Distribution 5
Video consumption and interaction is popular across
many demographics, and presents opportunities for video-
conferencing. The use of video-conferencing to bring experts
into places such as branches or through web and mobile apps
is more readily accepted in emerging markets. In developed
markets, 23 percent of consumers already see video as having
a role in doing business, including Gen X and the usual early
technology adopters. The capability of video-conferencing
technologies is becoming more sophisticated; consumer-led
familiarisation (such as through Google Hangouts) include
not just the video exchange, but also simultaneous content
exchange. A mortgage application discussion in a branch
held over video-conference to a mortgage consultant can
now also incorporate document sharing and signing.
Digital television is maturing, but is still a nascent technology
platform for interaction and app-based transactions. The current
focus for TV business models is advertising and subscription-
based.8
Open standards on TV platforms needs to improve
so that opportunities from other industries, such as payments,
can integrate effectively.9
For example, PayPal is continuing
to develop its payment capabilities and integration options: a
natural fit to work with the next generation of TV platforms.
Non-traditional ecosystems
Disruptive innovations10
help create new markets that
eventually disrupt existing markets and business models.
The car, for example, was not a disruptive innovation; it was
the mass produced and low price Model T Ford that diverted
the transport market away from horse-drawn carriages.
Traditionally, companies focus on sustaining innovation,
using technology to keep pace with or get ahead of their
competition. Many businesses recognise and see innovations
in their industry; successful companies align finances and
resources to progress their innovations.11
After the success of the iPod, Apple disrupted the music business
by connecting the distributors directly to the consumers via
iTunes. They disrupted it again with the iPhone, creating apps
and revolutionising how people consume information and run
their lives. This is a key example of not following the traditional
“listen to your customer” approach to growing a business.
Notable disruptive banking innovations include PayPal12
and its re-invention of payment services; and Square13
,
which allows businesses to take advantage of card services
using their technology.
Disruptive business platforms allow organisations to be
accessed by partners and customers. They often rely on open
standardised interfaces seeking new ecosystems to integrate
and consume the core services. The opportunity for charging
models and new revenue streams follows.
Companies are “codifying” their services so that end users
are not just people, but other platforms too. The application
programming interface (API) is exposed and is part of the
brand offering, and it can be linked to either a charging model
or other related financial services. Whilst APIs are relatively
well-known as a technological approach, providing an API
has now become a key enabler for business innovation, and
organisations will be expected to provide them.
Channel architectures that are enabled with the right
technologies and an information partnering capability
are best placed to capitalise on disruptive opportunities.

6. 6 The omni-channel banking evolution
Evolution of banking channels
Mobile first
The promise of mobile banking services has been a topic of
conversation within the industry since the late 1990s. The rise
of consumer IT, in particular smartphones and tablets, in the
last three to five years has not only brought a rich technology
platform to exploit, but critically driven demand and expectation
from an increasingly tech-savvy customer base and corporate
users. The mobile device has become part of society, both
as a practical tool and as a fashion accessory.
From a channel provider perspective, the traditional mobile
challenges of coping with cross-vendor form factor and
platform variety remain, however consumer demand has
driven a sharpening of focus around a smaller number of user
friendly technologies, most notably Apple’s iOS devices and
Google’s Android platform. This has put the provider onto
a more practical footing than in previous times, which has
also contributed to the rise of mobile apps.
It is likely that the increased empowerment of connected
consumers, coupled with the loss of trust in banking post-
crisis, will be a critical factor in deciding which mobile services
succeed and which fail. Human factors such as ease of use and
convenience are now important, in addition to traditional
values such as competitive products, trust and security.
Mobile payments
Mobile payment is widely known as a crucial service, reflecting
the growing importance of the mobile device among consumers.
The UK market for payment via mobile technologies is very
active and also very disparate. New offerings from agile new
market entrants join a marketplace where established financial
institutions are, in some cases, backing multiple solutions.
Technologies such as near field communication (NFC) bring
the promise of added convenience, but require widespread
adoption of shared standards, as well as hardware changes
with the merchants to be successful.
There is also growing innovation in consumer payment models
with, for example, a number of retailers processing payments
online via mobile devices, with store collection via a coupon.
This is highly disruptive to the traditional models upon which
much of the existing consumer payments ecosystem is founded,
since it increases the possibility for increased disintermediation
of banks and card schemes in the process.
Coping with the dynamics of mobile transactions
As well as introducing new technology into the banking
infrastructure, mobile devices also bring different dynamics
in terms of the traffic that banks can expect to deal with.
Mobile access to banking means that consumers can expect
service any time and in any place: a far less predictable
model than even internet banking.
Similarly, while institutions hope ease of access means that
frequency of contact with consumers will increase, this will
create an added burden on the supporting infrastructure.
Strategies such as leveraging push notification services offer
both a helpful banking service, plus offer the bank greater
control over when contact is instigated.

7. IBM Sales and Distribution 7
Security in the consumer IT world
Mobile banking services stand to create tension between
the need to be secure yet at the same time sufficiently easy
to use to be an attractive option to the consumer.
There is a growing recognition that authentication via
repeated entry of lengthy passwords, PINs and so on for all
interactions is intrusive to the user experience and adds friction
to the process. An objective of successful mobile banking is
to provide an experience that delivers service with the least
friction possible.
Frictionless solutions are still emerging, but the sophistication
of consumer devices means that combinations of background
factors (e.g. location, connectivity) all potentially have a role
to play in more flexible, low friction authentication schemes.
Using such factors to derive a risk profile enables the provider
to select an authentication mechanism that fits that risk – with
lower risk requiring a lower (or no) friction authentication.
Bring your own device (BYOD)
BYOD is the corporate manifestation of the rise of consumer
IT, with banking users looking for access to services via devices
of their own choosing in an increasingly flexible model. This
presents significant challenges to the organisation, ranging
from security to end user support and application compatibility
and availability. A by-product of BYOD is an eventual
reduction in capital expenditure for end-user computing.
The opportunity, however, is that BYOD will enable greater
efficiency in general, both through device familiarity and
increased flexibility in working practices for both the bank
and its employees. This flexibility manifests itself both in
terms of working time and location of employees, and also
in terms of the future options for servicing consumers.
For example, the ability to service customers outside
of traditional branch models.
Single view of the bank
Digital technologies are enabling customers to multitask across
different banking-related channels. This could be transaction
banking (checking online balances and statements or asking
a call centre agent to perform a service transaction) and/or
opinion banking (commenting positively or negatively about
the bank on social media).
Many enterprises have sought to create the single view of
the customer using a record of all interactions with the bank:
physical or digital. The need for channel data processing
systems to capture those interactions has not gone away,
and one trend IBM is seeing is a subtle shift to the single
view of the bank.
For the customer who is accessing the bank through a variety
of devices and locations, there is an increasing desire to carry
out transactions beyond the traditional channels (for example,
branch, phone, desktop or web). The customer will therefore
use applications (for example smartphones or kiosks) that need
a consistent and up-to-date view of their banking activity, such
as viewing their balance and making payments, as well as what
the bank has done to them, such as applying charges or
marketing new products.
The single view of the bank is having a consistent data record
of its clients – both interaction and opinion. Assembling this
information and keeping it up-to-date, is fundamental to
underlying applications bank colleagues will use for marketing,
sales and servicing, plus those applications that ensure
corporate regulation or support information sharing with
partners. This is a foundational capability of a truly omni-
channel bank.

8. 8 The omni-channel banking evolution
The influence of social media
As with smartphones, social media has become an increasingly
pervasive element of everyday life for consumers. Social channels
such as Twitter have become a powerful platform for consumers
to voice experiences of consumer care, both good and bad:
a far more public and hard-to-manage consumer forum than
banks were once used to.
However, the social channel does create an opportunity
for new services and models of interaction with customers.
The social dimension provides the opportunity for much
more personalised and longer-lived dialogue than the
transaction-orientated traditional online banking model.
For a truly differentiated experience, simply porting existing
online banking presence and services into a Facebook page
is unlikely to drive huge success on its own. Embracing the
social models of interaction will elevate online banking to
new levels.
In terms of understanding customers better, social media
also provides an unprecedented public well of information
to assess consumer sentiment, wants and needs and influential
communities. This enables development of more relevant and
targeted products and incentives, and refined customer service
– revenue growth, market differentiation and more effective
product development.
Data exploitation
The emergence of big data technologies means that banks not
only have the potential of richer data sets upon which to work,
but also an agile platform for data-driven innovation. Big data
is still emerging as a trend, but looks likely to become an
increasingly integral aspect of how all organisations will
approach data and analytics in the future.
Big data is a complementary part of an overall data
management platform. It augments the well-established data
warehouse capability with the ability to ingest and process
previously complex, fast-moving or simply unused data in
a cost-effective way. Call centre traffic, web logs and unused
fields in existing data warehouses become potential sources
of value instead of a costly inconvenience.
For omni-channel banks, big data provides an effective
mechanism for developing cross-channel insights, even in
a legacy technology environment. The ability to consume
the raw output of an incumbent technology means that
management information or new services can be developed
without the cost and risk of intrusive integration works.
A recent IBM Institute for Business Value (IBV) study
determined that in the financial services organisations
surveyed, 50 percent of the overall big data activity was
focused on customer-centric initiatives.14
This indicates
both where the industry is recognising value in big data
today and also that it is likely that organisations who best
harness big data will provide the best customer care.

9. IBM Sales and Distribution 9
Omni-channel architecture
Omni-channel behaviour and the consumerism of enterprise
IT is leading to a need for a new generation of IT systems.
Systems of engagement are designed for real-time collaboration
and empowering end users across a variety of devices. They
deliver a context-rich interactive experience and are built
on the technologies of mobile devices, data analytics, social
media integration and cloud computing platforms. Systems
of engagement add a layer of consumer effectiveness on top
of the technological rigour, robustness and efficiencies of
the traditional established systems of record.
The next generation of multi-channel architecture that
banks will evolve to is just as much about exploitation of
the interaction as well as enabling the multi-device, channel
shifting interaction.
Omni-channel architecture has a number of characteristics.
It has the capability to track the context of the end user access
to great levels of detail – for example their location, who they
are and their preferences. Technology has now advanced so
that just as much insight can be gleaned about the transaction
a customer is trying to achieve as from the core data of
the transaction.
The challenge for banks in their evolution to these new
architectures is the need to build a change-ready infrastructure
that can cope with the omni-channel scale. There will continue
to be an increase in the number of device form factors and
contexts in which they access the bank. The volume of
interactions is largely becoming unpredictable, yet the
brand and service excellence that a bank aspires to must
be maintained.
Conclusion
Mobile device technology is maturing rapidly, with the growing
prevalence of powerful smartphones and the emergence of
enterprise-class software to support the development and
runtime infrastructure needs of mobile solutions. Banks now
have viable technologies at their disposal to scale out their
new channel architecture effectively.
Banks are adapting to support omni-channel behaviour and
presenting a single view of the bank to the customer. In today’s
digital world, the need for an agile change capability is becoming
more important. This extends across the whole change lifecycle
– potentially daily process and decision rule changes, flexible
end user interface content and function, and the ability to
consistently support industrial-strength operations behind
the change.
Consumer technology is driving demand for digital banking
services. They will challenge existing business models and
test the scale of transactions that channels and core banking
systems can handle. Adopting a technical architecture that
can integrate with the wider ecosystems of e-commerce
partners and social media platforms will open up opportunities
for disruptive innovations and new value chains.
Strategies for the exploitation of new channel technologies
such as video and digital TV should be developed. Flexible
and well governed service-based architectures are necessary
for future proofing.
The complexity of data both within and outside the bank that
makes up everything known about the customer is expanding
rapidly. New capabilities in big data analytics enhance current
data architecture to enable deeper insight to help drive context
and the next best course of action.

10. 10 The omni-channel banking evolution
Omni-channel architecture for banking needs to be centered
on supporting a digital application infrastructure that can cross-
connect data for a consistent user experience; scale to handle
the expansion of device interactions and data generation; and
is assembled as a set of service-based components delivered
using full lifecycle agile delivery methods.
In summary, there are demands as well as opportunities
in channel architecture, including the following:
•• Ensure channel applications can scale effectively when
deployed on modern cloud based infrastructures.
•• Design channel services to deliver consistent data that
is a single view of the bank to the customer irrespective
of access point.
•• Develop a channel delivery trajectory that is mindful
of near term new advances such as digital TV and
wearable computing.
•• Enrich data processing in the channels layer and use analytics
to greater personalise the interaction with the customer.
Authors
Martin Gale
Master Inventor and industry architect
Martin is an IBM Master Inventor and architect, and acts
as a technical advisor to clients in the financial services
industry in the UK and Ireland.
Martin’s background is in the development of end user
solutions, and his career has spanned a number of revolutionary
periods for IT, from the “dot com” boom and the early days
of e-business, through to Web 2.0, and, most recently, the
rise of mobile platforms.
Martin’s experience within IBM has spanned a variety of
disciplines, from software engineering and custom application
development to consultancy and relationship management.
He is a regular speaker on new technology, both to clients
and academic institutions, as well as being a certified Chartered
IT Professional of the British Computing Society and a Master
Certified Architect in the Open Group.
Jeremy Caine
Client technical advisor and Executive Architect
Jeremy is an IBM Executive Architect and technical advisor
to UK and Ireland retail banking sector clients. He provides
technology strategy leadership and architectural direction
to support enterprise growth, and is a leader on digital
transformation initiatives for IBM’s clients. He is an advocate
of business model innovation, ecosystems, platform architecture,
disruptive technologies and the digital economy.
Jeremy is highly experienced in the design and delivery of
business transformation and complex IT system integration
programmes, and has worked in the financial services
(banking, insurance and investments); public sector; and
distribution industries.
Jeremy is a UK Chartered Engineer, Member of the
Institute of Engineering and Technology, and Distinguished
Certified IT Architect of The Open Group. He also serves
as industry expert to the advisory board of New Economic
Models in the Digital Economy.

11. IBM Sales and Distribution 11
References
1 Omni-channel Marketing, eMarketer,
www.clickz.com/clickz/column/2199397/omnichannel-
marketing-yournext-Challenge
2 Omni-channel Banking, Cisco Research,
www.cisco.com/web/about/ac79/docs/Cisco-IBSG-
Omnichannel-Study.pdf
3 http://merchandisingmatters.com/in-store-media/
five-multi-channel-trends-that-impact-in-store-
merchandising
4 www.bbc.co.uk/news/business-22152611
5 Kiosk deployment is growing progressively, despite
negative growth in 2000. Souce: Frost and Sullivan.
6 American Banker, www.americanbanker.com/btn/23_8/
citis-japanese-revolution-1023326-1.html
7 The Financial Brand, Feb 1, 2011,
http://thefinancialbrand.com/16613/rbc-retail-store-
branch-prototype-concept
8 http://blogs.gartner.com/allen_weiner/2012/09/27/
the-tv-is-speaking-are-digital-marketers-listening
9 http://blogs.strategyanalytics.com/DMS/post/2012/10/03/
Smart-TV-Apps-Business-Model-Barriers-Hinder-
Revenue-Opportunities.aspx
10 http://en.wikipedia.org/wiki/Disruptive_innovation
11 IBM internal.
12 www.paypal.com
13 https://squareup.com
14 www14.software.ibm.com/webapp/iwm/web/signup.
do?source=csuite-NA&S_PKG=Q412IBVBigData

12. © Copyright IBM Corporation 2013
IBM United Kingdom Limited
76 Upper Ground
South Bank
London
SE1 9PZ
Produced in the United Kingdom
June 2013
All Rights Reserved
IBM, the IBM logo and ibm.com are trademarks or registered trademarks
of International Business Machines Corporation in the United States,
other countries, or both. If these and other IBM trademarked terms are
marked on their first occurrence in this information with a trademark
symbol (® or ™), these symbols indicate U.S. registered or common law
trademarks owned by IBM at the time this information was published.
Such trademarks may also be registered or common law trademarks in
other countries. A current list of IBM trademarks is available on the Web at
“Copyright and trademark information” at ibm.com/legal/copytrade.shtml
Other company, product and service names may be trademarks or service
marks of others.
References in this publication to IBM products and services do not
imply that IBM intends to make them available in all countries in which
IBM operates.
Please Recycle
BKL03003-GBEN-00