Multichannel

What Is Multichannel?

Multichannel refers to a business strategy that uses multiple independent customer contact points, or distribution channels, to allow customers to interact with a company. In the realm of financial institutions, this approach enables clients to engage with their bank or wealth manager through various avenues such as physical branches, websites, call centers, mobile applications, and ATMs. The core idea behind a multichannel strategy is to provide accessibility and choice, catering to diverse customer preferences within the broader field of customer experience and financial services distribution.

History and Origin

The concept of using multiple channels to reach customers is not new, evolving significantly with technological advancements. Historically, financial services primarily relied on physical branches for customer interaction. The advent of new technologies began to change this. For instance, ATMs emerged in the late 1960s, followed by the development of at-home banking services in the early 1990s. By the new millennium, over 80% of U.S. banks offered internet banking. This expansion into diverse channels, like mobile and online platforms, transformed how customers accessed banking services, shifting from solely traditional methods to increasingly digital ones. The financial sector has long embraced multichannel strategies to interact with clients, with companies continually updating their services to meet evolving expectations.⁹, ¹⁰, ¹¹

Key Takeaways

• Multichannel strategies involve offering customers multiple, independent ways to interact with a business, such as physical locations, websites, and mobile apps.
• In financial services, multichannel access provides flexibility, allowing customers to choose their preferred method for transactions and inquiries.
• A key challenge of multichannel is maintaining consistency in customer experience and messaging across disconnected channels.
• The approach emphasizes providing options rather than integrating all channels into a seamless journey.

Interpreting the Multichannel

Interpreting a multichannel strategy involves understanding that each channel often operates in isolation, serving a specific purpose. For example, a customer might use a bank's mobile banking app for routine transactions like checking balances or transferring funds, but visit a physical branch for more complex needs like applying for a loan or discussing investment strategies. The effectiveness of a multichannel approach is often measured by the breadth of options provided and the ability to meet customer needs within each channel. Businesses employing a multichannel strategy aim to maximize customer reach and convenience by being present wherever customers may seek to interact, enhancing overall accessibility for their client base.

Hypothetical Example

Consider a hypothetical financial advisor, "WealthLink Advisors," that employs a multichannel strategy. A client, Sarah, manages her investment portfolio with WealthLink.

1. Initial Contact: Sarah might first discover WealthLink Advisors through their website, which provides information on their services and philosophy. This website serves as one channel for information gathering.
2. Portfolio Review: When Sarah wants to review her portfolio performance, she logs into WealthLink's secure online portal, an independent channel for account access.
3. Advisory Session: For in-depth discussions about rebalancing her portfolio or exploring new investment opportunities, Sarah schedules an in-person meeting with her advisor at WealthLink's physical office. This physical branch is another distinct channel.
4. Transaction Alerts: Sarah receives text message alerts on her smartphone for significant portfolio events, like large deposits or withdrawals, showcasing yet another separate channel for communication.

In this scenario, WealthLink provides various distinct ways for Sarah to interact, each serving a specific purpose and operating independently, thereby illustrating a typical multichannel approach to client engagement. This provides Sarah with flexibility but does not necessarily ensure a seamless transition of information or context between channels.

Practical Applications

Multichannel strategies are widely applied across the financial services industry, from retail banking to wealth management and insurance. Banks, for instance, have invested significantly in multichannel distribution, recognizing that customers utilize various touchpoints for their financial needs. This includes enabling clients to perform basic transactions via ATMs, conduct more complex tasks through online platforms, or seek personalized advice at branches.⁸

In the context of wealth management, a firm might offer clients the ability to check their portfolio performance through an online portal, receive market updates via email newsletters, and schedule in-person meetings with an advisor. The aim is to provide diverse access points to cater to varied client preferences and situations. While these channels serve distinct functions, the strategic deployment of a multichannel approach can enhance customer retention by increasing accessibility and improving brand awareness. Companies also leverage multichannel approaches to aid in tasks like fraud prevention and adherence to regulatory compliance through various verification methods across channels.

Limitations and Criticisms

While a multichannel strategy offers customers a choice of interaction points, it comes with several limitations. A significant drawback is the potential for a fragmented customer experience. Since each channel often operates independently, customer data and interactions may not be shared seamlessly across platforms. This can lead to inconsistencies in messaging, repetitive requests for information from the customer, and a lack of a holistic view of the customer for the business.⁵, ⁶, ⁷

For example, a customer might receive different information about a product from a call center representative than from a bank's website, causing confusion and frustration. This disjointed data handling can also impede efforts toward effective data analytics and limit the ability to provide personalized interactions. Implementing and managing multiple separate channels can also be expensive and time-consuming, potentially leading to higher operational costs without the integrated benefits of a unified system.³, ⁴ Furthermore, without a unified approach, maintaining consistent messaging across all channels can be challenging, which may dilute the brand message and negatively impact customer perception.¹, ²

Multichannel vs. Omnichannel

Multichannel and omnichannel are often confused, but they represent distinct approaches to customer interaction. The fundamental difference lies in their integration. Multichannel focuses on providing customers with a choice of independent channels to interact with a business. Each channel typically operates in a silo, meaning that data and interactions from one channel are not necessarily shared or integrated with others. The customer might switch between channels, but the business does not necessarily track or provide a continuous experience across them.

In contrast, an omnichannel strategy aims to provide a seamless and fully integrated customer experience across all available channels. With omnichannel, all channels are connected, and customer data is shared in real-time, allowing for a consistent and continuous journey regardless of how the customer chooses to interact. For example, a customer could start a loan application on a mobile app, continue it on a desktop computer, and finalize it with a representative in a branch, with all previous interactions and information readily accessible. This level of integration supports superior personalization and a more cohesive interaction, ultimately providing a strong competitive advantage.

FAQs

How does multichannel apply to financial services?

In financial services, multichannel means offering various ways for clients to engage, such as visiting a branch, using mobile banking apps, accessing online portals for investments, or contacting a call center. Each of these represents a distinct channel for interaction.

What are the main benefits of a multichannel strategy?

The primary benefits include increased customer reach by being present on multiple platforms and providing customers with choice and convenience in how they interact with the business. This approach can cater to different customer preferences and increase overall accessibility.

What is the biggest challenge of a multichannel approach?

The biggest challenge is the lack of integration between channels. This can lead to fragmented customer experience, inconsistent information, and inefficient data management, as each channel often operates independently without a unified view of the customer's journey.

Is multichannel still relevant with the rise of digital technologies?

Yes, multichannel remains relevant as it provides customers with diverse options for interaction. While the trend is moving towards more integrated experiences like digital transformation and omnichannel, many businesses still utilize and benefit from a multichannel framework to serve their customer base.