South African banks are embracing self-service as a strategic imperative, and can be expected to invest heavily in solutions that allow their customers to access a full range of banking services wherever they are and at any time.
The recent "Self-Service Strategies in South Africa 2007" survey, conducted by World Wide Worx on behalf of Consology, shows that banks attach the most strategic importance to Self-Service out of a respondent base that also included insurers, retailers and telecommunications firms.
John Ziniades, CEO of self-service specialist Consology, sauys: "The South African banking sector has years of experience with self-service, dating back to the introduction of the country's first ATMs. The next evolution of self-service in the banking world was online banking, a wildly popular service that has changed the way banks and customers interact.
"We can expect to see banks build on these channels in the years to come, in the hopes of keeping customers away from more costly channels like physical branches and agent-staffed call centres."
The branch network is a major overhead for banks, by contrast to insurers that largely operate through brokers, retailers that generate sales from store traffic, and mobile operators that work through a network of franchised stores, notes Ziniades.
"The costs of the physical world for banks are driving them towards self-service channels."
But electronic self-service channels don't only generate cost benefits for banks: they also allow banks to offer consistent and convenient service to their customer, which leads to more customer satisfaction and loyalty. Indeed, banks see reduction of customer churn, rather than cost-savings, as the most important benefit of self-service, according to the self-service survey.
Other benefits of self-service from a bank's perspective include cost savings from automating transactions, reduction of customer support costs, cross and up-sell opportunities, and deflection of calls from the contact centre. The survey shows that the Web is the channel of choice for self-service – and that is where Ziniades expects to see banks invest.
Online banking started out as way for customers to easily check statements and balances online without needing to head for a branch, ATM or the phone.
As customers grew comfortable with simple banking tasks online, they become confident enough to start making online payments. There is scope for banks to use the Web even more effectively to manage their relationships with their customers.
"South African banks have long recognised that the Internet is a powerful tool for customer acquisition and retention, and were among the world's pioneers in the creation of online banking services. But over the last five years, banks have chosen to focus on usability and look and feel of their online banking sites rather than on key functionality enhancements," says Ziniades.
"We expect the focus to now turn to introduction of packaged self-service solutions that allow banks to introduce new functionality to their online portals. These will also lead to the alignment of self-service channels such as IVR, mobile, Internet and ATMs with each other, in order to offer a consistent level of service."
Ziniades notes that the proliferation of complex financial service products in South Africa, such as credit and debit cards, is driving traffic to call centres at local banks since consumers struggle to understand these products.
Most banks are unable to communicate effectively with their customers about complex products and services through their existing electronic channels. The result is that call centre costs are spiralling out of control.
"Self-service solutions can help banks to communicate the features benefits of these products more effectively," says Ziniades. Online banking does not currently offer any true personalisation functionality. By contrast, an average Telco’s online offerings provide the ability to personalise itemised calls by swapping numbers with names and categorising business versus personal spend.
This type of functionality could be used to personalise credit card statements and cheque accounts in much the same way, allowing for categorisation of transactions by business, personal, entertainment, and food, for example, says Ziniades.
"Most banking portals allow for online statements and transactions, meaning that banks are missing out on some great opportunities to drive customer loyalty and increase their share of the customer's business. To capitalise on these opportunities, banks will need to shift from their home-grown online banking systems to self-service suites," he adds.